Authorities say the measure could boost affordability for new buyers, but others aren’t so sure
A federal-provincial plan to purchase more than 2,200 unsold condos in British Columbia and convert them into rent-to-buy housing units has been billed as a way of boosting affordability and giving more choice to new buyers – but the jury is still out on whether it’s the right move.
A new Business in Vancouver survey showed 51% of respondents believe the scheme “wastes taxpayer dollars” and “artificially [props] up developers,” while 55% said it “banks for [developers’] bad bets instead of letting condo prices fall to an affordable level.”
The plan would see the federal and provincial governments join forces to snap up so-called “distressed” condos at a reduced price, converting them into rental units for first-time buyers who can then purchase the properties at some point in the future.
“There are people, in many cases young families… who don’t have money for a down payment, but can build in that equity over time, rent-to-buy,” Carney told reporters last month.
But the mortgage industry isn’t completely sold on the measures. Alex McFadyen, founder and mortgage advisor at Flow Mortgage Co., told Canadian Mortgage Professional that while the plan had generated some industry buzz, it still hadn’t filtered much into client conversations.
“The average client that we’re talking to is not referencing this,” he said. “They’re not communicating about it. They’re not speaking about it on a daily basis if they’re buying homes at all. It’s Internet heavy and anybody and everyone who’s interested in politics is talking about it.”
Rollout criticized as unclear
Some of the main criticism of the plan has been a lack of clarity about what it will entail, a communication gap acknowledged by Carney when he said authorities hadn’t done “a particularly good job” in launching the scheme.
McFadyen said that’s been a frequent shortcoming. “It feels like every housing rollout there is kind of half-cooked and it [has] a big gap,” he said. “And it doesn’t seem like there’s any public solicitation of conversation before they make this decision.”
He argued that the plan has shifted shape publicly since it was first announced and questioned why taxpayer money should flow to developers holding unsold inventory.
“Let the market naturally run its course,” he said. “Let the real estate properties sell for what they’re going to sell for. Don’t intervene, let it be what it is.”
Qualification, not rent-to-own, is the real barrier
Some critics also say the measure is missing the mark, and that the goal should be to make regular homes more affordable for first-time buyers instead of experimenting with programs that mightn’t see much uptake.
McFadyen is among those who sees the plan as misguided. “I don’t think first-time homebuyers are asking for rent to own,” he said. He pointed to the BC government’s 2016-17 matched downpayment initiative as a more effective model than anything it’s introduced since.
“If the question is, ‘Are we helping out first-time homebuyers?’ I would attack the qualification process,” he said. “Stress test first and look at a downpayment matching program,” he said. “I haven’t had a single person yet say to me, ‘I think this is a good idea.’ No one, not a single person.”
The plan is just one part of a wider federal strategy to turbocharge the pace of home construction and availability in the next decade, a broader scheme that lawmakers estimate will cost about $5 billion.
But McFadyen sees little chance that the program alone will move the needle for new buyers in the province anytime soon.
“Based on the limited information that was provided to us and what we know about it so far… I would say not meaningfully, no,” he said. “I don’t see it meaningfully changing the market. I think you’re just manipulating the markets.”
Some will argue that the initiative is better than sitting still, but McFadyen questioned that logic. “Is it better than doing nothing? I would say no,” he said, “because there are many more things that could be done with taxpayer money.”
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