The federal government helps finance rentals. Now condo builders want a similar deal

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A coalition including developers, lobby groups and big banks is asking the Canadian government for help amid the condo crash.

As the Toronto-region condo crash drags on, a new report from the real estate industry and big banks is calling on the federal government to help get new projects off the ground.

The report is recommending, among other priorities, providing financing tools for condos similar to the ones that exist for rental buildings, such as the Apartment Construction Loan Program by the Canada Mortgage and Housing Corp. (CMHC).

That program offers low-interest loans to developers to encourage them to build badly needed rentals.

“The apartment construction loan program is functioning very well and has stimulated levels of purpose-built rental that we haven’t seen in decades, which is amazing,” said Mattamy Homes Canada CEO Brad Carr, who is co-chair of the National Housing and Investment Initiative, the coalition behind the report, which includes leading developers and representatives from the big five banks.

“The challenge is we believe that Canadians still want choice and they still want ownership as an option.”

The condo market has crashed, with preconstruction sales ground to a halt. Here’s what comes next.

Condo construction has become “sell the building, and then we’ll lend you money to build,” Carr added. And that has created an overreliance on investors as buyers.

Typically condo developers need around 70 per cent of units pre-sold to get the financing to move forward. This has been a challenge in the Toronto area where demand has dried up since a peak in prices during the pandemic.

Carr believes there are buyers who want to live in condos in good locations in major Canadian cities, “and if we could create financing vehicles that made it more attractive to build them and then sell them, those buyers would be there.”

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