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Rent-to-own can help create homeowners, but experts say may not be best for everyone


Rent-to-own initiatives can offer a pathway to home ownership for some Canadians, but experts warn it may not be for everyone.


Rent-to-own programs differ from your average rental situation by enabling tenants to build an equity stake in a property with an understanding that the tenant will buy the property when an established set term ends, said Jordann Kaye, spokesperson for Zolo.ca. This set time can last between one and five years.


Prime Minister Justin Trudeau announced a $200-million investment in a five-year rent-to-own program under the Affordable Housing Innovation Fund, administered by the Canada Mortgage and Housing Corp., on Aug. 30.


The money, which will be used to help housing providers create rent-to-own models, is part of a larger $2-billion investment to create up to 17,000 homes in Canada.


Some companies, including Requity Homes, Clover Properties and Home Visions Canada already offer their own version of rent-to-own programs across Canada.


Rent-to-own programs may also require a down payment, not unlike the normal purchase of a home. Requity Homes, for example, requires two per cent to 10 per cent of the initial home price to start the program, the company's founder and CEO, Amy Ding, said.


"Generally, our goal is for clients to save a minimum of five per cent to 10 per cent down over the course of three years — our typical rent-to-own term length," she said.


For riskier clients who may have foreclosed on a home or have just come out bankruptcy, Requity Homes requires a larger deposit to ensure they can reach 20 per cent by the end of the third year and maximize their chances to qualify for a mortgage.


Since the federal government's program focuses on new developments, Kaye said renters can expect a lengthier timeline to account for construction and may have to commit before the building even exists.


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