Have you ever wondered if rental restrictions, age restrictions, or pet restrictions affect financing options and availability? This video blog addresses this question.
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Transcription of Video Blog:
Hi. It’s Rowan Smith with the Mortgage Centre.
As many of you know, I recently got a new baby puppy that I brought home. As I was bringing him back to my condo, I got to thinking to myself, “I don’t actually know if pet restrictions are in place in my building.” I had to go back and read my condo by-laws, and found that “yes,” there’s no problem bringing pets. You can have any pets you want.
Now, that’s very different. Some buildings have restrictions of size or number of pets or whatnot, but it got me to thinking, “What other restrictions are there out there, and how do they affect market ability of your home?”
There’s really three restrictions that you’re going to see; pets, rental restrictions, and age restrictions. Of those three types of restrictions, pet restrictions have really no baring on market ability of property. I’ve never seen one property sell higher than another, solely because of all things being equal, that the pet restriction was the reason.
Rental restrictions have a very material affect on your resell of your property. If you’re in a building that has a limited number of rentals or has no rentals allowed, and it’s often done because owners take better care of their property then tenants do, it’s just a fact of life. It is harder to sell those homes or they sell for less money, because the investor market is not able to buy it, able to put a tenant in it and earn a revenue off of it.
Age restrictions, the third type, do have a very profound affect on market ability. If you’re in a building that’s 40 plus, 30 plus, generally, they’re very marketable, and you can still finance them quite easily. Where you run into problems is when you’re in a building that’s 55 plus.
At that point, you’ve really started to narrow down the market that is going to be able to buy your property, and how many of that in that market want to live in an age restricted community. You see it a lot in seniors homes where they’re even older. They’re 65 plus, where they just want retirees.
So if you’re looking at one of these properties thinking, “This is a fantastic deal,” first off you’ve got to look at if you’re going to have kids, they’re not going to be allowed to live in the property. Strata council can enact fines against you, and they can block the purchase of something if they really so desire. Now, I’ve yet to see it happen.
But one more note on financing these properties, CMHC cannot insure them. So if you’re trying to put less than five percent down, you have to go with one of the other mortgage insurers. The reason CMHC can’t insure them is because it’s a form of age discrimination, and the government can’t be seen to support any form of discrimination. So if a strata council is preventing people from under 55 from buying it, they’re semi-discriminating. CMHC won’t insure it.
So you either have to have 20 percent down or you have to go to Genworth or AIG as the mortgage insurer. Genworth still has a very good market share in Canada, but AIG has shrunken dramatically and given the recent takeover, I’m not sure if they’re actually still conducting business or not.
So the message from all this is financing a building 55 plus can be difficult, financing it for 30 plus, 40 plus, we can probably get it done and not have very many problems. So, if you know somebody who’s looking in the age restricted building thinking it is a great deal and if it does fit their lifestyle, have them give me a call.
It’s Rowan Smith at the Mortgage Centre.