With real estate becoming increasingly unaffordable in Toronto and the wider GTA — many are now purchasing property with friends, family and even strangers to break into the housing market.
Co-ownership isn’t necessarily a new concept. For centuries, people have been cohabitating with each other, whether it be for communal care, cultural preferences, or a general desire for togetherness.
But now, census data shows that multi-generational households account for over 6 per cent of the population. And this is now the fastest-growing household type in Canada. The number of people living in multi-generational homes has doubled since 2001.
Furthermore, the primary reason for co-owning a home is changing.
“More and more of my clients are looking into co-ownership, mainly for financial reasons,” says Strata.ca realtor, Cyrus Ghazvini.
“With interest rates rising so sharply, it makes sense to me that clients are pooling their money to buy a home with not just family, but even friends.”
Surveys consistently show a majority of millennials still want to own a home. But many have put these dreams on home due to high interest rates and a cost-of-living crisis we haven’t seen in years.
Co-ownership is gaining enough attention that the government released provincial guidelines to help would-be co-owners.
But is co-ownership really the right solution for you? After all, the benefits are very enticing, especially in this market.
First and foremost, you don’t have to shoulder all the expenses that come with homeownership yourself.
By pooling resources you can also increase your budget, which often makes homeownership possible for those who otherwise would have been priced out of the market. This is particularly true if you’re a first-time buyer.
Additionally, people find the idea of creating community and combining lifestyles positive, especially in this ongoing ‘loneliness epidemic’.
But while the benefits are wonderful, as anyone who’s had a bad roommate or landlord to deal with, things can get complicated if there are disagreements.
“Getting in on a home with others is relatively easy compared to getting out,” warns Ghazvini.
“Not only do you have to consider lifestyle differences, but you may need to have some uncomfortable talks with co-owners around legal, personal and financial responsibilities.”
Or to put it another way:
"It's kind of like a marriage of convenience," said Paul Lagace, a legal advocate for the Prince Rupert Unemployed Action Centre, in a recent CBC article.
"You're sharing a mortgage together, and if you split up, it would play out much like a divorce settlement."
So it’s definitely not like a rental situation. In those circumstances it’s easy enough to get out if you have a bad housemate or terrible landlord. But when you’re legally tied up in a property, it’s a lot harder to go your separate ways if things go south.
"You can't evict the other person because you both own the house, so there's no tenancy to dissolve," said Lagace, telling CBC that the only way to break up the relationship is by either selling your portion — or the entire house.
Additionally, if one party fails to make mortgage payments, it could negatively impact your credit score as well. And potentially your ability to purchase property or obtain new credit in the future.
All this is to say, if you have a trustworthy partner or close family members, co-ownership is a great solution to break into this market. But it’s important to choose your co-owner(s) wisely and have an iron clad ‘prenup’ to minimize potential issues.