As I watch home ownership slip through the fingers of many Torontonians, I feel it’s the perfect time to introduce less conventional ideas. While most people looking for affordable home ownership options start thinking condo, there is another option – co-ownerships. Here I explore the idea of co-ownership and whether it is an affordable home ownership option in the GTA.
Co-ownership, Not Cohabitation
Many people hear the term co-ownership and cringe at the idea of living with a group of people. However, they are getting co-ownership confused with cohabitation. Cohabitation is buying a primary home with other people and living there together. Co-ownership is purchasing interest in a co-ownership building where you are given an individual unit. So it is more like a condo.
Condos vs Co-ownership Purchases
When you buy a condo, you receive ownership for your condo unit and a percentage of interest in common elements which vary from building to building. You have a deed of ownership for your individual unit and own it outright. In a co-ownership building, you buy percentage interest in the entire building. Your name appears on the ownership document, and you own a percentage of the building registered on title. Although it sounds like you don’t have your own unit, your purchase entitles you to the exclusive right to occupy the unit in question as part of your Co-Ownership Agreement. On your deed it sets out the percentage you own in the building, which includes a percentage of common areas.
Condos vs Co-ownership Maintenance Fees
With a condo, you pay monthly maintenance fees to cover the cost of common element upkeep and insurance. The condo management allots a percentage to a reserve fund to address major projects and the rest of the fees go towards different things based on what the condo offers. You also become a member of the Condo Corporation and must follow its rules and bylaws. In a co-ownership building you pay maintenance fees based on the percentage of how much you own. The big difference however, is that you also pay a share of the building’s property taxes. In a condo you pay your own individual property taxes.
Commonalities of Condo and Co-ownership Buildings
Two of the things both purchases have in common is that you can finance/mortgage your own suite, and there is no requirement for consent to sell, rent or finance the unit. Many buyers hesitate over the co-ownership idea because they are worried they need fellow owners’ consent before moving ahead with these decisions. This is not the case.
The Pros of Co-Ownership
In the GTA, a big benefit to co-ownership buildings is that you are looking at some pretty snazzy, highly-desirable properties you won’t find in condos. I’m talking about vintage, converted apartment buildings that are large and spacious, often low-rise and in established areas like Yonge and Eglinton or Rosedale. If you are into retro character, you’re in luck. This isn’t your average cookie cutter condo where everything is overly slick and modern. Instead you’ll find original built-ins, interesting moulding, original doors/floors, etc. It all depends on the age and maintenance level of the building, but if you are looking for character, this is where you’ll find it. You have access to some of the best neighbourhoods in Toronto, in some of the most character-intense buildings at a far more reasonable price.
The Cons of Co-Ownership
This is where it gets a little dicey. The big five banks tend to view co-ownership purchases as riskier, so you won’t have access to a traditional mortgage. However, you will find mortgages at credit unions and trust companies, and can still take advantage of great rates. Unfortunately, to qualify, you’ll need to come up with a much higher down payment of up to 30% to 40%. And because the buildings are older, you might find all that the character I mentioned in your unit is unequally balanced with some down sides, including shared laundry, zero amenities, less than energy efficient windows and heating, etc. Although you might expect to pay less in maintenance fees due to fewer amenities, the age of the building tends to push maintenance fees up. On the bright side, although you have taxes added onto your maintenance fees, they tend to even out with what you would have paid for individual condo property taxes.
Ultimately, if you want to live in an established posh area, love vintage, retro character and aren’t concerned about amenities, co-ownerships could be just the ticket for finding your TO dream home.
If you would like help learning more about these rare, worthwhile finds, I’m here to help. Reach out to me today. For more information on what you should know about the real estate market check out this blog.
Photo by Cytonn Photography on Unsplash
