The Town of Ajax has adopted a resolution to ask the provincial government to reduce the down payment required for new builds. The town council, after a meeting on Tuesday, says changes are required to make new builds more affordable for buyers.
The council said the minimum down payment for a resale property is usually 5 per cent, while for a pre-construction property, it can be as high as 25 per cent to be paid via a “cost-prohibitive” payment schedule set by the builder.
It means that on a new build property worth $750,000, the minimum down payment amounts to $187,500. Buyers have to come up with this amount before they can even move in and stop paying the mortgage or rent on their current home, the council pointed out.
“New builds are also notorious for delays in construction causing deposits to sit in trusts, or even more frustrating, some new builds are simply cancelled and deposits returned with no earned interest,” a statement added.
It pointed out that there is no regulation around deposits for new builds, and are set at the discretion of the builder to satisfy lender requirements for financing to build.
All levels of government are considering new policies to tackle the housing crisis, while improving affordability being a top priority. Governments are encouraging people to invest in new condo and townhouse builds in urban areas to increase density, connect homes and jobs and encourage transit use.
The council said the “Ontario Government be requested to work with Tarion (the regulator for Ontario’s new home building industry), the development sector, and lending organizations to reduce deposits for new builds to lessen the burden and strain on buyers, provide more stability and make the process more affordable and manageable for all parties.”
The council plans to send a copy of the resolution to Ontario Premier Doug Ford; Steve Clark, Minister of Municipal Affairs and Housing; Rod Phillips, Minister of Long term care and MPP for Ajax; Peter Balasubramaniam, CEO of Tarion, all Durham area municipalities and Ontario’s Big City mayors.
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