Canadians can now earn cash back on rent to put toward a down payment
Saving for a down payment while shelling out thousands in rent every month can feel like an uphill battle, but a new resource is giving Canadian renters a way to get closer to homeownership.
Zown (pronounced “zone”), a seasoned Canadian real estate company, says its new app lets eligible renters earn cash back of up to eight per cent of their monthly rent, with those rewards going toward the purchase of a future home.
The Toronto-based company launched the first-of-its-kind app this week as a way to help renters start preparing for homeownership before they’re actually ready to buy.
“For many young Canadians, the first and biggest transaction on a monthly basis is rent,” Zown founder and CEO Rishard Rameez told Daily Hive.
For renters who have spent years watching home prices and down payment requirements climb faster than their savings, the idea, Rameez said, is essentially to start making those years of renting count toward the next stage.
“We don’t want people to give up on home ownership because this has been the vehicle to build wealth for the longest period of time,” Rameez said. “We want it just to be able for the younger Canadians to also get to that point.”
The concept is relatively straightforward: eligible renters sign up with Zown, submit their lease agreement, and provide proof of their monthly rent payment. They can continue paying their landlord through their preferred payment method (e-transfer, checks, cash, etc.), or pay their rent directly through Zown once that option becomes available, Rameez said.
Zown then credits the renter up to eight per cent back, which they can put towards the purchase of a future home.
For example, someone paying $2,000 a month in rent would earn $160 in rewards each month, or roughly $1,920 in one year. If they continued renting for the next five years (assuming the amount doesn’t increase), they could get $9,600 back.
The money isn’t handed over as cash that renters can spend however and whenever they want. Rameez said when someone is ready to purchase a home, the money will be sent directly from Zown to the lawyer’s trust account on the day of closing, similar to what happens when someone is approved for a mortgage.
Rameez gave another example of someone eventually buying a $500,000 home.
Under the example he provided, a buyer putting down the minimum five per cent would need $25,000 for the down payment, plus additional money for closing costs.
If that buyer had accumulated $10,000 in Zown rewards over several years, that would cover a significant portion of the money needed to complete the purchase.
The company says its new app builds on an existing model in which eligible homebuyers receive money back when purchasing through Zown. Since launching the platform in 2022, it has given roughly $7 million to Canadian buyers.
More than 65,000 people in its database — mostly from B.C., Quebec, and Ontario — are currently renting and want to purchase a home, according to Rameez.
And while Zown is a Canadian company, Rameez said the early interest has shown up in California and Texas. The company is also registered as a real estate platform in those two states, allowing the company to conduct real estate transactions as it expands to the U.S. market.
As for Canada, though, Zown said its longer-term goal is to help 10,000 young renters afford to purchase a home by 2028.