BC city covering condo down payments for first-time homebuyers

Oct 27 2021, 10:24 pm

In a bid to support more affordable housing ownership, a suburban city in BC’s capital region with 36,000 residents is offering to cover a portion of the 5% downpayment required to buy a condominium home in their jurisdiction.

The City of Langford’s grant, offered on a sliding scale based on gross annual household income, would cover 75% of the downpayment for household incomes under $99,999, 50% for $100,000 to $114,999, and 25% for $115,000 to $125,000. Total household incomes in excess of $125,000 are ineligible.

But with the various requirements, this is not an initiative to attract new residents to the jurisdiction. Prospective recipients must be existing residents of Langford for at least the past two years, cannot own any real estate (first-time homebuyers), cannot have over $50,000 in the value of all assets held by their family, qualify for a pre-mortgage approval of $450,000, and not receive any down payment assistance from family or friends. The household size must also be at least two people, one of which may be an eligible dependent such as a child under 18 years of age.

The grant can only go towards the acquisition of a two-bedroom condominium in participating new developments that have an asking price of no more than $450,000.

In September 2021, according to the Victoria Real Estate Board, the benchmark price for a condominium home in Langford was $481,900 — comparable more affordable to the benchmark prices of $576,700 for a townhome and $874,700 for a single-family dwelling.

This is a unique program intended to assist residents who may qualify for a mortgage, but are unable to save for the minimum down payment for reasons that include dedicating a substantial portion of their income towards rent. Recipients do not have to pay back the grant.

Additional restrictions on title would help ensure this government-assisted home ownership program serves its intended purpose, including banning owners from renting their unit during the first five years of ownership, and limiting the sale price of the unit if it is sold within the first five years of ownership.

This is a pilot project backed with a pool of $3 million in funding from Langford’s Affordable Housing Reserve Fund, which is entirely accumulated from contributions by developers as a condition of rezoning for increased density.

If the pilot program proves to be a success, and a decision is made by city council to continue the program, the municipality will consider expanding the criteria to include people who work in Langford, and including three-bedroom units for larger families and one-bedroom units for individuals.

The municipal government will open the application process on its website in early 2022. After prospective recipients are deemed eligible by city staff, they will be provided with a commitment letter that outlines how much assistance will be granted.

A list of participating new condominium developments will be provided by the city. When a building with eligible units becomes available for pre-sale, the qualifying buyer would be invited to buy from the developer on a first-come, first-served basis.

Such a program directly supports working, middle-class households, which is also an emerging focus for BC Housing. Through its HousingHub program, BC Housing is providing private developers with low-cost financing to help support the construction of affordable rental homes or below-market affordable ownership homes for middle-class households.

The provincial government also has a first-time homebuyers program that reduces or eliminates the amount of property transfer tax paid when a home is bought.

Kenneth ChanKenneth Chan

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