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New to Canada? Here’s how to purchase or rent a home

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As a new immigrant, navigating the Canadian real estate market can feel daunting, especially if it differs significantly from that of your home country.

Whether you’re contemplating buying or renting a home, this brief guide will help you get a better lay of the land so you know what to expect.

I’ll outline some of the most common property types while explaining the documentation you need to rent or purchase a home, and the key expenses you should budget for.

Can non-Canadians purchase real estate in Canada?

Before jumping in, I’d like to address the Prohibition on the Purchase of Residential Property by Non-Canadians Act and how it could affect new immigrants searching for housing. The act was passed by Parliament(opens in a new tab) in June 2022 and came into effect in January 2023.

The temporary foreign homebuyers ban(opens in a new tab) was passed in an effort to reduce pressure on the real estate market and make housing more affordable. The ban will remain in effect for two years before expiring and effectively prevents non-Canadians and foreign corporations from purchasing a home.

Canada has been going through an affordable housing crisis(opens in a new tab) characterized by strong demand and a lack of affordable homes. The current shortage has been one of the leading drivers of inflated home prices and rental rates(opens in a new tab), experts say.

New data from the Canada Mortgage and Housing Corporation (CMHC) shows that 3.5 million more housing units(opens in a new tab) will need to be constructed in order to restore affordability by 2030, in addition to homes that are already being built.

While the foreign homebuyers ban remains in place today, immigrants who have obtained permanent residency status or citizenship are exempt. Some other exemptions include(opens in a new tab):

  •  International students(opens in a new tab) who meet certain requirements, including having spent most of the last five years in Canada
  •  Foreign nationals with temporary resident status, such as refugees and those fleeing international crises
  •  Consulate staff members and diplomats
  •  Foreign work permit holders with at least three years of filed tax returns

Types of properties you can rent or buy

Now that we’ve discussed the elephant in the room, here’s a quick look at the most common types of property you can rent or buy in Canada:

  •  Detached house: A single-family home that stands alone on its own property, separated from other homes by open space.
  •  Semi-detached house: A house that shares one common wall with another home, but is not attached to any other structure.
  •  Townhouse: A multi-level home that shares one or more walls with adjacent homes, usually in a complex.
  •  Condominium: Condos are individually owned units within a larger building or complex. Owners have exclusive rights to their units but share common areas such as hallways and building amenities.
  •  Apartment: A rented living space within a larger building. Apartments are similar to condos, but require a monthly lease agreement and can’t be purchased outright.

Most common living arrangements

Whether you plan on renting or buying a home, these are the most common agreements you can choose from.

1. Standard lease

A standard lease is a fixed-term rental agreement(opens in a new tab) that can be as long as both parties want. Typically, apartments offer lease terms that range from three months to a year in length, or even longer. This legal agreement outlines monthly rent payments, utility responsibilities, and other rights, rules and responsibilities that both parties have agreed to.

Remember that each province and territory has specific laws and regulations regarding landlord and tenant obligations. It’s always a good idea to research some of the key regulations in your province or territory so that you know your rights as well as what’s expected of you.

Signing a longer-term lease or renewing an existing one can lock you into a lower rental rate, versus terminating your current tenancy and looking for a new rental property on the market. In many provinces and territories, landlords are allowed to increase rent(opens in a new tab) once a year for existing tenants, and several governments have set limits on how much landlords can raise rates.

Meanwhile, in several provinces such as Ontario, there are no limits on how much a landlord can ask from a new renter. Also keep in mind that breaking a lease early can result in penalties.

2. Month-to-month lease

Many landlords offer month-to-month rental agreements for those who are uncomfortable with a long-term commitment. Most provinces and territories require tenants to provide a minimum of either one month(opens in a new tab) or 60 days’ notice(opens in a new tab) if they plan on leaving, regardless of whether they have a long-term or monthly lease.

However, in provinces such as Nova Scotia(opens in a new tab) and New Brunswick(opens in a new tab), tenants with monthly leases have more flexibility. Those who rent on a monthly basis must give at least one month’s notice before moving out, while those on a year-to-year lease must provide at least three months’ notice.

The downside of month-to-month leases is that rental rates are generally higher, as landlords assume more risk. Once you move out, it could take them time to find another tenant, and they may need to invest money in cleaning or preparing the unit for the next occupant.

3. Purchasing a home

Buying a home involves securing a mortgage with a bank or other financial institution, and making an initial down payment. You own the property and are responsible for all mortgage payments, property taxes, insurance and maintenance. It’s a long-term financial commitment that may involve a lengthy approval process.

4. Rent-to-own

With today’s high mortgage and interest rates(opens in a new tab), some buyers are considering rent-to-own agreements(opens in a new tab), which offer a compromise between renting and purchasing.

In a rent-to-own arrangement, tenants rent a property for a specific period of time with the option to purchase the home at the end of their rental term, often at a predetermined price. Additionally, a portion of the rent payments may go towards the home’s down payment.

The downside is that rent-to-own arrangements typically involve higher monthly payments. Your payments will be broken down into two parts(opens in a new tab) – your monthly rent and the money you put towards a down payment or home equity.

Renting: The basics

A landlord is defined as an individual, company, or entity that owns a property and leases it to a tenant in exchange for rent payments.

When you apply to rent a property, landlords typically ask you to complete an application form with your personal details. Although documentation requirements may vary depending on the landlord, most rental agreements require prospective tenants to provide the following documentation:

  •  Passport, visa, or immigration documents for identification
  •  Proof of income, such as bank statements, pay stubs, or an employment letter
  •  References from previous landlords (if applicable)

Many landlords may also request approval for credit and background checks. Your landlord may require a higher security deposit if you’re new to Canada and have little or no credit history. A security deposit generally can’t be higher than one month’s rent(opens in a new tab), but those with good credit and rental history may be offered a lower security deposit.

The fees you’ll need to budget for include:

  •  A security deposit: While this fee can vary according to province or territory(opens in a new tab), it is usually equal to one month’s rent and is paid at the start of the tenancy. You should receive this amount back at the end of your lease agreement, along with any accumulated interest, provided you leave the unit in good condition and don’t violate any terms. Landlords in provinces such as Ontario often use this money as payment for the last month of rent.
  •  Common area maintenance (CAM) fees: Often referred to as “CAM fees” or simply “maintenance fees,” this is paid in addition to your monthly rent to help maintain the property’s shared spaces. Fees may cover services such as landscaping, pest control and trash service.

Your monthly rent payments are typically made in one of four ways:

  •  Cash
  •  Cheque
  •  Electronic bank transfer
  •  Credit or debit card

Each landlord may have their own system for collecting rent payments. For example, larger commercial properties often won’t accept cash due to security risks and may require a cheque, money order, or electronic payment.

In most provinces and territories, landlords aren’t allowed to increase rent more than once every calendar year and must adhere to laws governing rental increases. Landlords must also give you between one and three months’ notice of plans to increase rent, depending on the length of the agreement. Once your lease is up, you can renew it or move out.

Buying a home: The basics

The application process to buy a home is typically far more demanding than renting. Unlike signing a lease agreement, buying a home requires you to obtain a mortgage.

A mortgage is a loan from a bank or financial institution to finance your home purchase. You’ll pay regular installments over a fixed period of time. Along with contributing to your home equity, a portion of your payments will go towards interest fees charged by the lender.

There are two types of mortgages you may encounter:

  •  Fixed-rate mortgage: These have a constant interest rate throughout the term, ensuring predictable monthly payments. Borrowers are shielded from interest rate fluctuations in the market.
  •  Variable-rate mortgage: The interest rate can change based on market conditions, potentially affecting monthly payments. Borrowers might benefit from lower rates but also face the risk of rate hikes.

In addition to documents and references that show proof of residency, most lenders want to see several years of financial history to ensure you’ll be able to keep up with the long-term commitment of a mortgage. This can include proof of income and employment history.

Your credit report and score(opens in a new tab), which determine your creditworthiness, are also major factors that lenders will consider before approving you for a mortgage.

Traditional mortgages usually require a down payment of at least 20 per cent of the home’s value. CMHC-backed mortgages may only require a five per cent down payment(opens in a new tab), but will involve a lengthier approval process and the purchase of additional mortgage insurance.

Here’s a quick breakdown of the fees associated with buying a home:

  •  Down payment: This is a percentage of the home’s purchase price that is paid prior to moving in. Providing a down payment allows you to secure your mortgage. Some lenders may ask for an even larger down payment based on your individual financial situation.
  •  Mortgage payment: This is the monthly amount you pay for your home loan.
  •  Mortgage insurance: A monthly insurance payment that provides coverage in the event that you default on your loan. This is usually optional for traditional mortgages but is always required for CMHC-backed loans.
  •  Homeowners insurance: This insurance covers you from unexpected damage to your home, such as hail, flooding, and natural disasters. This coverage can be obtained through insurance providers.
  •  Property taxes: These are annual taxes paid by property owners to the municipal government.
  •  Closing costs: These are additional expenses, aside from the cost of purchasing your home, that must be paid to complete a real estate transaction. They can include a land transfer tax(opens in a new tab), inspection fees, and other legal or administrative costs.
  •  Homeowners Association (HOA) fees: Homes in some neighbourhoods require monthly HOA fees, which go towards maintaining and improving common areas and shared structures within the community.

All of these fees can add up and contribute to a higher upfront cost than you may have expected. When determining your budget, take some time to look into the average prices of these fees based on where you’re located and the value of the property you’re looking at.

Once you’ve completed the mortgage financing process and paid your closing fees, you will have officially purchased a home.

Is it better to rent or buy in Canada?

If you’re new to Canada and have limited income and credit history, you may find it difficult to obtain a mortgage and purchase a home outright.

Before buying a house, you should put together a budget detailing your projected monthly expenses and research the average home prices in your area to better understand how much of a mortgage you can afford(opens in a new tab).

If you’re serious about buying a home, it’s worth getting in touch with a real estate agent. They will be able to show you your options based on your budget and can help you navigate the complexities of applying for a mortgage.

If you’re unable to get approved for a mortgage, it may be best to start by renting your home or enrolling in a rent-to-own agreement with your landlord. Both of these options provide flexibility while you take time to build your credit and income history.

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

The Canadian Press. All rights reserved.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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