BUSINESS
12/24/2019 13:01 EST | Updated 12/27/2019 06:12 EST

Can’t Afford A House In A Red-Hot Market? Co-ownership May Be The Answer

“If you want to live in Toronto, you have to get creative.”

Chris So via Getty Images
A house for sale in a Toronto neighbourhood, April 2015. The Ontario government is encouraging potential homeowners to consider co-ownership as a way of getting into the housing market.

TORONTO ― Dana Brookman always wanted to buy property in Toronto, but the overheated housing market made that nearly impossible. 

“It’s a real shame,” Brookman said of the city’s current housing situation. “I don’t know anybody in my generation that can buy a house on their own.”

A few years ago, the millennial teacher was renting a one-bedroom basement apartment with her partner and young child. Priced out of the rental market, she eventually received an inheritance, but it wasn’t enough to afford a place on her own. Brookman, 35, knew her sister got some money as well, and that’s when the wheels started turning. 

“There really wasn’t a possibility for either of us to buy on our own because we didn’t have enough of a down payment by ourselves, but together we did.”

The older sister really wanted to stay in her Toronto neighbourhood, so she created a PowerPoint presentation to highlight the benefits of sharing a home together. 

“We had never thought about it before,” younger sister Miriam Brookman, 30, admitted. “We really wanted to be in the city and close to family.”

Watch: These are the best affordable housing communities in Canada. Story continues below. 

 

That’s when they both opened their eyes to the possibility of owning a house in Canada’s largest city through co-ownership, a concept Ontario’s government has been promoting recently. 

Earlier this month, the province unveiled a comprehensive guide to co-ownership, suggesting it could help people young and old by making homes more affordable, expanding budgets for prospective buyers and maximizing use of the city’s current housing stock. 

This type of arrangement typically includes two or more people who own and reside in a property together, sharing living spaces such as kitchens, backyards and living rooms, with separate units for private spaces. Responsibilities and maintenance costs are shared, which pools resources together to cover the costs of owning a home. 

Toronto real estate broker Ryan Roberts says he sometimes sees siblings buying property together as a way to get into the market. 

“It is something that could very well continue into the future,” he told HuffPost Canada. “There are certain aspects that need to be clearly laid out including percentage split of expenses, decisions as to upkeep and renovations.”

That’s why it’s critical to put the agreement in legal writing, making clear who is responsible for costs including repairs and taxes, how the property will be used, and how decisions will be made. It’s important to consult a legal professional on the co-ownership agreement, as failure to do so could cause serious problems, the province warns.  

It made sense for the Brookman sisters, who are both married. The house they bought had two units, which was then split into three. The top floor had the older sister, her husband and young child, the second floor was home to the younger sister and her partner, and the basement was rented out for some extra income. At one time, there were six to seven people living under one roof. 

It worked for them, but they admit this isn’t the type of arrangement that works for everyone. 

“I think you have to do it with someone you know very well,” Dana said.

While the two couples were “99 per cent on the same page” going into it, there were big decisions that required a great deal of compromise, because more isn’t always merrier when it comes to sharing costs.

For example, they had to decide what to do when they were told they would have to replace the roof within three years. They also chose to split the mortgage evenly, despite the fact that one couple was going to have more space than the other. 

“We had a lot of house meetings and talked it through,” the older sister said. “You have to be very willing to compromise.”

Getty Images
A man wraps his arm around his partner in this stock image. Co-ownership could be a great way for couples to get into the market, especially if they can't afford a down payment on their own. 

The two couples also had to live through some serious renovations, which meant they were suddenly sharing a floor, including kitchens, bathrooms and living spaces. They described it as “living on top of each other” for a while.

“The renovations were bad, but it’s a means to an end,” Dana said. “Push through it and you get what you wanted in the end.”

The unconventional living arrangement eventually ended well for the two. Dana bought out Miriam, which allowed the younger sister to buy her own place just a few minutes away. The value of the property they shared went up significantly in the three years they lived together, resulting in a “huge profit” that allowed each of them to become homeowners. 

“It could really be a great solution,” the elder sibling said. “We’re still very close.”

But co-ownership isn’t for everyone. 

“I would feel funny recommending it to just anybody ... I’m not sure that the majority of kids these days have the communication and conflict-resolution skills that they would need,” Dana told HuffPost.

“If you’re not 100-per-cent positive that you will be able to work out conflicts positively, don’t do it.”

It’s definitely a good way to get into the market.Miriam Brookman, Toronto homeowner on co-ownership

Younger sister Miriam agrees, calling the situation “tricky” at times. 

“If people who didn’t know each other went into it together, there would have to be a lot of parameters around things. They’d have to be very easy-going people and there would probably have to be some very technical terms laid out legally to make it work.”

People who work in real estate will tell you the same thing, because there are very real risks involved in buying a house, whether you’re doing it alone or with others.

When in doubt, the government recommends asking professionals for their input on the best way to avoid and resolve issues. 

But if home ownership is your goal, where there’s a will, there’s a way. Especially if affordability, location and community matters to you. 

With four adults paying the bills and the basement rented out, the property was “just affordable” through co-ownership, Miriam says. But in these competitive times, the sisters insist you have to be open to new possibilities if you want to become a homeowner.

“It’s definitely a good way to get into the market,” the younger sister acknowledged. “If you want to live in Toronto, you have to get creative.”