As housing prices climb relentlessly skyward in Canada’s hottest real estate markets and the cost of living soars, some house hunters are deciding to not ‘go it alone.’ Instead, they’re combining their assets with two or more parties to purchase property — from two siblings buying a house together to relative strangers splitting a duplex.
Lesli Gaynor is a Toronto real estate agent with a focus on co-ownership (and a background in social work and policy work). After listening to many people’s frustrations with the current conditions in the Canadian housing market, she wanted to do something about it. “Housing it such a basic tenet of people’s well-being and such a determinant of health. As the real estate market grew more and more unaffordable, it started to become really problematic for people.” She wanted to challenge the notion that we have to own homes by ourselves and that we have to shoulder the burden alone. Gaynor was even involved in the creation of weOwn, a web-based app that makes it easier to connect and match with other people who are interested in sharing a mortgage.
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In a city like Toronto, both renting and buying present real challenges for anyone from Millennials to senior citizens. The average price of a Toronto home in May was $879,300. Even couples earning the median household income ($76,400, according to Statistics Canada), are getting priced out of the soaring condo market. While not for everyone, co-ownership is one solution to this ubiquitous issue.
Co-ownership boosts affordability — and has surprising benefits.
Media darlings Louise Bardswich, Beverly Brown, Martha Casson and Sandy McCully (aged 65-71) have been dubbed the real-life Golden Girls of Port Perry for their unorthodox living situation. They live together in a heritage-home in downtown Port Perry and each pooled $250,000 to buy it outright. It took Bardswich moving her mother into a retirement home to decide it wasn’t for her. “In Port Perry at that point, it was around $3,300 to $3,500 a month to live in a retirement home,” she says. She did the math — accounting for a 3 percent increase each year — and it just wasn’t financially feasible. Plus, it was too institutional for her.
When Bardswich got the idea, she met a builder who was interested in getting involved. “He had a property and he put in an application for a building permit that would be suitable for up to six people. And it was turned down,” she says. The Township of Scugog Council withheld the permit, likely assuming it would be used as a boarding house or small retirement home. “I think it was just fear on their part. They just didn’t know what to do with it,” says Bardswich.
Martha Casson had the bright idea to reach out to the Ontario Human Rights Commission for advice on the matter. They wrote back with a letter that would form the basis of Bill 69 or “The Golden Girls Act,” which clarified that any senior citizen is allowed to co-live in Ontario without hassle.
Bardswich met one of her housemates through the curling club, another at work. “I only really met Sandy shortly before she made the decision to move in. We’re not four old friends getting together, or sisters. It shows you can do this with relative strangers.”
“I think what we’re seeing is that it’s becoming more of a norm for young people,” says Bardswich. “Either renting or buying together — it just makes all kinds of sense. It’s a good way to get into the market and there are surprising benefits to it. Not cooking every day, somebody else takes the garbage out on occasion, when something goes wrong with the house, it’s not all on my shoulders.” She acknowledges there is a cringe factor to living with other people but says you can combat it if you carve out your own private space. “We all have nice big bedrooms with our own TVs and stuff. I can go here if I want to be alone and that’s cool.”
Bardswich also notes that companionship can become an issue for seniors. But arguably, Millennials are also feeling alienated. More Canadians are living alone than ever before. According to new data, one-person households represent nearly a third of all living situations, resulting in a loneliness epidemic. “It’s not a new concept — people have been living together in community in different ways forever and ever,” says Gaynor. “I think we’ve gotten a little bit further and further away from that.”
Are you right for co-ownership?
Gaynor has worked with countless groups to help them navigate the co-ownership journey. The strongest groups, she says, have mastered the art of compromise. “If you’re not someone who is able to compromise, you’re not really suited for co-ownership.” This doesn’t mean giving up everything you want, but being able to work within the group limitations. “If you’re dead set on ground floor, two-bathrooms, 22 windows and you will not budge and you’re slowing the process down, your group will fall apart. Frustration will set in. They’ll think, ‘Oh, forget it. This is ridiculous. I’m wasting every weekend looking at houses and you won’t you budge on any of your things.’ So compromise is really important.”
When asked what she was looking for in a fellow co-owner, Bardswich was quick to say: flexibility and communication. “You have to be open and willing to communicate. We talked a fair bit about that. You don’t get to hold a grudge, you don’t get to pout,” says Bardswich who goes on to say: “Martha has an interesting way of putting it: If you’re the kind of person who would never let a friend come and stay in your house while you’re away, then you probably shouldn’t be co-owning with anybody.”
Other than compromise, flexibility and communication, Bardswich stresses you don’t have to have much else in common. “We live our own lives, we go our own ways. We have different interests. You know, a couple of churchgoers, a couple are atheists. None of that matters — it’s the openness to communication and flexibility that matters.”
Prepare for some tough conversations.
Gaynor sets her clients up for success by helping them go in with eyes wide open and plan for the what-ifs.
“People are so excited and think it’s a great idea. But then: ‘You want to know my credit rating? You want to know how much money I make?’ You’re naked,” she says. This can lead many to get cold feet. “You have to go in saying, ‘I’m in.’ Once you do that, you have to ask hard questions of the group. And that’s what I do a lot of with my groups.”
This means having a plan if someone wants to leave, if they fall off a ladder and can’t work for six months and having a mediation process in place if two parties can’t agree on something.
The Golden Girls met with a lawyer and drafted up a comprehensive contract. But they also covered the smaller things — like agreeing to pay for professional cleaners each week and hiring gardeners to manage the lawn. Each month, they contribute $1,100 each into a joint chequing account to cover all expenses and each week, they each put $100 in a pot for shared groceries. “That covers all of our food, our wine, all the rest of it. The rule is you never get to say, ‘That’s my yogurt in the fridge.’ It’s fair game. It all works out pretty evenly,” says Bardswich.
The nitty gritty of co-ownership.
Lenders are accustomed to one or two people applying for a mortgage but up to four names can be easily be added to the title. “It’s just a regular mortgage product without extra premiums,” says Gaynor. “It’s when you get beyond four that it gets a bit tricky.”
With an arrangement like this, mortgages aren’t severable. “If you, me and your brother are on a mortgage, you me and your brother are 100 percent responsible for that mortgage. I can’t walk away from my third,” says Gaynor. Because it’s a single mortgage for the house, every owner is on the hook. Gaynor suggests preparing an emergency fund with at least three months of housing payments to protect against a default (and destroyed credit scores). “Every month you guys contribute. It’s like a condo fee in that way. It can be based on square-footage, ownership percentage, everyone wants to contribute equally because you all have equal spaces — however you decide.”
If you cause the group to dip into the emergency fund, your share in the house should decrease. Fair is fair.
When you sign up to be a co-owner, you become tenants in common. Most married couples default to being joint tenants (unless they get a prenup that specifies otherwise). As joint tenants, if your spouse passes away, the estate and everything in it belongs to you. With tenants in common, the deceased person’s share will pass to their heirs through a will rather than to other co-owners. If something happened to you, the other co-owner would have six months to satisfy your estate. “That may mean selling the property, sadly,” says Gaynor.
On the bright side, co-ownership can help you step on the property ladder in ways you never imagined. “It’s a nicer house than I probably ever would have lived in on my own,” says Bardswich. “I love the location. I wouldn’t have been able to afford to live right downtown and I do. I love that I can walk away from it and never think twice.”
“I used to come home from holidays and wonder as I rounded the corner if the house would still be there,” she says with a laugh. It’s just one of the many worries Bardswich can cross off the list thanks to co-ownership.