Combining resources and buying a home with a family member or friend seems to be a big trend these days. Many are weighing the pros and cons of being in such an arrangement and it seems that the investment gains and lower carrying costs seem to be winning out.
Co-ownership can get messy and it is not always beneficial. But with expert guidance from a lawyer and a consultation with a mortgage broker or Lender, co-ownership can be a great way to enter the real estate market. A lawyer can provide guidance on the best way to structure the property title, whether it be tenants in common or joint tenancy, and also draw up a cohabitation agreement to prevent future conflict. A mortgage expert can review all of the co-owners finances and advise on how it will impact everyone’s finances collectively and what the best course of action is when seeking a mortgage. According to Stéfanie Cadou, residential real estate broker, Royal LePage Village in Montreal, cohabitation combinations are becoming increasingly diversified these days in order for buyers to gain access to home ownership, which for some means letting go of the option to live in complete solitude, a trend that emerged for many households during the pandemic and has remained permanent for some. “The decision to buy jointly with family or friends requires careful thought and the establishment of clear rules for living together,” said Cadou. “Preparing a cohabitation agreement – ideally notarized – can be beneficial to ensure that rules and obligations are respected by all parties. It is also essential to provide private and common living spaces so that all co-owners can pursue their respective daily routines without encroaching on each other.” High property prices, elevated interest rates and the rising cost of living have prompted many Canadians to rethink their lifestyle and housing needs. For some, this means pooling financial resources with other family members and friends in order to gain access to the housing market. By co-owning a property (with someone other than their spouse or significant other), homebuyers can not only divide the expense of homeownership among more people, but potentially access larger homes in more desirable locations that they may not have been able to afford on their own. According to a recent Royal LePage survey1 conducted by Leger, 6% of Canadian homeowners co-own their property with another party, not including their spouse or significant other. Of this group, 89% co-own with family members and 7% with friends. Another 8% co-own with someone who is not a friend or family member.
Seventy-six percent of co-owners say that affordability was a major motivating factor in their decision to co-purchase their property. Not surprisingly, that number rises to 83% for co-owners between the ages of 25 and 34. “Households group together for many reasons, including communal care for elderly parents, help raising children, cultural preferences or simply to be together. However, the decision to live together, including co-owning a home, is a decision increasingly made for financial reasons,” said Karen Yolevski, COO, Royal LePage Real Estate Services Ltd. “In an environment where home prices and interest rates have risen quickly and sharply, and where the threshold to qualify for a mortgage has become much more challenging, Canadians are pooling their resources and buying homes together. In cases where homebuyers cannot afford to purchase on their own, they are combining their buying power with their parents, children, siblings or even friends.” Concerning their co-owning situation, 44% of co-owners3 say that they and all fellow co-owners live in the home together. A smaller percentage (28%) say that they co-own a home with another person(s), but they do not cohabitate. Six percent of respondents say that they co-own a home with another person(s) and neither party uses the home as a primary residence, rather as an investment or recreational property. Here are a few highlights from the 2023 Canadian Co-owners Survey: - Almost one third (32%) of co-owners who were motivated by low affordability purchased their home after the Bank of Canada began raising interest rates in March of 2022 - Nearly two-thirds (65%) of Canadian co-owners say they own a single-family detached property - 56% of co-owners co-own a home with their parent(s) or parent(s)-in-law; 18% co-own with their adult child(ren)
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1An online survey of 501 Canadians 18+, who co-own their home with someone other than their spouse, was completed between August 10, 2023, and August 21, 2023, using Leger’s online panel. No margin of error can be associated with a non-probability sample (i.e., a web panel in this case). For comparative purposes, though, a probability sample of 501 respondents would have a margin of error of ±4.4%, 19 times out of 20. N.B. Participants could co-own with a spouse but must co-own with someone other than their spouse as well.
2Sample was weighted based on age, gender, and region according to current census data and the incidence of home co-ownership was calculated using Q1 and Q2 responses
3In the survey, co-owners are defined as an individual person or a couple who own a property with another person or persons
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