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CMHC Reports Less Than 20% of Condos in Vancouver and Toronto Are Investor-Owned

Aug. 20, 2014
5 mins
Professional modern man working at a coworking space in the city

An extensive survey of more than 42,000 households in Toronto and Vancouver, showed that 82.9% of people who own a condo reside in it year-round and the remaining 17.1% are investors.

Canada Mortgage and Housing Corporation (CMHC), who conducted the survey to fill the "data gap", said it didn't include Canadian and foreign investors who own units in Toronto and Vancouver that do not live in the respective cities, limiting the conclusions that may be drawn. Therefore, industry watchers who sought to find out the number of wealthy investors from such places as China, India, Russia, Europe or the Middle East putting their money in Canadian real estate, will have to wait for future research.

Of the investors identified by the first-time CMHC condo survey, or those owning a primary residence that reside in it while also owning at least one other condo unit, more than half rent out their second unit and about a third have it occupied by a family member. Nearly 12% said they bought a condo with the specific intention of selling it for a profit within a year.

Close to 60% of the respondents expect to hold ownership of their condo for more than five years, while nearly 18% plan to keep it for two to five years. Almost 8% say they intend to remain as owners for less than two years, with the remaining 16% unsure of the time-frame they intend to maintain ownership.

While most of the condo investors owned just one secondary unit, CMHC found that 15.7% owned two secondary units and 9.8% held ownership in three or more units.

Additionally, the CMHC reports that 42.1% of the Toronto and Vancouver investor households, surveyed between August and September 2013, had no mortgage on their last purchased condominium unit.

As some may know, there have been various measures and restrictions on foreign ownership of real estate in Canada. For example, foreign investors who plan on spending less than six months a year in Canada may keep a home here without having to apply for residency. However, those who purchase a property and intend to live in it longer than six months have to immigrate to Canada and apply for permanent residency.

If they choose to rent out their property, foreign owners are not required to live in Canada but have to pay a 25% withholding tax on rental income, where as with Canadian property owners, it's usually deducted off the monthly rent. Also, homebuyers living abroad, as you'd expect, are subject to all the same fees and taxes as Canadians when purchasing real estate. In certain cases, they may pay higher property or land transfer taxes in some jurisdictions and different capital gains tax rules are imposed when they sell a property.

Mortgages for foreign investors are a little stricter as they must use a chartered Canadian bank and are often required to pay up to 35 percent down payment, significantly higher than the range of 5 to 20 percent, typically expected from Canadian residents.

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