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CMHC told to Review Investment Property Down Payments

The federal government considers reforms to residential investment or commercial properties to curb house prices.

In a letter sent from the Prime Minister in December, Housing Minister Ahmed Hussen was told to “review the down payment requirements for investment properties” and develop policies to “curb excessive profits” in that housing segment.

According to data from Teranet, over 25% of the home purchases in 2021 were made by those who already own a home.

The Ministry of Housing and Diversity and Inclusion and CMHC told the Financial Post “…our government is looking at every tool at our disposal to tackle these challenges head on,”. “By developing policies to curb excessive profits in investment properties, protecting small independent landlords and Canadian families, and reviewing the down payment requirements for investment properties, we are targeting the issues the market is facing from multiple angles.”

The details have not been released for any potential changes to investment properties, their down payment requirements or a timeline for any expected changes.

The current rules for non-owner-occupied rental properties in Canada with up to 4 units require a minimum of 20% down payment by most lenders.

On Wednesday, Rob McLister, Mortgage Expert, told the Financial Post that an increase of 5% to the minimum down payment could slow investment purchases “incrementally,” while a more significant 35% minimum would “substantially slow” those purchases.

Rob added that regulators could look at restrictions on the use of borrowed funds, such as home equity lines of credit, to fund down payments as another means to curb those purchases.

Ian Clark

Ian Clark is a graduate of The College of The North Atlantic's School of Business and is a Mortgage Broker with East Coast Mortgage Brokers. Prior to ECMB, Ian was brokering with Mortgage Alliance Provincial Mortgage Group. Ian is also an active member of Mortgage Professionals Canada, Canadian Mortgage Brokers Association, Canadian Progress Club and the Mount Pearl Paradise Chamber of Commerce.