STANDARD RENTAL HOUSING MULTI-UNIT

Mortgage Loan Insurance for Multi-Unit Residential Properties

AT-A-GLANCE

CMHC mortgage loan insurance enables Approved Lenders to offer greater financing choices to borrowers providing standard rental housing accommodations in multi-unit residential buildings.


LOAN PURPOSE
Construction financing, purchase or refinance.

PROPERTY TYPE AND SIZE
● Projects providing standard rental housing
(self-contained units).
● Minimum project size of 5 units.

NON-RESIDENTIAL COMPONENT
Not to exceed 30% of gross floor area nor 30% of total lending value. Loan relating to non-residential component must not exceed 75% of lending value of non-residential component.

MAXIMUM LOAN-TO-VALUE RATIO
Construction financing: up to 85% of lending value as determined by CMHC or 100% of cost, whichever amount is less.
Purchase: up to 85% of the purchase price or lending value as determined by CMHC, whichever amount is less.
Refinance: up to 85% of the lending value as determined by CMHC.
Purchase/Refinance with improvements: up to 85% of the ‘as is’ or ‘as improved’ lending value, as determined by CMHC.

Is your multi-unit project eligible for affordable housing flexibilities or an energy-efficient housing premium refund? Check out the Affordable Housing and Energy-Efficient Properties information sheets for helpful information.

LOAN ADVANCING
Construction financing: During construction the loan can be advanced up to 75% of costs or lending value, whichever is less. The advancing of additional funds is subject to rental achievement.
● Construction costs are to be reviewed and recommended by a quantity cost surveyor (flexibility may be provided in small markets).
● Construction must be completed under a fixed price contract with a general contractor or under a construction management arrangement.
● First and last advances must be approved by CMHC. The lender has the option to approve advances occurring between the first and last.
Purchase or refinance of existing properties with improvements:
● Where rental income is not disrupted during construction, the loan advances will be limited to the greater of 75% of the “as improved” value or 85% of the “as is” value.
● Where rental income is disrupted, the maximum advance allowed during construction is based on 75% of the “as improved” value. The advancing of additional funds is subject to rental achievement.

RENTAL ACHIEVEMENT
Where loan advances are required above 75% level, authorization to advance will be given by CMHC once the Approved Lender has provided evidence acceptable to CMHC, that the property has achieved the projected rent level.

MINIMUM DEBT COVERAGE RATIO REQUIREMENTS

INTEREST RATE
Fixed interest rate or floating (with ceiling rate).

AMORTIZATION
CMHC may consider amortization periods of up to 40 years. A premium surcharge applies for amortization periods greater than 25 years. The amortization period must not exceed the remaining economic life of the property, as determined by CMHC.

SECURITY TYPE
First, second and pari passu mortgages are permitted.
Second mortgages are permitted as an interim measure.

GENERAL GUIDELINES FOR BORROWER ELIGIBILITY
The borrower must demonstrate competence and experience commensurate with the size and type of property for which mortgage loan insurance is being sought. The borrower or a corporation affiliated with the borrower must have at least five years of demonstrated management experience in the operation and management of similar multi-unit residential properties. Alternatively, a formal property management contract must be in place with a professional third party property management firm.

BORROWER NET WORTH
The borrower must have minimum net worth equal to at least 25% of the loan amount being requested, with a minimum of $100,000.

GUARANTEE REQUIREMENTS
Construction financing: The borrower and guarantor must provide their covenant/guarantee for 100% of the outstanding amount owing under the housing loan from time to time until stabilized rents have been achieved for 12 consecutive months, at which time the additional guarantee required may be reduced to 40% of the outstanding loan amount owing under the mortgage, from time to time.
Purchase or refinance of existing properties: For new loans on existing residential rental properties, the guarantee amount required by CMHC is 40% of the outstanding loan amount owing under the mortgage, from time to time.
Limited recourse: Where a loan does not exceed 65% of lending value, as determined by CMHC, Approved Lenders may request that the loan be considered non-recourse to the borrower. The recourse of the Approved Lender shall be limited to the property and the other assets taken as security and not personally against the borrower.
CMHC may require additional risk mitigation measures as it deems appropriate (e.g. equity retention, replacement reserves, collateral security, personal guarantees).

CMHC mortgage loan insurance provides access to preferred interest rates lowering borrowing costs for the construction, purchase and refinance of multi-unit residential properties and facilitates renewals throughout the life of the mortgage.

Condoville: What is the real estate boom doing to downtown Montreal?

Units in high-rise condos are a hot commodity, but critics worry they will hurt the city’s vitality

On a cold Saturday morning in April, a small group of hockey fans mixed with real estate investors in the showroom of one of the many upscale condo developments in the city.

The 55-storey tower bills itself as “Montreal Canadiens-inspired,” and is being built in the shadow of the Bell Centre, near two other Habs-themed high-rises.

 

Guy Carbonneau, the team’s one-time captain and coach, was on-hand signing autographs, and hawking units.

“The Habs are built on a history of greatness and I believe Tour des Canadiens 3 will do the same for the Montreal real-estate landscape,” Carbonneau said, reading from a prepared statement.

Such is the velocity of Montreal’s condo market these days that everyone seems to be sucked into its orbit.

 

While the city’s real-estate market is enjoying a sustained growth period, downtown condo sales have been particularly hot.

Last year, 3,365 condo units were sold in central Montreal, a record that surpassed previous highs reached in 2012 and 2006, according to figures compiled by Altus Group, a real-estate data firm. There was a near 22-per cent increase in the fourth-quarter alone.

Former Candiens captain and coach Guy Carbonneau met with fans and investors at a recent event in the showroom of the Tour des Canadiens 3 condo development. (Jonathan Montpetit/CBC)


High-rise condo boom

Much of this growth was driven by new construction projects, such as the Tour des Canadiens 3, suggesting there is no longer any excess supply on the market.

“We’ve exhausted the inventory of unsold new units that were in the big towers during the difficult years of 2013, 2014 and 2015,” said Vincent Shirley, director of real-estate development at Altus.

“Today it is the launch of condo projects that is really effervescent. They will account for 50 per cent of first-quarter sales this year.”

Foreign investors have started to take note. They now account for roughly 1.7 per cent of Montreal purchases, though that’s small compared to Toronto (3.4 per cent) and Vancouver (4.8 per cent).

The high-rise condos in downtown Montreal are a bigger draw for professionals with no children or older people with equity looking to downsize. Market observers estimate as many as 25 per cent will be used as investments.

“What we’re seeing is people are wanting to live in larger spaces in the downtown. They want great views and to be able to walk to everything,” said Rizwan Dhanji, a residential sales executive with Canderel, the developer behind Tour des Canadiens.

High-rise projects with names like Crystal, YUL and the Drummond are the most ostentatious manifestations of the city’s hot condo market. (Jonathan Montpetit/CBC


In the condo development’s showroom, prospective buyers can visit a mock-up of a two-bedroom, 1000 square-foot unit.

Hints of the lifestyle on offer are embedded in the furnishings: modern leather-backed chairs, a crystal decanter on a quartz kitchen countertop, wooden Henriot box tucked away in the corner.

A floor-to-ceiling high-resolution photograph of the Saint-Lawrence River represents the view available to those who can afford the upper-level units.

Outside, Montreal’s new condo towers — imposing steel and glass structures rising 100 meters or more — are impossible to miss.

City of glass

With names like Crystal, YUL and the Drummond, they are the most ostentatious manifestations of the city’s hot condo market.

Many consider them to be its most problematic element as well.

Some of these concerns will be familiar to anyone who has followed recent developments in the country’s two other major real-estate market.

These include worries about affordability, which has declined steadily in Montreal since 2015. And some municipal politicians have mooted the need for a foreign-buyers tax.

But alongside the economic, there are architectural concerns. Not only have these residential skyscrapers reshaped the city’s skyline, they have dramatically altered the pedestrian experience along René Lévesque Boulevard and large parts of Griffintown.

In the condo development’s showroom, prospective buyers can visit a mock-up of a two-bedroom, 1,000 square-foot unit. (Jonathan Montpetit/CBC)


Like all skyscrapers, the new downtown condo towers block out sunlight and deflect air currents.

“You need lead shoes just to stay on the ground because of the wind vortex,” joked Dinu Bumbaru, policy director of the urban advocacy group Heritage Montreal.

And if the condo towers can be unpleasant to walk by, some feel they’re not much better to look at either.

“I don’t see virtue in any of them. It’s not architecture, it’s commodity,” said Phyllis Lambert, founder of the Canadian Centre for Architecture and an influential architecture critic.

“Montreal used to be a place where you would have high-rise buildings with light and air between them. But now it’s just a cavern down Réné-Lévesque.”  

Thinking beyond boom-and-boom

Neither Lambert nor Bumbaru are opposed to downtown condo-living per se. Indeed, both acknowledge the need for mid-rise residential building to combat sprawl.

But they are concerned that many of the high-rise condos are being built with little consideration for the impact they will have on surrounding neighbourhoods.

The Projet Montréal administration is expected to draw up a new master plan this year, which will guide zoning and development decisions.

They hope it will encourage a greater emphasis on the aesthetics of high-rise towers and the “strollability” of the surrounding area, by ensuring new developments don’t block out sunlight or include street-level stores, for instance.

Community groups, parents and the Commission Scolaire de Montréal (CSDM) have been pushing for a new French-language school in the downtown area, between Atwater and University streets. (Verity Stevenson/CBC)


Mayor Valérie Plante has also suggested making the downtown more accessible for families is a priority for her administration.

But many of the new condo developments don’t contribute to that goal, said Lambert.

She was dismayed to see that the development on the site of the old Montreal Children’s Hospital was allowed to proceed without setting aside space for an elementary school, which the neighborhood needs urgently.

“There isn’t proper planning in Montreal,” Lambert said.

Bumbaru, whose group intends to contribute several proposals for the new master plan, agreed. Proper planning, he said, should consider the city’s needs beyond the current boom in the real-estate market.

“In the past, we managed to generate genuine neighbourhoods with real life in them. But you wonder if the kind of building we’re doing today will support authentic city life because there is no room for families. The units are basically there to generate short-term gain for builders and investors,” he said.

“We have to raise our planning skills in this city.”


Jonathan Montpetit · CBC News · 

 

An end to mandatory parking spots at new Ville-Marie housing developments

Bylaw requiring real estate developers to build minimum number of parking spots to be nixed

Mayor Valérie Plante said she wants to amend the bylaw so that parking spots are no longer mandatory at new residential buildings in the Ville-Marie borough. (Paul Chiasson/The Canadian Press)


Condo developers will no longer be required to build a minimum number of parking spots at new housing projects in Ville-Marie, as the Montreal borough plans to change that requirement today.

A city bylaw currently forces residential developers to build a number of parking spots that’s proportional to the number of housing units, among other factors.

If that number is not met, they have to pay a fine of $80,000 for each missing parking spot.

Mayor Valérie Plante said the bylaw is outdated and that several developers have pleaded with the city to make exceptions. 

She wants to amend the regulation so that parking spots are no longer mandatory at new residential buildings.

The Ville-Marie borough — which includes the city’s downtown core, and runs east-west from the railway tracks a few streets east of Frontenac Street to Atwater Avenue — is expected to vote on the measure at its meeting Tuesday.

“I heard you, you believed this bylaw was a bit passé. So we’re getting rid of it,” said Plante, speaking at an event hosted by the Urban Development Institute of Quebec, a commercial real estate lobby group, on Monday.

She said a required minimum number of bike racks will remain in place, though. 

“We want to give developers the flexibility to decide, depending on the target population and the distance from public transit, whether it is really necessary to build parking spaces,” Plante said. 

The group’s CEO, former Parti Québécois leader André Boisclair, said he welcomed the planned change.

“This is a good thing, especially since households and young households in particular, behave differently than those of their elders,” he said.

More affordable housing units

While builders in Ville-Marie will no longer have to dig out space for parking, they soon will have to include affordable housing units in their plans.

Plante said the city has one year to draft the bylaw that will make the affordable units mandatory, and it plans to hold consultations through the city’s public consultation office (OCPM).

Plante says the city is also working on a bylaw that would require large real estate projects to include a certain number of affordable housing units. (Paul Chiasson/The Canadian Press)


The new rules, which were one of Plante’s election campaign promises, are expected to come into effect in July 2019.

Developers want to see the bylaw as soon as possible to see how it would affect future projects, Plante said, and the city is calculating the financial impact they might incur.

“We want to be reassuring — we’re working collegially with the different stakeholders,” she said.

The City of Montreal’s metropolis status, secured by former mayor Denis Coderre, grants it the power to make it necessary to have a minimum number of affordable housing units in large real estate projects.


CBC News · 

With files from Radio-Canada