Condo developers urge big banks to ease presale threshold for financing
Condo developers in Canada are urging major banks to lower the presale threshold required for construction financing. Currently, banks typically require around 70 percent of units to be presold before financing is approved, which has become increasingly difficult in the current market. Developers are suggesting a reduction to 50 percent to help stimulate new construction projects.
- ▪Developers are struggling to sell enough units to qualify for construction financing due to a downturn in the new-home market.
- ▪Banks usually require about 70 percent of units to be presold before providing financing for construction.
- ▪Some developers are advocating for a reduction of the presale threshold to 50 percent to facilitate new projects.
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Open this photo in gallery:A construction worker on the site of a new condo development in Montreal in February, 2024.Christinne Muschi/The Canadian PressShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountDevelopers are calling on Canada’s biggest banks to make it easier for them to get financing to start construction on condo buildings. With the new-home market in the dumps and individual investors largely gone, developers have been struggling to sell enough of their project’s units to qualify for construction financing. The lack of purchases during the preconstruction phase has roiled homebuilders, forcing some into receivership and leading others to either postpone or cancel condo projects or turn them into rental-only apartments.
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Excerpt limited to ~120 words for fair-use compliance. The full article is at The Globe and Mail.
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