Buy Your Kid A Condo - The Gazette

Rising prices, low interest rates spur new ways to jump in -and keep the housing market frothy.

Montreal real-estate developers are benefiting from the growing number of well-off Canadian parents buying condos for their children.

Local firm Developpements McGill is capitalizing on the trend.

The company is promoting a "Family Investment Program" to help flog new condominiums to these kinds of customers at its luxury M9-3 condo project in Old Montreal. The building offers a rooftop terrace with a Jacuzzi, lofty ceilings, a gym and high-end finishings in units.

In some cases, clients can also qualify for generous municipal subsidies that make the prospect of buying into the market even more attractive.

Carlos Alberto Furtado is one of the parents who has decided to jump in.

This year, he bought a $185,000 one-bedroom apartment for his 19-year-old son, Christopher Gouveia Furtado, in the M9-3 building. His son has been residing in the Mirabel airport area, but misses the excitement of living in the city.

"There is not quite enough action," said Furtado, an operations manager at airport caterer Cara Enterprises, adding that he felt his son would have a better quality of life if he were to live downtown. His son is working at La Ronde, but has started looking for another job in the city.

"We looked around and saw potential in that area," Furtado, 51, said, adding that the condo has a good chance of appreciating in value as the adjoining Griffintown neighbourhood is developed.

Parents buying real estate for their fortunate young adult children is not new, but the current frothy housing market, buoyed by low interest rates and still-climbing prices, has encouraged people to jump in while they can.

Sometimes this means giving children a financial leg up early in life. Others prefer to take money that would normally be spent on rent during a child's university years and instead invest it in a condo for their son or daughter to live in. After the child finishes school, the parents often hope to sell it and make a decent profit -or a least break even.

Buying into the local real-estate market has become an even more attractive proposition in recent years as rents in Montreal have soared. The value of real estate has also grown, making it seem like a sound investment during tough economic times -if one has the capital to invest.

And some baby boomers do.

A TD Canada Trust survey in May found 10 per cent of Canadians were considering purchasing a condo for their children, compared with five per cent in the previous year.

Developpements McGill's Louis Conrad Migneault said his company has teamed up with the Royal Bank of Canada to make it easier for children and parents to complete the necessary financial paperwork to buy into the M9-3 building.

As part of its family-geared investment program, the developer accepts a five-percent down payment, it guarantees the interest rate until construction is completed, and it gives a $1,000 rebate on the notary fees when the transaction is completed.

But most important, participants can make a joint mortgage application with their parents -while still keeping the option of having only having the child's name appear on the property deed.

This is key because it means that if the parents are already property owners, the condo will be exempt from capital gains if it is resold.

Furthermore, having only the child's name on the deed makes it possible to qualify for city subsidies for first-time


"We negotiated with RBC in order to have a pretty unique (contract) to make the child the sole owner," said Migneault, the company's vice-president of operations and marketing.

For a single person without a child to be eligible for the city subsidies, a new condo unit can cost a maximum of $200,000. Under the program, buyers receive a rebate of $4,500 and a reimbursement of 40 per cent of the welcome tax.

The incentives seem to be working.

At the M9-3 building where one-bedroom and studio

apartments are priced under $200,000, 20 of the 63 condos sold were because of this program, Migneault said.

For clients in this category, the median age is 26, with the youngest buyer being 19 and the oldest 32, he added.

Migneault said he first noticed the increased interest in parents buying condos for their children last spring - soon after the city promoted its subsidy programs in a bid to stop Montrealers from leaving the island in search of more affordable housing.

"One out of 10 (customers) was coming in for a kind of family-related purchase."

Major downtown condo developer Le Group Preval is also benefiting from the trend.

But Preval co-chairman Jacques Vincent said he first started noticing the tendency about three to five years ago.

He said the these types of buyers have been attracted to his company's Imperial Loft project on St. Antoine St., because lofts appeal to 20-some-things. These types of buyers have also bought into the Lowney project on Notre Dame St. W., he added.

"The young people are very interested," he said. "They are 22, 23, 24. They are buying with the help of their parents."

He said that five to 10 per cent of the Imperial project has been sold to parents buying with their children.

Vincent said buyers have generally been able to take advantage of city subsidies because they are choosing studios and one-bedroom units, priced under $200,000.

The subsidies "help keep young people in Montreal instead of going back to the suburbs. They are able to have access to real estate," he said.

As for Christopher and his dad, the subsidies helped make buying a condo financially feasible for them. Furtado estimated they were able to save about $6,000 as a result.

"It was a reason to take the step forward."