As interest rates drastically increased in 2022 and 2023, in addition to construction costs, it has become more difficult for builders to finance projects and make a profit, one expert says.
Ontario’s real estate consumer watchdog says it is facing the “largest claim event” in its history, with the organization expecting to owe more than $90 million to homebuyers this year as builders walk away from home and condo projects.
In its 2024 business plan, Tarion said the claims are expected for deposits from buyers who purchased homes or condos from builders that either cancelled projects or were operating illegally, and didn’t comply with warranty legislation.
The anticipated payout comes after a perfect storm of high interest rates, rising construction costs and an ongoing labour shortage has led builders to abandon projects or seek bankruptcy. The gross claims projection of $90 million has prompted Tarion to enhance consumer protections and provide more stringent monitoring of bad actors in the industry, which one consumer advocate says is “sorely needed.”
By law, builders must provide a warranty on all new homes built in Ontario, and Tarion has a mandate to ensure buyers of newly built homes receive the coverage they’re entitled to. But if a builder fails to deliver a home and can’t refund the purchaser, a deposit claim can be made by the purchaser to Tarion for the return of the deposit.
Previously, Tarion’s deposit payouts were significantly lower. From 2019 to 2021, annual deposit refunds ranged from $1.2 million to $1.6 million. In 2022, the annual total increased to almost $7 million.
Bu hikaye Toronto Star dergisinin February 28, 2024 sayısından alınmıştır.
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Bu hikaye Toronto Star dergisinin February 28, 2024 sayısından alınmıştır.
Subscribe to Magzter GOLD to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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Disgraceful behaviour on Parliament Hill
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