Ontario-based rent-to-own business lands with a splash in Edmonton

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As Edmonton’s housing market continues to attract national attention for its activity and relative affordability, Ontario-based rent-to-own housing business, Requity Homes, say the city is a perfect fit for its business model.

Requity Homes lands in Edmonton after already having operated in Ontario for a few years. With Edmonton’s high relative housing affordability, evidenced by a consistently strong market over the last two years, Requity founder and CEO, Amy Ding, believes that the city will be a good fit for the business and its clients. As Alberta’s population increased due in large part to international immigration, Ding says the rent-to-own model is perfect for newcomers.

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“For a lot of those newcomers, they’re extremely well educated back home. But when they first land here, the first job they have may not be relevant in terms of their past education. The job may be contract position. It may be there are no guaranteed hours because they’re just trying to settle in…So it’s very difficult to get a mortgage that way,” said Ding.

Tarek Chowdhury and his family moved to Edmonton in the fall last year from Bangladesh, and he echoes Ding’s points. Even after he and his wife had successful careers in the army and on television, respectively, they had no luck securing a mortgage.

“Since we are new, in Canada, it’s almost next to impossible to get a mortgage as a newcomer,” said Chowdhury, adding that the earliest they would have been able to get one would have been after more than two years.

With the city’s housing market operating at a clip, two years out of the market could mean jumps in the price of a house of over 10 per cent each year.

Chowdhury said Requity’s speed from initial contact to move in was “unbelievably fast,” which both Ding and Chowdhury said is an asset in the market. The business recently received $26 million in financing, allowing it to move quickly when purchasing homes, which is an advantage in a market experiencing consistent upward price pressure.

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While newcomers are a great fit for the rent-to-own model and give Requity a solid foundation of potential clients throughout the province, she also said that self-employed/small business owners and people who’ve had negative experiences in their financial history (i.e. bankruptcy) often benefit from it too.

She said the process for approval starts with Requity examining a client’s cashflow. Unlike a mortgage requiring credit history, a strong credit score, and a significant down payment, Ding just needs to see that the clients have enough money coming in to get the ball rolling. From there, if the cashflow is sound, Requity works with the client to establish how much of a down payment the client can afford (minimum two per cent), and then gives them a price range for a home, at which point the clients can work with a realtor that Requity connects them with to go find a home of their choosing within their budget.

The down payment is held for the clients by Requity in its accounts and clients then pay monthly to Requity, which includes rent and a predetermined contribution to the down payment account for when the clients can get a mortgage.

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“We structure the program in a way where our clients can buy back (the) home at any time, throughout the three-year term. So, it’s not like you’re locked in for three years,” said DIng.

She said that a few recent clients in Edmonton were able to secure a mortgage for their homes in just one month, but that others tended to take longer. Requity’s website says the average length of their rent-to-own program is 18 months.

The business is set up so that Requity’s profits come from the capital gains when it sells the homes to its clients once they have a mortgage. The program differs, however, in that it sells the home based on market value at the time of initial purchase. When Requity buys the home, it tacks on a yearly appreciation of five per cent, regardless of the market’s actual appreciation.

So, for example, if a buyer was looking at a home that cost $300,000, after three years of appreciation at the market rate, which last month was 10.5 per cent year-over-year, a homebuyer would pay about $405,000. Comparatively, in Requity’s program, the same home would cost roughly $347,000, highlighting a potential other benefit of the program as a way of almost bookmarking a home price during a rapidly rising market.

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Ding said with its recent funding, Requity is looking to help 100 families find homes over the next year. With its broad customer base, relative affordability, and no land transfer tax, she expects Alberta will have most of the company’s business, with the lion’s share of the activity within the province landing in Edmonton.

“Edmonton is the perfect market for us,” said DIng.

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