Buying pre-construction condos in the GTA

Updated: Nov 28, 2019

7 things you need to know before you buy.

Despite the higher construction costs – and consequently pricier condos - the demand for pre-construction condos is on the rise. GTA and Toronto specifically, actually top the list for condo pre-construction and short-term rental investment opportunities, according to market trend specialists.


In 2018, Toronto was ranked 7th out of 140 cities in the world, according to the 2018 Economist’s Livability survey. The results are based on averaging such metrics as stability, healthcare, culture and environment, education, and infrastructure. In addition to that, in November 2017, it was announced that Canada will admit almost 1 million immigrants over the next three years.

Toronto is also becoming a popular destination for skilled workers who travel here as employers pay premium dollar to hire the best minds from all over the world and students to attend reputable universities and state-of-the-art research facilities.


GTA is the fastest growing region of the province, with population increasing by 2.8 million in the next 24 years, according to Statistics Canada. The population growth is projected to increase from 6.9 million (in 2017) to 9.7 million (by 2041). An increase of this magnitude, coupled with the rise of construction projects across Canada – 5,200 condo projects starts as of March 2019 - suggests an increase in demand for resale condos and pre-construction condos.

Buying a pre-construction condo is different from buying a resale condo. You should consider key nuances in order to avoid surprises and manage your expectations. Here are 7 things you need to know when buying a pre-construction condo.


While you can expect to pay a deposit as low as 5% for a resale condo, pre-construction condos typically require 10%-20% down payment. The full payment is typically broken down into an increment deposit structure, consisting of smaller and manageable installments.

In the beginning of the project, the payment is generally higher as the bank, which is financing the condo construction, sets the requirement for the builder. Closer to the completion of the project, the payment structure is more negotiable. The 20% down payment is generally broken up into 5% payments, with the first one due at signing (sales deposit), and the remainder of the three installments spread across the 18 months into a purchase.

“It is important to research the builder you are buying from. Tarion Warranty only covers $20,000 of your total deposit for condos and $40,000 for freehold homes. Make sure it is a reputable builder with a good track record,” says Jay Frenkel, Toronto’s Agent Relations Manager at team as part of Right At Home Realty Inc.


Buying a pre-construction condo requires more than just the deposit and mortgage payments. As a buyer, you have to consider the total cost of ownership, which includes maintenance fees, property taxes, utility connection fees, builder/developer adjustments, and closing costs.

Closing costs, which roughly add to 1-3% of the price of your home, include land transfer taxes, legal fees, warranty fees, development levies and various administration fees. Your real estate agent or builder should clearly explain what each of those costs are. According to Canada’s leading builder of condominium homes - Tridel, “condo developers are required to pay certain development levies to municipalities to help fund city infrastructure. In exchange for approved increases in height or density, developers often make monetary contributions to help build public community centres and parks.” If you are buying directly from a developer, make sure to evaluate how these fees are managed and whether they are included in the purchase price.


Occupancy fees, or carrying costs, are often one of the biggest hidden, surprising and unaccounted expenses for buyers of the pre-construction condos.

Essentially, an occupancy fee is the rent that you would pay to the developer before the building is completely finalized and ownership is transferred to you as a buyer. The builder expects you to move in if your unit is finished, even if the main building and common areas aren’t completed.

According to Ontario’s Condominium Act 1998, your builder is obligated to charge you an interim occupancy fee. The duration of the occupancy period is determined by the developer and should be discussed in the agreement of purchase and sale. Interim occupancy can last a few months or more, depending on a number of factors, and also the developer’s level of experience.


The cooling off period in Ontario is 10 calendar days after the buyer signs the contract to purchase the pre-construction condo. During this period, a buyer has an opportunity to review, reassess and re-think their investment.

During this time, it’s important to get your finances organized, have the real estate lawyer review the paperwork and ensure you are ready for the financial commitment. The 10 day cooling off period allows the buyer to back out of the transaction without any penalties, and get refund of their deposit.


Pre-construction condos are subject to HST. However, if you plan to move into your pre-construction condo and consider it your primary residence, you can qualify for the rebate of the HST, based on the New Housing Rebate Program. According to the program, you qualify for this rebate if you bought a new or substantially renovated house (including a new condominium unit) directly from a builder. The maximum Ontario new housing rebate amount available to buyers is $27,300. If purchased for exactly $368,200.00.

However, if you are an investor that plans to rent the condo out to tenants, you may qualify for other rebates if you plan to rent your unit for at least a year. Reach out to an experienced real estate agent to discuss your options. “We take pride in helping our buyers fill out the appropriate forms for HST Rebate,” comments Jay Frenkel, Toronto’s Agent Relations Manager at team as part of Right At Home Realty Inc.

I always tell all our Realtors to advise investors who have rented out their unit(s) to pay the HST upfront and apply for the rebate straight away. It typically takes 4-8 weeks and the refund is in.


One of the sales and marketing strategies that developers will often use to entice prospective buyers is to offer artificially low monthly maintenance fees. Another reason why these fees may be so attractive is because the condo fees are determined during the planning stages of the construction, and years in advance of the actual building phase.

Expect your condo fees to substantially increase, usually 10-20%, within the first two years of occupancy. Consider this fact when budgeting and planning the purchase of your pre-construction condo.


Expect the delays when it comes to buying a pre-construction condo. Know that builders have the right to delay the completion of your condo, due to a wide array of circumstances.

While the delay could often play to your advantage, giving you a bit more time to get your finances in order, builders should provide you with an expected completion date for the condo and the regular update on the progress.

It’s wise to adjust your expectations from the get-go, and plan to take possession and move in at least 6 months to 2 years later than the original move-in date. Hold your builder accountable on the actual delays and request the outline of delays and penalties in writing.

Buying a pre-construction condo in the GTA is a popular investment option for many home buyers, given the growing trends of our region. But with any big-scale investment, it is important to remember that an informed buyer is a smart buyer.

If you are considering a pre-construction condo purchase, talk to one of our experienced real estate agents at team to avoid any surprises and ensure complete transparency when it comes to buying a pre-construction condo. Working with one of our agents, you reap the benefits of our long-standing partnerships and connections with Canada’s leading builders and developers and leverage our knowledge and expertise of market trends, best neighborhoods to live in, and access to early promotional packages.

“We have access to platinum programs before the general public does, and we are willing and able to find you the home of your dreams and/or just the best possible investment,” says Jay Frenkel, Toronto’s Agent Relations Manager at team as part of Right At Home Realty Inc.

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