P.E.I. government gives details of new rent-to-own home program

The P.E.I. government has announced details of a new program that it hopes will make it easier for Islanders to purchase their own homes.

The rent-to-own program was first announced in the provincial budget in May, when $1 million was set aside for it.

According to a news release Thursday, Finance P.E.I. will purchase eligible homes for Islanders and rent them back. 

"A tight housing market and increases in construction cost have made housing prices out of reach for many Islanders," Housing Minister Rob Lantz said in the release.

The program is being touted as a way for Islanders to buy a first home even if they are having trouble saving for a down payment or can't get a pre-approved mortgage.

To be eligible, a household with one earner must have an annual income of less than $65,000, or less than $100,000 if more than one person is employed. They must also be able to meet monthly payments equivalent to the five per cent  interest on a five-year mortgage amortized over 25 years. 

Over time, part of the money they pay the province will turn into equity. They can use 40 per cent of it toward their down payment if they decide to buy the home using a traditional mortgage from a credit union or bank. 

Finance P.E.I. will spend up to $350,000 on each home, excluding taxes and legal fees.

The current benchmark price for a single-storey detached house on P.E.I. is $362,900, but there are some options on the market within the range covered by the program.

P.E.I.'s housing situation has been described as in crisis since 2019, following rapid population growth that started in 2016.

Since that time, P.E.I.'s construction industry has struggled to build enough apartments and houses to accommodate the number of new people arriving in the province, both internationally and from other provinces.