Condo developers urge big banks to ease presale threshold for financing
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- Condo developers are pressing Canada’s Big Five banks to lower the pre‑sale threshold needed for construction financing from about 70% of units to roughly 50%.
- Ian MacLeod, senior vice‑president residential at Dorsay Development Corp., says lenders have expressed interest in reducing the requirement and are willing to work on a solution.
- Banks typically require developers to presell about 70% of a condo project’s units before providing construction financing, a rule that has become a barrier as pre‑sale demand has collapsed.
- OSFI (Office of the Superintendent of Financial Institutions) does not impose a presale requirement, but its guidance offers more favorable capital treatment for loans when presales exceed 50% of contracts.
- Canadian Bankers Association notes that any easing of financing criteria beyond OSFI’s expectations is at each bank’s discretion and hinges on its appetite for risk.
Why it matters: Developers gain access to needed construction loans, while banks can increase lending by holding less capital; the lower 50% presale rule could revive stalled condo projects and stabilize the new‑home market.
