Some credit-challenged Winnipeggers are checking out rent-to-own housing as a new way to secure a home, but the rules attached to such agreements means it may not work for everyone.
A number of companies in the city are offering rent-to-own properties, in which a renter pays a higher than usual monthly rate. Part of the elevated rent would be saved as a down payment towards purchasing the house.
The properties are aimed at customers with bad credit or no down payment who want to buy a house.
"Our main goal is to help individuals and families get into a house and a mortgage that normally they wouldn't have the opportunity to do," said Rob Robson, whose company offers rent-to-own housing.
However, those who break their rent-to-own contracts lose the down payment and get evicted from the home.
John MacFarlane said he had signed a three-year rent-to-own contract, but he could not keep up with the $1,900 rent, $600 of which was socked away by the landlord towards the down payment every month.
But MacFarlane could not keep up with the payments, so he is losing $11,000 and he is getting evicted from the rental home he had hoped to buy.
"It seems heavily biased toward the owners," he said.
Robson, who was MacFarlane's landlord, said his company is helping people. He even offers credit counselling.
With vacancy rates low in Winnipeg, as well as a shortage of affordable housing, the demand for rent-to-own homes will continue growing, he added.
Deborah Drinnan, who has a rent-to-own contract, says the company she has signed with wants to ensure she can eventually buy her rental home.
"Every six months they do a review with you on your finances to make sure you're where you should be, to make sure that at the end of your term that you will be able to get a mortgage," she said.
Shauna MacKinnon of the Canadian Centre for Policy Alternatives cautioned that there is a lot of social pressure on people to buy houses, but home ownership may not be for everyone.
"It's more difficult for people to purchase homes — it's getting increasingly expensive — so people are often feeling desperate, and it's easy to take advantage of people who are feeling desperate," she said.