New Kelowna project aims to save first time buyers 25% on a new home
A Kelowna MLA is trying to revive a home building model he pioneered in Banff 30 years ago to provide new homes in the city for 25% under market value.
Kelowna-Lake Country Liberal MLA Norm Letnick has set up the non-profit YeYe Housing Society and is almost ready to take its first 20-unit project to city council.
“(Buyers) are not paying for the land, that’s where the bulk of the 25% savings is coming from,” Letnick said during a Zoom meeting with reporters, Aug. 15.
When he was elected to Banff municipal council in 1992 he helped set up a housing corporation that built 200 homes over a five-year period, he said.
A key to having a similar program work in the Central Okanagan is to have a willing landowner who can wait for years for a return on their investment.
In this case, the owner of an old house on 0.42 acres at the corner of Houghton and Fleming roads in Rutland has agreed to provide the land.
When the buyers sell their homes in the future, at market value, they will get 75% of the sale price while the land owner and the society will get 25% e in order to recoup the equity they have in the project. The exact percentage split will be negotiated prior to the initial purchase.
The next owner, when they sell, will keep the full sale price.
Some savings come from the fact there will be no developer’s profit (usually in the 7-9% range, Letnick said) and the fact that services have been donated by professionals to help launch what Letnick hopes will be a model for the Central Okanagan and B.C.
Those professionals will not be asked to continue donating their services for future developments.
Called YeYe One, the project includes four one-bedroom units with 620 square feet. Based on construction values in February, that was estimated to come in at $420,000, of which the buyer would pay $315,000.
Letnick noted that construction values will likely change by the time the units are actually built.
The plan is for another six one-bedroom units of 508 square feet (valued at $360,000), six two-bedroom units at 1,067 square feet ($533,000) and four -three-bedroom units at $1,287 square feet ($643,000).
The society is waiting for City of Kelowna bylaw changes to be given final approval before applying for a development permit. That's expected to happen soon.
In the meantime, it wants to know how many people are interested in buying into the project. It's asking people to register as potential home buyers on the society website, here.
Once it knows how many people are interested and their family composition is determined, the society will look at creating a screening process. This will not be a first-come, first-served process.
It will be open to first-time homebuyers only and there will be an income cap on buyers, likely in the range of $150,000 per year.
— This story was updated at 6:50 a.m. Aug. 16, 2022, to clarify the initial resale process.
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