Options for Homes Non-Profit Corporation

How is it social?

Options’ uses a second mortgage system to approach affordable housing.  Each Options purchaser receives a second mortgage as a contribution to their down payment worth at least 13% of the purchaser price.  There are no monthly payments involved with the second mortgage, but the mortgage, plus a premium directly related to the resale price increase, is to be paid back upon sale or rental of the unit. 

This mechanism provides multiple benefits.  The second mortgage reduces the percentage required by the purchaser for their down payment to 5% and reduces the mortgage needed by the client thus making the home more affordable.  The required repayment upon sale or rental makes the home less attractive to speculators.  As a result, 95% of Options homes are owner occupied.  Owner occupancy reduces maintenance costs because the owners care for their building, and creates a sense of community.  The repaid funds go into a community wealth fund held by a separate non-profit organization and are dedicated to creating new affordable homes. 

To date, Options has provided home ownership opportunities to over 3700 households across Canada.  There are also 10 active affiliated organizations using the Options model across Canada and abroad including Acces Condos in Montreal, Options for Homes Waterloo and Options for Homes Greater Sudbury in Ontario, and Options for Homes Romania.

What is its business model?

Options for Homes assembles it’s buyers into purchaser co-operatives who then hire Options as a consultant.  Options is paid a fee to assemble the team of specialists to design and build the condo.  Currently, we are working with the largest, most reputable builder in Canada, Deltera, builders for the Tridel group of companies.  Options also works closely with a separate non-profit organization to provide second mortgages for its clients and to secure initial financing to purchase the land.  This structure is key to Options success because it ensures a non-profit model is used without sacrificing quality. 

To further keep prices affordable, marketing costs are reduced and costly amenities such as pools and saunas are removed.  The formation of purchaser co-ops has been instrumental in creating a sense of community in each development resulting in thousands of referrals and positive word of mouth.  Inexpensive flyer campaigns and subway advertisements are heavily used as well.

The key innovation is the model’s ability to access its own equity source so that the problem becomes its own solution.  By strengthening and growing the real estate market in a city or country, the model can act as a catalyst to the development of these economies.  In effect providing a tool where home owners can help themselves while helping their country.

Its history

Options was founded in 1992 by Michel Labbé, an Urban and Regional Planning Graduate from the University of Waterloo.  He has been involved in the production of affordable housing for over 25 years. 

 A trip to work in the Townships of Johannesburg, South Africa and the disappearance of government grants contributed to a shift in Mike’s focus to affordable ownership housing.  During his time in South Africa, his team was tasked with finding a solution to unused land from the separation of Blacks and Whites during the apartheid era.  Mike proposed the use of a second mortgage system to get around income level barriers, an idea that was rejected at the time but lead to the formulation of the Options for Homes (Options) business model.  Options was incorporated a few years following his return during the early 1990s recession in Toronto. 

Since then, Options has developed 9 condominiums in the GTA and has two preparing to launch sales in 2010.

The organization has also been fortunate to have been recognised for its work with several prestigious awards over the years including:

Affordable Housing Champion by the City of Toronto, 2010
City of Pickering Civic Award for Sustainability, 2009
Canadian Urban Institute Local Hero Award, Michel Labbé, 2008
Tides Top Ten for 2007: Social Justice Title, 2007
Schwab Foundation Entrepreneur of the Year Finalist, 2007
Ontario Co-operative Association Co-operative Innovator Award, 2004
CMHC Housing Award for Finance and Tenure, 2002
Nominated for the Ernest Assaly Builder Awards Program, 2002
Recognised by the Tarion Warranty Corporation for service excellence since 1998

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