Key’s tagline is “Own where you live.”
The innovative proptech launched in 2021 with a co-ownership model that makes homeownership accessible without needing to qualify for a mortgage or save for the typical 20 percent down payment.
Key provides the opportunity to co-own a home to live in and build equity from day one, with a small down payment from 2.5 percent of the home’s value, without having to take on a mortgage. Key aligns real estate investor capital with resident capital to underwrite the cost of homeownership, making it more affordable for residents.
The first-of-its-kind model helps people get on the property ladder decades faster and last year they raised a $11 million financing round led by Luge Capital.
Techcouver sat down with co-founder and president Daniel Dubois to learn more about the platform and how they’re helping solve Canada’s housing crisis.
From an aspiring homeowner’s perspective, what challenges do you think still exist in finding an affordable home in Canada?
DD: Aspiring homeowners face several challenges in finding affordable homes, including rising prices and interest rates, along with demand outstripping supply in many markets, making it difficult to get on the property ladder. Additionally, many people find it challenging to come up with the required down payment and closing costs, making it hard to qualify for a mortgage.
What challenges must real estate developers address to increase the supply of affordable housing as soon as possible?
DD: One major challenge is the lack of available land in urban areas. We need to work to find new ways of developing existing land or looking outside of densely populated areas. Zoning regulations and excessive red tape can hold up the development process and increase costs, making it more difficult to build affordable homes. At the same time, developers need to be more innovative and forward-thinking in their approach to construction, utilizing new technologies and best practices to build cost-effective homes.
What new initiatives or policies can the government and industry regulators implement to help tackle the affordability issue?
DD: The government and industry regulators can play a vital role in tackling the affordability issue by implementing policies and initiatives that encourage the development of attainable housing. This includes providing incentives to real estate developers to purpose-build with attainability in mind, streamlining the regulatory approval process, and providing financial assistance to first-time homebuyers.
There are also several less obvious things that the government and regulators can do to help. For example, they can create programs to encourage the adaptive reuse of existing buildings, thereby increasing the supply of housing without expanding the footprint of urban areas. Land value taxes that charge higher rates on vacant or underused land can also help encourage development of new, affordable housing. Finally, they can work to streamline the permitting and construction process to reduce costs and increase the speed of development.
What do you think are the benefits that proptech companies bring to the table in terms of addressing the housing crisis in Canada?
DD: Proptech companies like Key bring a wealth of benefits to the table in terms of addressing the housing crisis in Canada. Key provides an innovative co-ownership model that combines the benefits of homeownership, like building equity and security of occupancy, with the flexibility of renting. Our transparent pricing based on fair market value and methodology is built into the operating agreement. This allows for a fair and equitable approach for all parties involved. Additionally, with Key, aspiring homeowners start building home equity from day one, making homeownership more attainable in less time.
What role should real estate developers play in leveraging technology to increase the supply of affordable housing?
DD: Real estate developers should use every tool at their disposal to increase the supply of affordable housing, including technology. Modern proptech solutions can help streamline the development process, making projects more cost-effective and efficient, which can lead to more attainable homes. Additionally, real estate developers can partner with proptech companies like Key to power innovative co-ownership models that provide the benefits of homeownership with the flexibility of renting, making housing more attainable for aspiring homeowners and more attractive to property owners.
Do you believe that proptech, and more specifically co-ownership models, could potentially solve Canada’s housing crisis?
DD: Proptech and co-ownership models like Key’s can certainly play a positive role in solving Canada’s housing crisis. It is a complex issue that requires innovative solutions. Proptech and co-ownership models are providing accessible and equitable options for aspiring homeowners who are struggling to get on the property ladder due to the high costs associated with traditional homeownership.
Our model at Key provides the benefits of homeownership like building equity along with the flexibility of renting. Owner-Residents co-own with investors, which enables them to save on the typical costs associated with buying and selling real estate and provides them with the freedom to move with short notice. With our transparent pricing based on fair market value estimates, we offer an affordable and accessible way for people to own a home and participate in the real estate market. When more and more people can own a home, it can help to stabilize the housing market and address the housing crisis.
What’s the difference between co-ownership and rent-to-own?
DD: The important distinction between co-ownership and rent-to-own is that with co-ownership, you start building home equity from day one, and your investment can grow as the property value appreciates. Each month a portion of your monthly payment goes towards building your equity and you can invest more at any time.
With rent-to-own, you start building equity only after the lease period is over and you decide to purchase the home. With Key, you are never required to take on a mortgage, but with rent-to-own, when your lease agreement runs out, you need to qualify for a mortgage. If you decide not to take on a mortgage and purchase the home with rent-to-own, you risk losing all of the equity you’ve saved and your initial deposit.
How can we ensure that co-ownership models, such as Key’s, are accessible and equitable?
DD: Accessibility and equity are two top priorities for Key, and we have incorporated several features in our co-ownership model to ensure that it is accessible to everyone. Our pricing is transparent, based on fair market value estimates, and we use certified appraisers to confirm values when an Owner-Resident moves out.
In addition, we offer an initial contribution starting at 2.5%, making it more accessible than traditional home ownership or rent-to-own models. Key also charges lower fees than other similar models, making it more affordable for people to participate. Overall, Key’s focus is on increasing access to home ownership, and we will continue to explore ways to make our co-ownership model accessible and equitable.
How can aspiring homeowners take advantage of co-ownership models to purchase their first home?
DD: Aspiring homeowners can take advantage of co-ownership models like Key’s by becoming an Owner-Resident. Owner-Residents co-own the home with investors and build equity, while also having the flexibility of renting. They can decide to take a mortgage and buy the home outright after three years or continue co-owning. They can move out with 75 days notice after the first year and get back all their investments, plus their portion of how the value of the home changed while they lived there. For pre-construction homes, there is a one-year lease period before becoming an Owner-Resident, during which equity is built too.
How can property owners take advantage of co-ownership models to get a strong return on investment?
DD: Property owners can take advantage of Key’s co-ownership model to get a strong return on investment by co-owning a property with Owner-Residents and investors. As co-owners, they will share the costs and responsibilities of maintaining the property, leading to lower costs and more predictable returns. Moreover, by co-owning with multiple parties, property owners can diversify their investment portfolio and reduce the risks associated with being a single-owner. In addition, the transparent pricing and fair market value estimates used by Key ensure that all parties are treated fairly in terms of returns. Our model ultimately provides an opportunity for property owners to unlock the value of their property and participate in the real estate market in a more flexible and affordable way.