Direct answer
New. A resale building rarely scores the MLI Select points that unlock the 50-year amortization, arrives with deferred capital expenditure and in-place rents below market, and is appraised on history rather than on a builder's guarantee. A purpose-designed new building earns its points on paper before it is built and is delivered with a warranty.
Key facts
- The 50-year MLI Select amortization is available at the program's top points tier, which new construction reaches through design rather than retrofit.
- A resale building's deferred capital expenditure is funded with unlevered equity after closing.
- New construction relocates risk to delivery, lease-up and rate at commitment, each of which has a contractual mitigant.
The points problem
MLI Select awards points for affordability, energy efficiency and accessibility. A building designed in 2024 or later can meet the energy tier with its base specification. A 1970s walk-up cannot without a retrofit whose cost the pro forma must carry before the insurer will recognize the points. In our experience that retrofit rarely pays for itself in reduced premium and longer amortization.
The capital expenditure problem
Resale buildings are sold on trailing income and bought with future costs. Roofs, boilers, windows, parking structures and balconies arrive on their own schedule. Every dollar of that schedule is equity the investor injects after closing at no leverage. A new building moves those costs a decade or more away and covers early defects under the provincial new home warranty regime.
The rent problem
In-place rents in resale buildings lag the market, and in Ontario the gap is locked in by the rent control guideline for units first occupied before November 15, 2018. Where there is no rent guideline, a resale building still needs turnover before rents reach market, and turnover is not underwritable. A new building leases at market from the first tenant.
Where the risk moves
New construction does not remove risk; it relocates it. The investor takes delivery risk, lease-up risk and rate risk between the agreement and funding. Each has a mitigant we require: a fixed price through closing, a builder appraisal guarantee, a completion timeline with at least one block already delivered where possible, and a financing condition tied to the CMHC certificate of insurance. The pages on the EGI holdback and on draw versus takeout describe how those mitigants work.
Questions
Are there resale buildings that qualify for the top tier?
Occasionally, after a documented energy retrofit and with rents already below the affordability threshold. We review them case by case, but they are exceptions.
What warranty covers a new building?
Provincial new home warranty legislation requires warranty coverage on new homes, with defined periods for materials and labour, delivery systems, envelope and structure. Confirm the coverage schedule in the builder's warranty certificate.
Sources
MLI Select: multi-unit mortgage loan insurance,
Canada Mortgage and Housing Corporation (CMHC)
Government of Ontario
Related pages
Reference material prepared by Daniel Kim & Associates, Sotheby's International Realty Canada. Not a recommendation to buy any property or security. Figures are illustrative and reviewed quarterly; complete independent due diligence with your counsel and accountant.
All reference pages