Loading...The pre-construction condo market has taken a hit after the highs of post-pandemic buying. The new reality where purchasers are having buyer’s remorse, appraisals are coming below the original purchase price, and in the worst scenario, buyers can’t close. The myriad of problems seem to dot the headlines these days.
So why exactly would anyone choose to buy pre-construction now? What is so compelling about them that someone would consider them over buying resale?
The reasons are many: for some individuals one of the biggest and most important factors is that it is entirely brand new. For others it could be the potential for appreciation. Pre-construction purchases go through an entirely different process with different timelines, contracts, deposits, and most obviously, risk. Additionally, as of April 1st, the provincial government introduced HST relief giving new opportunities for buyers to save when purchasing pre-construction.
So as a potential buyer, what are ways you can save, how do you know you’re getting a good deal, and what should you expect when considering pre-construction condos in Ontario?
What Is a Pre-Construction Condo?
A pre-construction condo is a unit that is being sold before it has been built yet. Usually you will buy based on a floorplan layout and seeing finishes in a sales centre rather than a finished product.
The timeline from purchasing to completion will vary in pre-construction. It can take from anywhere from 2 to 5 years depending on the project. It could potentially be even longer than 5 years.
The sales process for pre-construction is also very different. There are sales that begin before the public have access. This is typically reserved for VIP/Platinum brokerages who have a close relationship with the builder or have previously accomplished significant sales at other projects from the builder, thus enabling them to get early access to projects. They would have the first dibs to sell the first release to their clients. Afterwards, if there is still remaining inventory, the builder may do a public launch.
4 Major Reasons Why Buyers Choose Pre-Construction in Toronto
One of the biggest reasons why someone might choose to buy pre-construction in 2026 is because of the HST rebate. The proposed legislation means that qualifying buyers of new homes could save up to $130,000. In particular, this incentive only lasts until the end of 2026, so it’s a limited time offer that many are considering.
And with this HST rebate, many of these preconstruction homes in Toronto are looking more appealing because construction will take a few years, there is the potential to buy below future market value. Locking in a price today means paying less than the property may be worth at completion. Actually, for brokerages like ours with experience and knowledge – there are some pre-construction developments that are selling below current resale! That’s a fantastic deal for buyers where the pre-construction timeline works for them.
A third reason why buyers prefer pre-construction is that the deposits are often spread over time (often 2-5 years) which can make it easier for buyers to plan around compared to a lump sum at closing like in resale.
Finally, the biggest appeal of pre-construction is that it’s brand new! Rarely in resale do you see a brand new home for sale. For the most discerned buyers – pre-construction means being able to choose your own finishes and not having to worry about wear and tear or major repairs. You have the benefit of Tarion warranty too.
Differences in Pre-Construction
Understanding the Deposit Structure
The deposit differs from the typical 5% deposit found in resale. Instead, you’re paying your deposit over a longer period of time according to the set schedule/dates by the vendor.
Here’s a typical deposit breakdown example:
- 5% of the purchase price on signing
- 5% at 90 days
- 5% at 180 days
- 5% in 360 days
Deposits are held in a trust by the builder’s lawyer and are protected under Ontario’s Tarion warranty program. As a buyer, you should also know your deposits are protected up to $100,000 so there is a certain risk that you need to consider. Additionally, you need to keep note of the date for the deposits due and not just the initial payment. There can be additional costs like NSF if you miss your deposit installment payment.
The Cooling-Off Period (10-Day Rescission Period)
The cooling period for pre-construction is one of the most important protections for buyers in Ontario. This is a 10-day cooling period after signing the agreement. During these 10 calendar days (not business days), buyers are allowed to cancel the agreement for any reason and receive their deposit back in full. Most buyers are recommended to use this time to have their agreement reviewed by a real estate lawyer who can point out important details in the contract and also what to expect in terms of closing costs.
Understanding the Purchase Agreement
Pre-construction agreements are long, and even though you’re advised to read the entire document, most people don’t. So what are some of the important clauses and terms to look out for?
Occupancy Date vs. Registration Date
- Interim occupancy: the period where the buyer moves in but the building isn’t yet registered as a condo. During this phase, buyers pay occupancy fees to the builder rather than mortgage payments. Be prepared for these! The interim occupancy period can last from months to years. These payments do not count towards your purchase or mortgage.
- Final closing happens once the condo corporation is registered — only then does the buyer take legal title.
Permitted Amendments
- Builders have the right to make changes to unit specifications, layouts, or finishes within certain limits. Understanding what is and isn’t permitted in the agreement is critical.
- You may also have the opportunity to make amendments to the agreement of purchase and sale. It’s rare, but it can happen if you have a good realtor and/or lawyer. Addendums can be created to offer you more incentives or custom changes to the unit.
Closing Cost Adjustments
- Pre-construction buyers are responsible for various closing costs beyond the purchase price: development levies, educational levies, utility installation fees, and others. There is usually a schedule in the APS that will give an approximate or exact cost for these. One of the common incentives in pre-construction is capped levies/development charges, so that it does not exceed a certain amount. Otherwise, you could be on the hook for thousands and thousands of dollars with no limit.
Tarion Warranty — Buyer Protections in Ontario
Tarion warranty provides protection to buyers in Ontario for their newly constructed homes. It protects them from builder default and construction defects. As mentioned earlier, Tarion covers deposits up to $100,000 if a builder fails to deliver the property.
In terms of structural warranty, there is a one, two, and seven-year coverage depending on the type of defect. Lastly, buyers should always check that their builder is registered with The Home Construction Regulatory Authority before signing. If a builder is not registered with HCRA, then you should avoid it at all costs as the builder does not have the license to build in Ontario! You can check their registration online and also read about the different Tarion warranty coverage on their website.
Risks Buyers Should Know
Delays
Buyers are usually given an estimated or tentative occupancy date when you sign, however, delays are very common in Toronto. A project expected to complete in 2028 may not reach occupancy until 2029 or later. This could affect buyer financing plans, living arrangements, and opportunity costs.
Builder Modifications
Within certain permitted ranges, builders can alter unit specifications — finishes, layouts, even square footage can shift. Changes to amenities could potentially occur too.
Market Value Changes
Pre-construction is not a guaranteed gain. There’s a risk that the property is worth less than its purchase price at completion. This is especially good to know for investors and those who plan to assign or resell at closing.
Financing Risk
Buyers will need to qualify for a mortgage at final closing. Rates could rise or a buyer’s financial situation could change. Additionally, going back to the previous point – if appraisal values come back lower, now buyers are on the hook for the difference which could be a large amount that they don’t have.
Pre-Construction vs. Resale — Which Is Right for You?
Here’s a brief and honest comparison to help buyers decide if pre-construction or resale is the correct choice:
Resale: you can see what you’re buying in-person and move-in usually in 60-90 days. You’re also avoiding the risks we mentioned above.
Pre-construction: has a much longer timeline, more uncertainty, but it’s one of the best ways to get a new property
Investors: pre-construction offers leverage (small deposits, long timelines) and potential appreciation, but carries more risk in a softening market.
End-users (owner-occupiers): pre-construction works well if you have time flexibility and want a modern, purpose-built space in a project you can’t access any other way.
The Value of Platinum Access
Many new developments don’t sell to the public first. Instead, they will offer their first release to select Platinum/VIP brokers, and then agent sales, and then a public launch. Platinum/VIP brokers have an existing relationship with the builder, so the builder entrusts them with the first release because they know these brokers have the experience, knowledge, and clientele. By the time the public can register and try to buy, many of the more desirable floorplans will have already been sold. When you work with a broker who has platinum access such as ours, you get that access to early bird pricing and exclusive incentives.
Conclusion
Buying pre-construction condos and freehold in Toronto and GTA is not a simple process. There are many things to consider such as the deposit structure, 10-day cooling period, interim occupancy fees, closing costs, and overall risks. Despite the risks, there are also really great beneficial upsides. Notably, the HST rebate is really a game changer. If you decide that pre-construction is what you’d like, make sure to work with an experienced agent with platinum access and have your agreement reviewed by a real estate lawyer.
FAQ
Is buying a pre-construction condo in Toronto a good investment in 2026?
It depends on the project, location, and your timeline. 2026 brings new HST relief on new builds that significantly reduces costs for qualifying buyers. However, pre-construction carries risks including delays and market value changes over the construction period.
How much deposit do I need for a pre-construction condo in Toronto?
Most Toronto pre-construction projects require a total deposit of 15–20% of the purchase price, paid in installments over the construction period — not all upfront.
What is the 10-day cooling-off period for pre-construction condos in Ontario?
Ontario law gives buyers a 10-day window after signing a pre-construction agreement to cancel the contract for any reason and receive a full deposit refund. Always use this time to have the agreement reviewed by a lawyer.
What is interim occupancy in a pre-construction condo?
Interim occupancy is the period between when a buyer moves into their unit and when the condo is legally registered. During this time, buyers pay occupancy fees to the builder instead of mortgage payments.
Can I get HST relief on a new condo in Toronto in 2026?
Yes. New HST legislation in effect from April 1 2026 to March 31 2027 provides significant relief for buyers of qualifying new builds — potentially up to $130,000 in savings.