The Feds Want to Fix Canada’s Housing Crisis, but How?
It took a pandemic to fully expose Canada’s housing crisis. Now here we are, in the thick of it, wondering “Where’s the inventory? Is it coming this Fall? Next Spring?” Problem is, the sheer quantity of homes we need hasn’t even been built…
In the upcoming federal election, housing is a hot topic. Canada’s top 3 political parties have proposed changes that will make it easier for Canadians to save money, buy a home or find adequate rental housing. These changes will result in even more buyers, investors and renters flooding the market. As we know, an increase in demand must be met with a higher increase of inventory or absolutely nothing is going to change. We can’t just state “build more homes” and then not have the resources or capability to follow through on those promises.
The truth is the federal policies have some play in housing but the most impactful policies are actually at the local municipal level. Many cities, especially Vancouver, have created such a convoluted rezoning and development process that projects take years to even break ground. If the federal government wants to help, it needs to put pressure on the municipalities who are responsible for green-lighting new projects.
Thankfully the proposed platforms seem to signal greater communication and funding for housing from the federal to municipal level. The plan across all platforms is to further promote development within urban centres and reward municipalities for increasing density.
Here’s a breakdown of the Conservative, Liberal and NDP housing platforms:
Conservative Platform
Implement a plan to build 1 million homes in the next 3 years. That figure includes Canada’s current rate of building homes which is around 285,000/year. Resulting in a net change of 145,000 additional homes over 3 years.
Support municipalities by federally funding major transit projects. In order to get funded the municipality will have to agree to increased density along those transit lines.
Increase land supply for new homes by releasing 15% of the federal real estate portfolio to housing. Click here to see what the government “owns”
Encourage RE investment in rental properties by deferring the cap gains tax when selling a rental property
Combat money laundering with more FINTRAC changes
Complete ban on foreign buyers for 2 years. This applies to those who are not living in or planning to moving to Canada.
In spite of that ban, they will encourage foreign buyers to invest in purpose-built rental housing
Remove stress test requirement when an owner switches mortgage lenders
Index mortgage insurance to home price inflation, increase limit
Vow to never add a capital gains tax to the sale of an owner’s principal residence
Liberal Platform
1.4 million new homes over the next 4 years. That figure includes Canada’s current rate of building homes: 285,000/year or 1,140,000 over 4 years. Resulting in a net change of approx. 260,000 additional homes in 4 years.
Rent to Own Program - landlord must charge lower than market rent, commit to 5 year term or less. Government will invest 1 billion to develop rent to own projects. It’s unclear how exactly they will roll this out or what type of landlord would agree to this.
First Home Savings Account - $40,000 tax-free account dedicated to buying their first home.
Changes to FTHBI, choose between shared-equity or loan repayable at sale
Double the first-time home buyers credit
CMHC Changes - reduce fees by 25%, increase mortgage cut-off from $1 million to $1.25 million
Help cities push through permits and reduce red tape to get homes built faster
Increase funding to the National Housing Co-Investment fund 2.7 billion over 4 years
Convert office and retail space into housing
Multigenerational Home Renovation Tax Credit - 15% tax credit, up to $50,000 in construction costs to save $7,500
Ban blind bidding on homes and establish a legal right to a home inspection
Landlords to disclose pre and post renovation rent and implement a surtax if the increase is too substantial
Establish an anti-flipping tax, properties to be held for at least 12 months
Ban on foreign purchases for 2 years with some limitations.
Tax non-Canadian owners on vacant housing or vacant land
Review REIT’s (real estate investment trusts)
NDP
Create 500,000 units of quality, affordable housing in the next 10 years, half complete in 5 years
Waive GST on new construction rental units
CMHC Changes - Reintroduce 30 year terms for entry-level homes and first time home buyers
Double the First Time Home Buyer’s Tax Credit
Deploy federal resources and land for housing projects
Broad statement to “provide immediate relief for families that are struggling to afford rent in otherwise suitable housing”
20% federal foreign buyers tax to those that aren’t Canadian Citizens or Permanent Residents
