Unprecedented Spending on Housing
This week, in a series of announcements, and contained in their report, Solving the Housing Crisis, Canada’s Housing Plan, the Canadian Federal government announced unprecedented spending in an attempt to balance the Canadian housing market.
The Northern Account estimates that direct costs for these initiatives will be in the range of $30 to $50 billion dollars. Ongoing and indirect costs require a more formal analysis, which should be contained in April’s budget documents.
Promises Not Set in Stone
It should be noted that many of these initiatives are mere promises at this point; they will not receive funding unless they are contained in the 2024 budget, which is set to be released on April 16th.
Below is a non-exhaustive list of the most important items contained in the report:
Financing
- Increasing the Annual Limit for Canada Mortgage Bonds to make low-cost CMHC financing available. Specifically, an increase in the annual limit for Canada Mortgage Bonds from $40 billion per year to $60 billion (the extra $20B in bonds will be purchased by the government using deficit spending, and not “printed” by the Bank of Canada, as we had reported previously)
- A new Canada Secondary Suite Loan Program to be delivered by the Canada Mortgage and Housing Corporation, enabling homeowners to access up to $40,000 in low-interest loans to add a secondary suite to their homes.
- $15 billion in loans for the Apartment Construction Loan Program to “build a minimum of 30,000 new rental apartments in big cities, small towns, and rural communities alike”
- Changes to the Apartment Construction Loan Program to make it easier for builders to build and to get more projects done faster. These changes include: Extending the terms of the loans offered, Extending access to financing to include housing projects for students and seniors; Introducing a portfolio approach so builders can move forward on multiple projects at once
- “At least” $100 million in low-cost loans from the Apartment Construction Loan Program to build above existing shops and businesses across the country
- Budget 2024 will propose another $400 million, on top of the base $4B, to the Housing Accelerator Fund program “so more municipalities can cut red tape, fast-track home construction, and invest in affordable housing”
- Budget 2024 will propose investing $903.5 million to launch a new Canada Greener Homes Affordability Program. This will support energy efficient retrofits for Canadian homeowners and renters with low to median incomes, bringing down the monthly cost of home heating for hard-working Canadian families
Affordable Housing Funding
- Providing another $1 billion to the $13.2B Affordable Housing Fund which provides low-interest or forgivable loans and contributions for new and repaired affordable and community housing. It also provides priority funding for Indigenous communities, Black-led organizations to increase housing that benefit Black households, and women and children’s shelters and transitional housing.
- Budget 2024 will propose a Rapid Housing Stream within the Affordable Housing Fund to build deeply affordable housing, supportive housing, and shelters for our most vulnerable.
- A new $1.5B Canada Rental Protection Fund will preserve the affordability of existing homes and support the acquisition of new affordable homes. This new Fund will be co-led by the Federal government and other partners.
- The Federal government will launch a $1.5-billion Co-operative Housing Development Program in Summer 2024.
- Inuit And Metis – additional funding for First Nation, Inuit, and Métis communities, which will be over and above the $5 billion allocated to Indigenous infrastructure in 2024-2025.
- A new $6-billion Canada Housing Infrastructure Fund to accelerate the construction and upgrading of critical housing infrastructure. This includes water, wastewater, stormwater, and solid waste infrastructure to support the construction of more homes.
Homelessness Funding
- Budget 2024 will propose an additional $1 billion for Reaching Home, a program which has protected 125,000 people from chronic homelessness, and helped over 71,000 people find stable homes.
- To address the urgent issue of encampments and unsheltered homelessness, the government is proposing to invest $250 million through Budget 2024.
Asylum Seekers
- Through Budget 2024, they propose to further extend the Interim Housing Assistance Program for Asylum Claimants.
Land Proposals
- The government will explore leasing public lands as opposed to selling them off, so “public land stays public and affordable homes stay affordable making more land available for housing by identifying and building on underutilized public lands”
Innovation
- Budget 2024 will propose earmarking at least $500 million in low-cost financing to be made available through the program for new apartments that use prefabricated or innovative homebuilding techniques.
Pre-approved Housing Plans
- Budget 2024 will propose $11.6 million to reinvent the 1940s housing plans catalogue for 2024. In Fall 2024, they will publish the first phase of the catalogue which will include up to 50 low-rise housing designs, with the rest to follow.
Short term rentals
- $50 million to support municipal enforcement of restrictions on short-term rentals.
- New income tax legislation to remove income tax deductions for expenses incurred for short-term rentals operating contrary to provincial or municipal regulations is also being introduced.
Foreign buyers
- The federal government introduced a ban on the purchase of residential property by foreign investors, which the government intends to extend until January 1, 2027.
Mortgage Fraud
- Budget 2024 will propose the government’s intention to consult with the mortgage industry on making a tool available through the Canada Revenue Agency to verify borrower income for mortgages.
Corporate Ban on Purchasing Single Homes
- Budget 2024 will propose the intention to restrict the purchase and acquisition of existing single-family homes by very large, corporate investors.
Data Collection
- $20 million for Statistics Canada and CMHC to modernize and enhance the collection and dissemination of housing data, including municipal-level data on housing starts and completions.
Tradesperson Credentials
- Budget 2024 will propose $50 million to streamline foreign credential recognition with a focus on residential construction to help skilled trades workers get more homes built.
Tenant Protections
- A new $15-million Tenant Protection Fund. This will provide funding to legal services and tenants’ rights advocacy organizations to better protect tenants against unfairly rising rent payments, renovictions, or bad landlords.
- A new Canadian Renters’ Bill of Rights. This would provide a clear history of apartment pricing so renters can bargain fairly, crack down on renovictions, and create a nationwide standard lease agreement.
- Budget 2024 will propose to amend the Mortgage Charter to call on fintech companies, credit bureaus, and lenders to build the ecosystem that will give renters the option to include their rental payment history in their credit scores,
Increased Limits and Time to Repay Under Homebuyers’ Plan
- Increased withdrawal limit for homebuyers plan, from $35,000 to $60,000 effective April 16th 2024.
- An extra 3 years without repayments for anyone who made, or will make, a withdrawal between January 1st 2022 and Dec 31st 2025. They will now get a full 5 years without needing to start repaying.
30 Year Amortization for First Time Homebuyers Purchasing New Builds
- Effective Aug 1st 2024, 30 year amortizations will be available for insured mortgages for first time homebuyers buying new homes, including condos and townhomes.
- Explore expanding this program to other mortgagors
Changes to the Canadian Mortgage Charter
- Lenders will now have to make contact with homeowners 2 years in advance of renewal.
- Permanent amortization relief to be made available for homeowners experiencing hardship, with no fee or penalties. Ex. a 35 year amortization could be switched from a temporary measure to being permanent.
Tax Incentives
- a temporary accelerated capital cost allowance tax measure that will be proposed in budget 2024. Increasing the capital cost allowance rate from 4% to 10% for eligible new purpose-built rental projects would be those beginning construction on or after April 16, 2024, and before January 1, 2031, and that are available for use before January 1, 2036.
- In Budget 2024, the government will propose to expand this measure to remove the GST for student residences built by public universities, public colleges, and public school authorities. This change will apply to new student residences that begin construction on or after September 14, 2023, and before 2031, so long as they complete construction before 2036.
