'Condo king' says he's working with new Liberal leader on a plan to use taxpayer-backed financing to attract foreign investors
Before even taking office, Canada’s next prime minister, Mark Carney, is already drawing attention for his early real estate policies.
Carney, 59, is set to replace Justin Trudeau, who announced his resignation in January but remains in office until the transition is finalized. With the possibility of an election being called soon, Carney is reportedly considering an economic strategy that could reignite foreign investment in Canadian real estate.
Bob Rennie, a high-profile Vancouver developer known as the “condo king,” has revealed that he is working with Carney on a plan to attract foreign buyers to Canada’s rental market. The proposal would allow foreign investors to purchase rental units under a 25-year agreement, where they must rent out the properties rather than resell them.
The plan would also involve Canada Mortgage and Housing Corporation (CMHC) providing state-backed financing to lower borrowing costs for investors.
“[I’m]… working with Carney, surprise, and I’m trying to get a rental program in where people can buy, put it into a 25-year pool, a preferred rate from the CMHC, and let’s allow foreign buyers to buy it, they have to rent it out for 25-years, and it will show the world we are open for business,” Rennie said in an interview on ConversationsLive.
The idea is that with government-supported financing, developers and investors would have lower carrying costs, making it more attractive to build rental housing.
But at what cost?
Supporters of the plan say that Canada needs more rental units, and foreign investment could provide badly needed capital for new developments. If the cost of financing drops, more projects might move forward, potentially helping to ease the country’s ongoing rental housing shortage.
In theory, lower borrowing costs for investors could lead to more supply, and more supply could ease rental price pressures. By shifting risk onto the government-backed CMHC, developers might be able to build more projects without the financial uncertainty that often stalls new construction.
Despite the potential benefits, the proposal has sparked serious concerns. Using taxpayer-backed funding to support foreign investors in rental housing raises questions about who actually benefits.
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Rather than tackling Canada’s declining homeownership rates, this plan could further consolidate housing under large investors, leaving fewer ownership opportunities for local buyers.
In most advanced economies, foreign investment is encouraged in industries that create jobs and expand the economy, not in real estate, where locals end up renting from foreign landlords because homeownership is out of reach. Some critics argue that Canada’s economy is already overly dependent on real estate, and further concentrating wealth in housing could make it more vulnerable to economic downturns.
There’s also the issue of competition for resources. If CMHC provides cheap financing for foreign-backed rental projects, it competes for capital with domestic borrowers. That could raise borrowing costs for businesses, homeowners, and even the government itself.
Hidden costs
One common argument for plans like this is that government borrowing is cheap, so financing more rental construction shouldn’t be a problem. But economic reality doesn’t always work that way.
Government borrowing competes with private sector credit, meaning that when the government takes on more debt to fund real estate projects, it can push up borrowing costs for others. CMHC has previously warned the government that state-backed mortgage credit can lead to a net loss, since it distorts the market by shifting risk onto taxpayers.
In extreme cases, large-scale government borrowing to prop up investment can even contribute to inflation, as seen in Canada’s recent economic struggles.
Carney hasn’t officially endorsed the plan, and with a potential election looming, it remains unclear how much traction it will get.
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