Prime minister bids to tackle crisis
Prime minister Justin Trudeau has announced a new plan aimed at solving Canada’s generational housing crisis, introducing new tax incentives and proposals to build more housing on public lands to tackle chronic supply and affordability challenges.
Flanked by finance minister Chrystia Freeland and housing minister Sean Fraser in Vaughan, Ontario, Trudeau said the proposal – which aims to build nearly 3.9 million homes by 2031 – was “the most comprehensive and ambitious housing plan ever seen in Canada.”
The prime minister said the government wanted to make sure no Canadian puts more than 30% of their income towards their home through an approach centred on building more homes, making it easier to rent or own, and help those who can’t afford a home.
As part of the plan, the capital cost allowance rate for apartments will be increased from 4% to 10%, meaning builders can write off more from their taxes. The GST exemption on rentals will be extended to student residences built by public universities, school authorities and colleges, while hundreds of millions of dollars have been set aside to address homelessness.
Of note for the mortgage sector, the plan proposes to consult with the industry on making a tool available through the Canada Revenue Agency (CRA) to verify borrower income with a view to combating fraud.
Trudeau touted the plan’s “Team Canada” approach, offering incentives for provinces, territories, builders, and non-profit organizations to come together and build more homes.
The plan proposes to create a Canadian Renters’ Bill of Rights and launch a new Tenant Protection Fund to the value of $15 million.
Starting August 1, first-time homebuyers purchasing newly built homes will be allowed 30-year amortization periods on insured mortgages. https://t.co/RujgOSkz6w#mortgagenews #housingmarket #homeownership #amortization
— Canadian Mortgage Professional Magazine (@CMPmagazine) April 11, 2024
Measures unveiled to accelerate home construction
Support for workers in skilled trades, and new apprenticeship opportunities, are also on the way, according to the prime minister.
“The construction industry will need reinforcements to get all this work done,” Trudeau said. “Canada is working hard under our government to pass legislation that is about workers and about supporting the kinds of good clean jobs that the future is going to bring.”
The Canada Housing Infrastructure Fund had already been announced but is included in the plan, while an extra $400 million has been earmarked for the Housing Accelerator Fund to help spur the construction of an additional 12,000 new homes over the next three years.
The government said companies that commit to building affordable homes will be granted access to “surplus, underused, and vacant lands,” with Fraser indicating the government would be leasing land rather than selling it to keep it public and maintain control over what gets built.
He emphasized the need for buy-in from government at all levels. “There’s no way that one level of government is going to solve the national housing crisis on their own,” he said in an interview, describing the task as an “extraordinarily important” one.
Also included in the plan is a new program to permit homeowners to access up to $40,000 in loans at low interest rates to add a secondary suite to their homes and consulting on proposals to restrict the purchase of existing single-family homes by large corporate investors.
Yesterday, Freeland announced that the government planned to give first-time homebuyers access to 30-year amortization periods on newly built homes, with the RRSP withdrawal amount for new home purchases by first-time buyers upped to $60,000.
Plan announced at pivotal moment for Liberals
The plan arrives just days before Freeland unveils a budget that’s expected to be dominated by housing measures, with the governing Liberals seeing support slip away among younger Canadians amid ongoing affordability and cost-of-living woes.
Over the past three months, support for the Liberals among 18-29-year-olds has averaged just 20% nationally, according to weekly Nanos Research Group polling, below the Conservatives at 40% and the New Democratic Party (NDP) at 25%.
The Canadian Home Builders’ Association (CHBA) gave a cautious thumbs-up to the plan, noting that several of its own recommendations were reflected in the proposals and describing it as a “step in the right direction.”
In a statement following the announcement of the plan, opposition leader Pierre Poilievre pointed to Trudeau’s “failed” record on housing and increases in mortgage payments, rents, and downpayments during his premiership.
The federal government is due to unveil its full budget on Tuesday, April 16.
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