The next phase in our advocacy

Direct support payments to families struggling to afford housing can have an immediate and powerful impact. They put money directly into the pockets of those who are struggling to live where they are right now.  They don't have to disrupt their families by having to find some other place to call home. They are at less risk of falling into homelessness. Nearly 250,000 households received the Canada Housing Benefit (CHB). This is a tax-free payment to families with adjusted net income of less than $35,000.  Though the Benefit has been enriched in recent years to a total of $600 million annually, Canada's housing income support is much less generous than in other countries. For example, housing benefits in Canada for a single parent with two children cover roughly 50% of the average market rent. In contrast, similar benefits in the United Kingdom, Finland, and Ireland cover nearly 100% of market rent.

Canadian governments - federal, provincial, and territorial - must come together to substantially enrich the CHB.

‍

Through development and infrastructure charges, Housing in Canada is taxed at double the rate of the rest of the economy. When a new home is built, the full impact of government taxes and fees can now total a third of the overall cost, more than the cost of land or more than 50% of the cost to build.  

These added costs have hit a wall, with the cost of new construction—including fees—butting up against Canadians’ ability to pay.  If this doesn’t change, housing starts will continue to be held back at a time when the government, the opposition above all Canadians need them to double.

The federal government’s intention to halve development charges for multi-family housing by helping municipalities pay for needed infrastructure like water, sewage, and electricity services is welcome, but it will mean nothing if the provinces allow municipalities to keep adding more development charges.

We need governments to align on lower development and infrastructure charges.

‍

The government should support deferring taxation for property owners on capital gains and recaptured capital cost allowance on the sale of rental property to a community housing provider.

Finding the investment capital required to solve the affordability crisis is a major challenge. Many owners of existing rental properties would access the accumulated equity in their properties to develop new rental properties if there were not such a significant tax consequence to doing so. 

Allowing deferral of these taxes would free up substantial capital for new housing. Government tax revenues would not be reduced but rather would be collected at a later period. Limiting the deferral to disposition to a community housing provider would be advantageous for the affordable housing sector. 

Vendors of existing properties would have an incentive to sell their properties to community housing providers instead of market housing providers. This tax change would complement and support the success of the government’s Rental Protection Fund by putting community housing providers in a better position to acquire.

‍

Many positive changes have been made to MLI Select in recent years to broaden access to lower-cost financing options.   The CMHC can take a significant additional positive step by reconsidering recent changes to energy efficiency performance criteria, as they will make the positive program much more difficult for developers to utilize.

MLI Select mortgage insurance can be a powerful tool to incent development without requiring government funding. CMHC provides mortgage insurance at a profit to third-party capital providers who provide the funds needed for new development.

Recent changes (effective June 19, 2024) to the MLI Select program included reducing the points awarded under the Energy Efficiency performance criteria from 100 to 50. This change has made affordable rental housing projects economically unviable.

We also recommend that the formula be amended by lowering the affordability thresholds (i.e., the percentage of units requiring affordable rents), thereby encouraging greater uptake of the program across a far larger number of properties, and a net increase in the number of affordable homes built under the program umbrella. It would also be useful to update the MLI Select affordability requirements based on current income data instead of the data from 2019, which is what is currently used.

Further reductions to rates and fees, and/or decreasing debt service coverage requirements for these loans would help make investing in affordable housing a better return on investment. With the right mix of costs and incentives, the program could make it more advantageous for investors to build affordable housing than using traditional financing and charging market rents.

‍

Higher taxes will not incentivize affordable housing. To that end  the government should not introduce a new tax on residentially zoned vacant land, as it will not incentivize construction.

For this reason, we warn that the taxation proposed in Budget 2024 on residentially zoned vacant land will only disincentivize builders. This proposed tax measure threatens to increase costs for builders and renters and, therefore, discourages landowners from pursuing residential zoning of vacant land that could be used for the construction of new residential properties.

Like all G-7 nations, Canada’s population is aging out, and our birth rate has hit record lows.  In this context, immigration is indispensable to Canada’s addressing these challenges, sustaining productivity, and driving economic growth. Likewise, the Canadian construction labour force is aging causing an accelerating skills shortage.   Home construction requires the application of specialized skills, including carpentry, masonry, plumbing, electrical work, HVAC installation, roofing, tiling, and GPS surveying,  AI design, drone inspections, and modular building methods. 

 This is widely known and understood, but federal immigration policies have been erratic in recent years, first hitting the accelerator, then suddenly jamming on the brakes. 

If we are going to refresh the construction workforce and build the homes Canadians need, and in addition to attracting more young Canadians to the skilled trades, the federal government has to adopt smart immigration, stable  policies that prioritize construction skills. 

‍