While the federal political agenda has been hijacked by Canada/US trade and tariffs, the housing crisis still looms large within the Canadian economy. A depressed economic situation resulting from the trade war may exacerbate the housing crisis as the gap between the cost of building and what consumers can afford grows.
Housing was a central component of the last election campaign, featuring prominently in the Liberal Party’s platform – and it remains a priority issue for Canadians according to public opinion polls. The Carney government is already advancing key policy priorities within the housing file – with more to come soon.
As the fall Parliamentary sitting commences and we anticipate the Carney government’s first budget, the following are housing policy areas to watch:
Build Canada Homes (BCH)
On the eve of the fall Parliamentary session, Prime Minister Mark Carney announced the launch of Build Canada Homes, a marque initiative from the Liberals’ recent platform. Well-respected former Toronto City Councillor and Deputy Mayor, Ana Bailão, will lead the new entity as its inaugural CEO.
Some notable details of BCH from the recent announcement include:
- BCH will be initially capitalized with $13 billion to support its mandate, enabling financing, providing land, and helping builders get big projects off the ground.
- BCH will focus primarily on non-market housing, starting with a plan to directly build 4,000 factory-built homes on six sites, with capacity to build up to 45,000 homes.
- Canada Lands Company will be transferred under the BCH portfolio to provide direct access to the government’s land portfolio.
- The $1.5 billion Canada Rental Protection Fund will be launched under Build Canada Homes, acquiring at-risk rental apartment buildings to ensure they remain affordable over the long term. This is especially relevant near new transit projects.
- BCH will start as a Special Operating Agency within Housing, Infrastructure and Communities Canada (HICC). HICC will be responsible for setting BCH’s investment policy and governance. In the new year, BCH will evolve into a standalone federal entity reporting to the Minister of Housing and Infrastructure.
GST Rebate
Prior to the summer recess of Parliament, the Carney government introduced bill C-4, the Making Life More Affordable for Canadians Act, which included the Liberals’ campaign promise to reform the GST rebate on new home purchases for first-time home buyers.
As Parliament resumes for the fall session, Bill C-4 will be studied by the Finance Committee. It is likely that debate on the GST rebate design will be vigorous, given that the Liberals and Conservatives advanced competing policy proposals during the election.
The Liberals’ new rebate for new build purchases under $1.5 million only applies to first-time home buyers, which the PBO estimates will apply to 5% of housing starts, or roughly 13,000 homes per year, at an average cost of $780 million annually. The Missing Middle Initiative estimates that a proposal to expand the GST rebate to all owner-occupiers – similar to the Conservative proposal – would apply to 60,000-65,000 new homes a year at an annual fiscal cost of $2 billion in foregone tax revenue.
Keep an eye on the Finance Committee as the two main parties relitigate their policy proposals from the campaign trail and attempt to position themselves as the strongest on housing policy.
Multi-Unit Residential Building Tax Credit (MURB)
A key platform commitment from the Liberals was to reintroduce the Multi-Unit Residential Building Tax Credit (MURB). The program was previously operational in Canada in the 1970s and 80s and was responsible for spurring the creation of innumerable small scale rental housing, such as townhouses and multiplexes.
When first introduced, the tax credit allowed the building owner(s) to deduct some of the expenses associated with the building against both their personal and corporate income. In practice, the MURB program incentivized professionals who were not in the real estate business to come together, build small apartment complexes and reap the personal and corporate tax benefits.
The Fall budget would be a natural place to debut the MURB commitment. However, it is not guaranteed to have the same design features and eligibility as its predecessor.
The Canada Secondary Suite Loan Program
Budget 2024 announced the Canada Secondary Suite Loan Program, with a commitment to initiate program funding in 2025. The program has been advertised to provide low-interest loans through the CMHC to homeowners who are adding secondary suites to their properties, like a basement apartment.
In December 2024, in a prelude to the Fall Economic Statement, the ministers of Finance and Housing announced an enhancement to the program – increasing the loan limit from $40k to $80k and allowing insured mortgages to be refinanced to help cover the cost of adding a secondary suite.
While the MURB program will focus on small and medium size purpose-built-rental properties, the Secondary Suite Program is intended to help owner occupiers to densify their existing homes. The two programs work together to help different types of investors in the rental market.
The slow evolution of the Secondary Suite program reminds us how political delays – including the Liberal leadership and recent federal election – prevent government from moving ‘at the speed of business.’ Big announcements must be followed through with concerted efforts to quickly deliver access to programs and funding.
While the 2024 FES implemented the revised mortgage refinancing guidelines, Budget 2025 will likely initiate the operation of the entire program.
Housing Accelerator Fund (HAF) Agreements
The Housing Accelerator Fund has been a key policy tool for the Liberal government to engage directly with municipalities on boosting housing supply.
Restrictive municipal zoning rules remain one of the largest impediments to growing housing supply in Canada’s urban areas. The HAF agreements are supposed to provide incentives to lift these impediments by leveraging federal dollars.
As of Budget 2024, the Government had announced 179 agreements through the HAF totalling $4 billion in disbursed funds and forecasted to help construct 750,000 new homes over the next decade.
There are two main things to watch for in the coming months:
- Will the government provide further funding to the HAF to continue inking deals with municipalities across the country?
- Will the government uphold the terms of the agreements and insist that municipalities liberalize their zoning as agreed upon? The government has been generous with the carrot, but are they willing to use the stick and withhold funding – especially in Toronto, where the City has reneged on the commitment to allow sixplexes as of right?
As the government focuses more of its attention and fiscal resources on the affordable side of the housing spectrum, the HAF program and its agreements offer an opportunity for the Carney government to show its continued commitment to supporting the growth of all housing supply types.