affordable housing

Affordable housing for all

Comparing campaign promises in the lead-up to the 2019 federal election
Thursday, September 26, 2019
by Erin Ruddy

As Canada’s federal election inches closer, and hopeful candidates criss-cross the nation making bold declarations about future reform, affordable housing remains a hot-button issue for citizens and industry stakeholders alike.

From Charlottetown to Vancouver, and virtually every city in between, inadequate housing supply has reached critical levels. Year-after-year, words like “crisis” and “severe deficit” have been used to describe the dearth of affordable housing in our cities — yet here we are in 2019, still looking for solutions.

In Ontario, some positive headway has been made. A new report by Urbanation reveals that the pipeline for new rental supply is currently 50 per cent higher than it was two years ago. This progress, according to the Federation of Rental-housing Providers (FRPO), is a direct result of recent legislative changes implemented by the Ford government.

“The removal of rent control on new projects completed after November 15, 2018, was a great first step to restoring confidence and encouraging investment in purpose-built rental,” said Tony Irwin, FRPO president and CEO. “The massive growth in applications can hardly be a coincidence.”

But even with this pipeline of new units in the works, will there be enough affordable housing options for everyone? As Canada’s population grows fuelled by heightened immigration, and as housing patterns shift, the pool of renters is only getting bigger. Policy changes that incentivize rental housing development, and programs that make investing in energy retrofits more viable are critical to maintaining the flow.

“Renters need increased confidence that private sector rental-housing providers — the single largest cohort of rental-housing providers in the country — will be better positioned to enhance the existing rental stock and undertake the significant risk and investment necessary to build much needed supply of new secure purpose-built rental housing,” said David Hutniak, CEO of LandordBC. “We need action now! The stakes are very high.”

Underscoring this urgency, the Canadian Federation of Apartment Associations (CFAA) has been lobbying for key reforms since January, hoping that some, if not all, their proposed changes will find their way to the forefront of the parties’ election platforms.

“To varying degrees, all the parties support more rental housing development by the private sector, especially where it is needed,” said John Dickie, President of CFAA. “Similarly, each party also understands the impact rental industry costs have on rental supply and affordability.”

As such, CFAA’s proposals are pitched as ways to increase housing supply in order to improve housing affordability. Some of the proposed reforms are linked to the environment, given it’s such a key issue for all.

“We always need to be selective about what we ask for, since the finance officials are opposed to any sweeping reforms that would cost the federal treasury substantial amounts of money,” said Dickie. “However, various modest changes would improve the situation for many rental providers, and thus increase rental supply, addressing housing affordability.”

For CFAA, those changes include:

  1. Taking advantage of the move-up effect by reducing the GST/HST charged on new rental construction;
  2. Gaining active business tax treatment for rental providers to allow some deferral of recapture on sale and reinvestment, to allow investors to access the standard corporate tax rate (rather than the current high rate, which is close to 50 per cent in most provinces), and to allow small corporate landlords to access the small business tax rate;
  3. Clarifying and expanding the ability to claim expensive building improvement work as repairs (rather than capital improvements), even though the work provides a better item at the building than the item that was replaced (e.g. replacing mid-efficiency boilers with high efficiency boilers).

Expanding on this list, LandlordBC recently addressed “All Federal Parties” in a public blog post itemizing the action steps it hopes Canada’s incoming (or re-elected) government will undertake. The list includes: maintaining funding for the Rental Construction Financing Initiative (or introducing an equivalent stimulus for purpose-built rental construction); working with the provinces to reduce regulatory barriers; funding the Portable Housing Benefit to target those in greatest need; offering programs to assist with the cost of energy retrofits and the adoption of energy-saving technologies; holding the line on income taxes and capital gains taxes, and more.

So, with the election fast-approaching, is there any evidence that the parties have been listening? The answer appears to be yes. According to each parties’ official website, here are some of the campaign promises impacting the rental housing industry and Canada’s housing market at large:

Liberal

Justin Trudeau’s Liberal party has developed a $55-billion plan to build 100,000 affordable housing units over the next decade. Its highly publicized housing mandate is to “make it easier for Canadians to find an affordable place to call home.” In addition to launching the new First-Time Home Buyers incentive earlier this fall, moving forward, the Liberal Party says it will support rental development by increasing the new residential rental property rebate on the GST to 100 per cent, thereby eliminating all GST on new capital investments in affordable rental housing. This, it says, will provide $125 million per year in tax incentives to increase and substantially renovate the supply of rental housing across Canada.

Conservative

Conservative Leader Andrew Scheer has pledged to ease regulations in order to “help get new homes built.” At a press conference on September 24th, Scheer announced he would repeal Justin Trudeau’s tax increases on small business owners, while cutting unnecessary red tape. His government is proposing a 4-point plan to make home-ownership more affordable, which includes “fixing” the prohibitive mortgage stress test and making surplus federal real estate available for development to increase the supply of housing. Scheer has also stated that, if elected, his party will implement a green homes tax credit to help pay for energy-saving renovations.

New Democrat

Exceeding the Liberal party’s goal of 100,000 new affordable units, NDP leader Jagmeet Singh has pledged to build 500,000 units in an equivalent timeframe. The party also plans to abolish the federal portion of the GST/HST for those constructing new affordable units. Additionally, it would reintroduce 30-year terms to mortgages insured by CMHC for first-time home buyers, and give “low-interest loans repayable through energy savings” to retrofit outdated properties.

Green

The Green party, led by Elizabeth May, has promised to build 25,000 new affordable units and renovate 15,000 more in the next ten years should it be elected. It would also restore tax incentives for building purpose-built rental housing, and provide tax credits for gifts of lands (or buildings) to be used for affordable housing. Other stated plans include: making housing “a legally protected fundamental human right for all Canadians”; appointing a Minister of Housing to oversee the National Housing Strategy; increasing the National Housing Co-investment Fund by $750 million for new builds and the Canada Housing Benefit by $750 million for rent assistance for 125,000 households. The party also plans to finance building retrofits through direct grants and zero-interest loans, and re-focus the core mandate of CMHC to support the development of affordable, non-market and cooperative housing.

Erin Ruddy is the editor of Canadian Apartment Magazine.

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