Canada’s 2025 federal budget signals a renewed push to accelerate housing construction, placing housing supply at the centre of the federal economic agenda. Yet for apartment owners and developers, the picture is mixed: while some measures offer meaningful support, others raise questions about long-term viability and whether they go far enough to truly incentivize new rental housing.
One of the most notable announcements in Budget 2025 is the launch of the Build Communities Strong Fund, aimed at supporting housing-enabling infrastructure. This fund will be available to provinces and territories that agree to cost-match federal contributions and commit to reducing development cost charges (DCCs) and avoiding other taxes that hinder housing supply.
David Hutniak, CEO of LandlordBC, welcomed the announcement, noting that while municipalities have long sought infrastructure support, many had relied on new development as a revenue stream—effectively making “growth pay for growth,” a policy he considers fundamentally flawed. He also expressed support for the continued funding of key CMHC programs, including the Apartment Construction Loan Program (ACLP), which will remain in place over the next five years.
Although some in the sector had hoped for increased funding to the ACLP, Hutniak sees the renewed commitment as a positive sign for future development. That sign is further reinforced by the budget’s allocation of $13 billion over five years to the Build Canada Homes initiative—underscoring the federal government’s intent to scale up housing supply through sustained investment.
Complementing these measures, financing access is set to improve with the planned increase in the Canada Mortgage Bond annual issuance limit to $80 billion starting in 2026. This change is expected to expand access to cost-effective mortgage funding for lenders, ultimately supporting the rental housing sector by lowering borrowing costs and improving project viability.
In a move welcomed by many in the industry, the budget eliminates the Underused Housing Tax (UHT) as of the 2025 calendar year and defers the bare trust reporting requirement, including for nominee companies. Introduced in 2022, the UHT imposed a 1 per cent annual tax on vacant or underused housing, primarily targeting foreign owners but also affecting Canadians who held property through trusts, corporations, or partnerships. Hutniak called its removal “a good policy move,” citing the administrative burden and unintended consequences for domestic owners.
Immigration Levels Plan
In some markets, the budget’s immigration measures present a more complex picture. The newly announced 2026–2028 Immigration Levels Plan will cap permanent resident admissions at 380,000 annually and reduce student visa issuance to 155,000 in 2026—down from approximately 306,000 under the previous plan.
While these changes may ease pressure on rental demand, leading to higher vacancies and lower asking rents, which is certainly good news for renters, Hutniak and others fear they could further erode the business case for new purpose-built rental construction.
“We need to find the right balance so that we have a cost structure conducive to building new rental housing for the long term,” Hutniak pointed out.
Viler Lika, founder & CEO of the rental platform, SingleKey, also worries the lowered immigration targets could unintentionally squeeze small landlords in university towns who rely on student renters for income.
“While it’s great news for rents, with fewer international students, many of these properties may no longer be financially viable,” he said. “Immigration cuts will ease rental demand in the short term but could lead to increased vacancies or even landlords exiting the market.”
“Encouraging steps”
Despite these concerns, many industry leaders remain cautiously optimistic. Tony Irwin, President of Rental Housing Canada (RHC), emphasized the importance of translating federal investments into tangible outcomes.
“The 2025 federal budget includes encouraging steps toward addressing Canada’s housing challenges,” Irwin said. “Rental Housing Canada and its members are ready to ensure these federal investments lead to more rental housing construction, faster approvals, and lower costs. These are the outcomes Canadians expect, and our sector is ready to deliver.”
“The government’s commitment to accelerate housing construction marks a real turning point,” added Lika. “For years, developers have focused on condos, but now, with new incentives like tax breaks, lower interest rates, and longer amortization periods, we’re seeing a major shift toward purpose-built rentals. That means more supply, more options for renters, and cooling of rental prices.”
The government also intends to discontinue the Canada Secondary Suite Loan Program, which never really took off and the benefits are unknown. For Lika, this isn’t a moot point.
“With housing affordability still a major concern, encouraging homeowners to create secondary units could have been an efficient way to boost rental supply quickly and affordably, but compared to new measures put on the table, this would not have moved the needle on housing supply in any meaningful way.”
Budget 2025 was officially tabled on November 4, 2025, but it has yet to be approved. A vote in the House of Commons is expected soon.
