Increasingly being described as the most consequential Canadian election in recent history, April 28th will be a pivotal moment. Among the critical international issues on the agenda, housing affordability stands out as a key domestic priority for many Canadians.
With election polling data showing that the Liberal Party of Canada (LPC) and the Conservative Party of Canada (CPC) are in the lead, both parties have made housing affordability a focal point of their campaigns. Regardless of the election results, real estate and construction activity in Canada could see a much-needed boost after years of slow growth.
Federal campaign approaches to tackling housing in Canada
So far, Canadian voters are hearing the candidates state their intentions regarding how they will increase the supply of affordable homes.
The LPC’s approach includes:
- Introduce the Build Canada Homes (BCH) entity to function as a developer overseeing the construction of affordable housing in Canada providing innovative Canadian prefabricated home builders with $25 billion in debt financing, and $1 billion in equity financing. In addition, the BHC will additionally bulk order housing units from Canadian modular and prefabricated home builders.
- Provide $10 billion in low-cost financing and grants for affordable home building streams—$4 billion will be directed into long-term, fixed-rate financing for affordable homes, and $6 billion in grants earmarked to expedite the building of affordable, supportive housing for vulnerable populations.
- Cut municipal development charges in half for five years, potentially reducing the cost of a two-bedroom apartment in Toronto by $40,000.
- Reduce tax liability for owners who sell properties to developers who subsequently convert them into affordable housing.
- Reintroduce the Multiple Unit Rental Building (MURB) cost allowance, allowing investors to claim depreciation and other costs against unrelated income.
- Boost the Housing Accelerator Fund, which allocates $4 billion in funding until 2026-27, and streamlines land-use planning and development approvals, to prompt the construction of 100,000 more housing units in cities than would otherwise have been built.
- Eliminate the GST on the purchase of a home at or under $1 million for first-time buyers.
The CPC’s approach includes:
- Accelerate approval of financing for projects through the Canada Mortgage and Housing Corporation (CMHC), with potential withholding of bonuses for CMHC staff if targets are not met.
- Require cities to increase the number of homes built by 15% annually, with federal grants withheld if targets are not met. Cities exceeding targets would receive a "building bonus." Cities failing to meet targets would see federal funding withheld or clawed back.
- Eliminate the GST on homes worth $1.3 million or less.
- Sell off 15% of federally owned buildings to build affordable homes.
Recommended next steps for real estate and construction businesses
Real estate developers and construction companies are watching this election more closely than ever. A boost to the sector is well overdue and many organizations are already engaged in modelling scenarios to identify opportunities and tax strategies that will allow them to be first in line to take advantage of any new and positive changes to the business environment. Whether economic uncertainty will dampen purchaser enthusiasm remains to be seen.
Staying informed of options and potential strategies is key. If you would like to discuss how this might impact you, please talk to your BDO advisor or a member of our real estate and construction team.