The Liberal party has taken office for another four years. In 2017, the Liberals introduced a 10 year, $40 billion National Housing Strategy. The plan seeks to build 100,000 affordable homes, doubling the first-time homebuyer’s tax credit to $10,000, and cutting CMHC mortgage insurance rates by 25%. Liberals are also committing $1 billion in funding for a rent-to-own program. In this article we will look at some of the important components of this plan.
Give cities tools to speed up housing construction – The Liberal’s plan includes a $4 billion investment in a ‘Housing Accelerator Fund’ which will grow the annual housing supply in the country’s largest cities every year, creating a target of 100,000 new middle-class homes by 2025. This fund is application based and will provide municipalities support to grow housing supply and reduce approval times. The funding can be for several uses, such as hiring staff, building infrastructure, or to offset policies such as inclusionary zoning. The Liberal government will also invest in e-permitting technology to help communities streamline the planning process. They will further work with municipalities to identify underutilized properties which can be converted to housing.
Curb foreign ownership – The Liberals will ban new foreign ownership of Canadian housing for two years. Commencing on January 1, 2022, the government will introduce a tax on non-resident, non-Canadian owners of vacant housing, which will also be extended to include foreign-owned vacant land within large urban areas.
Assistance with down payments – The Liberals will introduce a tax-free First Home Savings Account, which will combine the features of an RRSP and TFSA and allow Canadians under 40 to save up to $40,000 and to withdraw it tax-free as a payment towards a first home purchase.
Reduction to CMHC insurance premiums – The Liberals have committed to reducing CMHC insurance premiums by 25% and increasing the insured mortgage cut-off from $1 million to $1.25 million.
Assistance with closing costs of buying a home – The Liberal plan includes doubling the First-Time Home Buyers Tax credit from $5,000 to $10,000, which can result in a total rebate of $1,500.
Build and repair more affordable housing – The Liberals will add a further $2.7 billion to the National Housing Co-Investment fund over 4 years to assist affordable housing providers to acquire land and buildings for the purpose of building or retrofitting affordable units.
Help renters become owners – The Liberals will commit $1 billion in loans and grants to introduce a new Rent-to-Own program. The funding will be used to develop projects with private, not-for-profit and co-op partners.
Intervention in the financialization of housing – The Liberal government has committed to reviewing tax treatment of large corporate owners of residential properties such as REITs. The government intends to put policies in place to curb excessive profits, and review down payment requirements for investment properties.
Introduction of anti-flipping tax – The Liberals will establish a new tax payable on any residential properties that are held for less than 12 months.
