This week, Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland tabled the second budget of the 44th parliamentary session, “A Made-in-Canada Plan”. This budget is heavily focused on measures to address the cost-of-living crisis, provide inflation relief, invest in public health care, and build Canada’s clean economy.
The budget followed an announcement of amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act, on Monday, March 27. The Canadian Real Estate Association (CREA) has been actively lobbying for changes to the prohibition since it was announced.
The announced amendments include:
Enable more work permit holders to purchase a home to live in while working in Canada.
Amending the exception for temporary workers to enable work permit holders with 183 days or more of validity remaining on their work permit or work authorization to purchase a residential property.
Repealing existing provision so the prohibition doesn’t apply to vacant land.
Repealing the vacant land provision from the definition of residential property so that the prohibition does not apply to the purchase of vacant land zoned for residential and mixed use.
Exception for development purposes.
This exception allows non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province and controlled by a non-Canadian.
Increasing the corporation foreign control threshold from 3% to 10%.
Increasing the control threshold from 3% to 10% so that any corporation or entity with 10% or more direct or indirect ownership of shares or ownership interests by a non-Canadian is subject to the prohibition.
Housing Measures in Budget 2023
As anticipated, “A Made-in-Canada Plan” reiterates existing housing measures and investments the government has previously announced and, while these investments are considerable, they’re not sufficient to address the current housing crisis. We’ll continue to advocate for solutions to address the urgent nature of the housing crisis, and the need for more housing supply across the entire continuum.
The following measures were included:
Building More Affordable Housing
The government intends to support the reallocation of funding from the National Housing Co-Investment Fund’s repair stream to its new construction stream, as needed, to boost the construction of new affordable homes for Canadians.
Urban, Rural, and Northern Indigenous Housing Strategy
Budget 2023 proposes to commit an additional $4 billion to Canada Mortgage and Housing Corporation (CMHC) to implement a co-developed Urban, Rural, and Northern Indigenous Housing Strategy.
Mortgage Lenders Code of Conduct
The federal government, through the Financial Consumer Agency of Canada, is publishing a guideline to protect Canadians with mortgages who are facing exceptional circumstances. They intend to ensure that federally regulated financial institutions provide Canadians with fair and equitable access to relief measures that are appropriate for the circumstances they are facing. This includes extending amortizations, adjusting payment schedules, or authorizing lump-sum payments. Existing mortgage regulations may also allow lenders to provide a temporary mortgage amortization extension—even past 25 years.
Flood Insurance Program
The government proposes to provide $31.7 million over three years, starting in 2023-24, to Public Safety Canada and CMHC to work with the Department of Finance Canada to create a low-cost flood insurance program, aimed at protecting households at high risk of flooding and without access to adequate insurance.
Raising Awareness of Flood Risks
Budget 2023 proposes to provide $15.3 million over three years, starting in 2023-24, to Public Safety Canada to create a publicly accessible online portal where Canadians can access information on their exposure to flooding.
Financialization of Housing
The federal government reiterated their commitment to tackling the financialization of housing through existing measures, including the two-year ban on foreign investment in Canadian housing, the tax on underused foreign-owned homes, taxing assignment sales and making sure properties held for less than 12 months are taxed fully.
The government believes more could be done to ensure homes are affordable, which is why policy changes applicable to large corporate landlords could be considered to ensure affordability and fair treatment of tenants. They want to ensure that investor activity, especially among those who own a significant number of investment properties, is helping, not hurting, housing affordability and will review whether there’s a need to rebalance the housing market.
Equity in Housing
The government will consult on changes required to remove regulatory barriers for home buyers from diverse communities seeking access to alternative financing products.
Home Buyers’ Bill of Rights
The government remains committed to developing a Home Buyers’ Bill of Rights, but has heeded CREA’s warnings and understands the authority of provinces in setting these rules, stating they will work with provinces and territories to develop this plan. We will continue to engage with the government on this issue during consultations, ensuring the rights of sellers are balanced with those of buyers; asserting provincial jurisdiction in this area.
Additionally, we’ve previously highlighted a number of government housing programs and initiatives that REALTORS® should keep in mind.
Below are several initiatives that were reiterated in the budget, including:
- Financial institutions will be able to start offering the Tax-Free First Home Savings Account (FHSA) to Canadians as of April 1, 2023;
- The government finally launched a new $4 billion Housing Accelerator Fund to remove barriers and incentivize housing supply growth on March 17, 2023;
- A two-year ban on non-resident, non-Canadians purchasing residential property, amended on March 27, 2023;
- A 1% annual underused housing tax on the value of non-resident, non-Canadian owned residential property that is vacant or underused;
- A $200 million stream under the Affordable Housing Innovation Fund to develop and scale up rent-to-own projects; and
- A third round of the Rapid Housing Initiative, which is providing $1.5 billion to create new affordable housing units for Canadians in severe housing need.
As a result of our collective lobbying efforts, the attention the housing sector has received over the last few years is unprecedented. There is a lot of work that still needs to be done and we will continue to engage with the government on federal housing initiatives that impact our industry and members, ensuring REALTOR® positions are heard. We will also continue to work with boards, associations, and REALTORS® to present a unified approach.