Prime Minister Trudeau moved Tuesday to help homeowners hit hard by soaring housing costs by taking steps to make rent and mortgage payments easier.
The government is also taking steps to increase the supply of housing in Canada. Stop property owners from converting apartments and condos into short-term rentals for tourists, remove GST from the construction of eligible new co-op rental housing, and work with local governments to lower hurdles to new construction. , seeks to encourage the construction of affordable housing. Attractive for developers.
“Housing is an urgent concern for Canadians, and housing is very tied to affordability for Canadians,” Finance Minister Chrystia Freeland told reporters when releasing her fall economic statement. The government understands this very well.”
Mr. Freeland’s economic outlook comes as Canadians across Canada face sharply rising interest rates. Homeowners who have had to renew their mortgages in recent months, or who have a variable homeowners line of credit, are already feeling the pinch; Some believe payments will increase significantly.
Meanwhile, rents are rising in many Canadian cities.
Starting next fiscal year, the City of Ottawa will make available $15 billion in new loan funding under the Apartment Construction Loan Program, which is aimed at spurring the construction of affordable housing. The program is expected to cost the federal government $342 million.
The economic report says the program is expected to deliver 101,000 new homes by 2031-32.
The economic statement announced what is known as the Canada Mortgage Charter, which requires financial institutions to provide further relief to Canadians hurt by high interest rate increases.
The charter allows lenders to temporarily extend amortization periods when homeowners find themselves short on repayment terms, waives fees and costs that financial institutions may charge as relief measures, and It requires loan holders to be given the option of making a lump sum repayment without prepayment penalties or selling their home.
“From my perspective, this Charter is one of the most important things we are proposing today, because with interest rates rising so rapidly, so many Canadians…are unable to stay in their own homes. We can afford it,” Freeland told reporters. “What we want to say today is that we understand this is a difficult situation and we are here to help.”
The government has earmarked $6.2 billion for new measures between now and 2028/29, with much of the spending planned for the years after the next election. And the government has not earmarked any budget for mortgage guarantees.
GST holiday for co-op housing
The biggest housing measure announced by Freeland on Tuesday is the removal of GST from the construction of eligible new cooperative rental housing projects.
This measure does not apply to major renovations of existing units. The government says the restrictions are meant to reduce the possibility of owners “renovating” their tenants.
The government is also encouraging states to exempt sales tax from rental housing construction.
The government has earmarked $1 billion from 2025/26 to 2028/29 to encourage the construction of 7,000 affordable, not-for-profit, co-op and social housing units.
short term rental
The government’s plan to tighten tax rules for short-term rentals in cities and regions with a crackdown on short-term rentals will come into effect “on or after” January 1, according to an update.
The Economic Statement proposes denying income tax deductions for expenses incurred to generate short-term rental income in areas where these units do not comply with local law.
In Montreal, Toronto and Vancouver, an estimated 18,900 homes and apartments were available for short-term rental on platforms like Airbnb and Vrbo in 2020, the government said.
“Canada needs more long-term housing for Canadians, and the federal government is taking steps to crack down on these short-term rentals that are keeping Canadian homes off the market,” the economic update says.
The government says the plan to protect international students from fraudulent organizations exploiting them will also improve access to housing. Details of that plan are expected to be announced in the coming months.