Housing affordability is a huge topic in this election cycle. It’s no wonder with housing prices rising across the country including Toronto’s average home price breezing over $1 million. Last Tuesday, the Liberals unveiled their ambitious new housing plan on their campaign trail.
While campaigning in Hamilton, Liberal leader Justin Trudeau unveiled the Liberal’s three-part housing plan: an aggressive combination of a Buyers Tax Credit, the introduction of a Home Buyers’ Bill of Rights and a commitment to building more homes. It is a bold plan and Trudeau described it as a means to “move forward with a plan to put home ownership back within reach and make buying your first home easier, fairer, and more affordable.” So how does this three-part plan work?
Unlocking Home Ownership: through government funding, families will get assistance for their first home of up to $30,000.
Protecting Buyers’ Rights: with the introduction of a Home Buyers’ Bill of Rights, the process of buying a home will become more fair, open and transparent.
Unlocking Home Ownership
This part involves helping Canadians with finances and funding for their first home in a number of ways. For down payments, the plan will introduce a rent-to-own program, double the Home Buyers Tax Credit, as well as create a tax-free First Home Savings Account.
The FHSA will assist many young Canadians under 40 save for a down payment much faster with the account allowing up to $40,000 to be used towards a first home with no requirements to pay into it and a tax-free withdrawal towards the purchase of a home. As well as the FHSA, doubling the first-time home buyers tax credit to $10,000 will help many young buyers with closing costs.
The rent-to-own program will assist with reducing mortgage costs by pledging $1 billion in loans and grants to assist renters on the path towards home ownership while renting. As well as that, the plan aims to force the CMHC to reduce mortgage insurance rates by 25% which would average $6,100 in savings.
Building More Homes
With the supply issues that are prevalent in the Canadian real estate market, the Liberals plan to build, repair or preserve 1.4 million affordable homes over four years. This part will include a Housing Accelerator Fund, which would be available for large cities to accelerate their housing plans through 2024-2025. Additionally, another $2.7 billion over four years would be allocated to build or repair more affordable housing. This would be done in ways such as converting empty office spaces into housing, offering a multigenerational home renovation tax credit to offset the costs associated with adding secondary units to a home and allocating more money for Indigenous housing.
Additionally, the Liberal government pledged to add another $567 million on top of an already $2.2 billion pledge to support communities in ending chronic homelessness across Canada.
Protecting Buyers’ Rights
This part of the plan is intended to make the process of buying a home “fair and transparent”. This will be done through a new Home Buyers’ Bill of Rights which will address a number of complaints and complex issues with the current real estate market.
Blind bidding, for starters, will be banned. Blind bidding occurs when multiple buyers submit offers on the same property but are not aware of what others are offering. In these instances, many buyers are pressured to over-bid and pay far more than necessary, driving prices up.
Additionally, the bill would include provisions that would require real estate agents to disclose all participants in a transaction on both sides of the property sale, introduce a publicly accessible beneficial ownership registry, home inspection legal rights that ensure “total price transparency” on the recent house sale prices on title searches, and many more items to protect buyers.
The plan will also temporarily ban new foreign ownership of Canadian homes for the next two years to balance and stabilize the market in the wake of Covid-19 as well as expanding the tax on vacant or underused housing that is owned by non-residents or non-Canadians.
Additionally, there would be an anti-flipping tax for residential properties. This tax will require properties to be subject to taxes unless they are held for at least 12 months as a means to curb speculative demand. The tax treatment of large corporations that own residential properties such as REITS would also be reviewed in order to curb the upward trend and pressure on rental prices.
On top of that, the plan will establish the Canada Financial Crimes Agency which will be solely dedicated to investigating and combatting major financial crimes including money laundering in the housing market, a common criticism in Canada. This is intended to strengthen oversight and assist Canadians in being able to buy their first home.
It is a bold and aggressive plan but, unfortunately, there’s no guarantee that it will be implemented as promised. Many times, politics gets in the way of massive overhauls and changes in markets that deal with high-stakes transactions. If the Liberals are re-elected, time will tell as we watch over the years to see the changes in the Canadian real estate market.
LOOKING FOR SOMETHING SPECIFIC?
Reach out directly for any additional inquiries and/or property details.