The upcoming fiscal update will focus on affordable housing, mortgage relief, and enforcing short-term rental rules
In a significant move to address Canada’s housing crisis, the federal government is set to announce a multi-billion-dollar package for housing construction in the upcoming fall fiscal update, CBC News has learned from a senior government source.
Billions for Rental Housing and Affordable Projects
The fiscal update, scheduled to be presented this Tuesday by the federal finance minister, will introduce a comprehensive funding program aimed at easing the nation’s housing challenges. According to the source, the plan includes $15 billion allocated for 10-year loans for new rental housing construction and a dedicated $1-billion fund for affordable housing projects.
Mortgage Relief Measures
In a bid to provide relief to homeowners at risk, the government will introduce new mortgage rules. These include a six-point charter, enhancing the Financial Consumer Agency of Canada’s guidelines, and new requirements for mortgage lenders to proactively contact homeowners ahead of mortgage renewals. This is particularly crucial as many homeowners face the prospect of higher interest rates in the coming two years.
CMHC’s Role in Facilitating Loans
The Canada Mortgage and Housing Corporation (CMHC) will play a key role in facilitating these loans to builders, offering favorable terms to encourage construction. The initiative is expected to help build around 30,000 new homes across the country, focusing on rental construction projects with five or more units.
Impact on Builders and Construction
“This funding gives builders a lot of certainty during the riskiest phases of a housing project,” said the government source. “It helps ensure buildings and construction happen, which we need.” These measures are part of a restrained fiscal update focused on mitigating the housing crisis while fostering economic growth and job creation.
Changes in Mortgage Lending Practices
The update will codify expectations around mortgage relief for at-risk homeowners, ensuring fair treatment by financial institutions. For those with insured mortgages, the requirement to pass a financial stress test when switching lenders at renewal will be removed.
Enforcement of New Rules
The Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada will enforce these new mortgage rules, supporting Canadians through the current environment of elevated interest rates.
$1 Billion for Non-Profit and Public Housing
A significant portion of the funding, amounting to $1 billion, will be earmarked for building non-profit and public housing, in the form of direct funding rather than loans.
Short-Term Rental Property Regulations
In addition to housing construction and mortgage relief measures, the fiscal update will introduce regulations for short-term rental properties. These measures aim to discourage landlords from breaking rules and make housing available for long-term tenancy. The Canada Revenue Agency will enforce new tax deduction rules for owners of short-term rental properties in prohibited areas.
Expectations from Fiscal Update
While the fiscal update is anticipated to be narrowly focused, it is expected to provide an up-to-date snapshot of the country’s economic numbers and account for measures committed to in the last budget but not yet implemented. This includes clean tech tax credits and a review of government department budgets.
Finance Minister and Deputy Prime Minister Chrystia Freeland emphasizes the challenge of balancing support for Canadians with fiscal responsibility. Meanwhile, opposition parties, including the NDP and Conservatives, have outlined different expectations and demands, ranging from more action on affordable housing to a call for a balanced budget.