2021 Budget Won’t Fix Canadian Real Estate Affordability
The federal budget for 2021 contained very few measures intended to improve housing affordability in Canada, and it will not make buying a home in Canada affordable. As a consequence, a series of rules has no or little impact on the ordinary buyer or seller.
The federal government has proposed the following housing-related financial plans:
- For the next seven years, the Canada Mortgage and Housing Corporation will receive $2.5 billion in funding to support the Rapid Housing Initiative, Affordable Housing Innovation Fund, Canada Housing Benefit, and Federal Community Housing Initiative.
- $1.3 billion in financing has been advanced and reallocated to recently planned funding for the construction and renovation of units, as well as the conversion of office space into residential units.
- 35,000 affordable housing units will be built, repaired, and supported with $3.8 billion.
- A 1% value-based tax on empty homes occupied by international non-residents is being proposed across Canada.
1% Tax On Foreign Non-residents Annually:
Implementing a tax on non-resident foreign real estate possession is included in the economic statement.
The non-resident, non-Canadian-owned residential property would be subject to a regional tax in Canada. The taxation will be a recurring annual 1% of taxable valuation of non-residential land that is empty or underused. By January 1, 2022, the tax will be in effect.
This is one tool of many to mean that the residential real estate market in Canada is a place where Canadians can begin their families and develop their future.
Financing To Assist The Most Exposed People:
The government is allocating funds to help the neediest people find housing. Support totaled $3.8 billion, with $2.5 billion coming from additional sources. The new funds would be used exclusively for programs benefiting poor communities. Low-income housing and support for people with disabilities are two of the categories that will be helped.
Women-focused housing programs will receive at least 25% of this investment. Overall, this additional money will bring at least 4,500 new affordable housing units to Canada’s housing stock, adding to the 4,700 units currently financed by the $1 billion increase in the 2020 Fall Economic Statement.
The additional $1.3 billion was either reallocated or advanced from prior commitments. This money is split up into different agreements to repair, restore, improve, or construct homes.
The latest funds would enable the construction of up to 12,700 additional homes, taking the overall number of Canadians seeking assistance from the Affordable Housing Innovation Fund to over 30,000.
The Fund is a National Housing Strategy program that promotes creative financing methods and groundbreaking construction strategies in the affordable housing market. It is funded by the Government of Canada and administered by Canada Mortgage and Housing Corporation.
Budget 2021 is a significant investment to repair the scars of the COVID-19 crisis, place people first, build jobs, expand the working class, position companies on a long-term development path, and ensure that Canada’s future is stronger, more prosperous, brighter, and stable. However, many other reform actions would be just band-aid solutions until they help to maintain a far better arrangement between supply and demand.