6 minute read
CFAA REPORT
from FE November 2021
by MediaEdge
OPPORTUNITIES AND RISKS
What’s changed since the September federal elections
BY JOHN DICKIE, CFAA PRESIDENT
Since the Liberal party was re-elected on September 20, 2021, not much has changed in terms of the dynamics of how Canada will be governed. The natural “partners” remain the Liberals and the NDP, and the Liberals can still win a confidence vote if any one of the three main opposition parties votes with them, or even abstains. What has changed to some degree is the focus on various issues, including housing and energy measures that may have an impact on the rental sector.
The September 20 federal election made hardly any change in the dynamics of governing Canada. As before the election, the natural “partners” are the Liberals and the NDP. As before the election, the Liberals can win a confidence vote if any one of the three main opposition parties votes with them, or even abstains. Table 1 shows the election result by regions of interest. HOME OWNERSHIP ISSUES
Housing affordability was a major focus of the campaign, largely in the owner-occupation space.
The Conservatives promised to encourage better access to home ownership through speeding up construction and facilitating borrowing via better treatment for the self-employed in mortgage and mortgage insurance applications, promoting seven
Table 1: Seats won 2021 Federal General Election
Party Canada Ontario GTA Ontario outside the GTA Canada other than Ontario
Liberals
160 78 46 32 82 Conservatives 119 37 4 33 82
Bloc
32 32
NDP
25 5 5 20
Green
2 1 1 1
Canadian houses” for the next two years • And, expanding the upcoming tax on vacant housing owned by non-resident, non-Canadians “to include foreign-owned vacant land within large urban areas”.
We can expect to see many of those Liberals promises implemented, possibly in stages.
Total 338 121 50 71 217
RENTAL HOUSING ISSUES
Source: https://www.theglobeandmail.com/politics/federal-election/2021-results/ November 8, 2021
to 10-year mortgage terms, and allowing current homeowners to switch between lenders without needing to pass the stress test.
Meanwhile, the Liberals promised a long list of changes mostly aimed at helping firsttime home buyers, including: • Programs to encourage rent-to-own arrangements • Forcing CMHC to cut mortgage insurance rates for first-time home buyers by 25% – saving the average homeowner $6,100 over their mortgage term • A new First Home Savings Accounts for savings for a down-payment of up to $40,000 – tax free on deposit, withdrawal and on the future sale of the home • And, doubling the first-time home buyers credit from $5,000 to $10,000.
These measures would deliver additional tax and mortgage preferences to homeowners, who are already heavily favoured over renters. For fairness to renters, CFAA believes the money put into the First Home Savings Account should be taken into income when the house is sold.
CURBING HOUSING SPECULATION
The Liberals also promised an assortment of measures aimed at curbing speculation. These include: • An “anti-flipping tax” on residential properties, requiring properties to be held for at least 12 months, apart from certain exceptions, such as needing to move to take a new job or a family breakdown • Banning “new foreign ownership of
Immigration is likely to be increased to 400,000 to 425,000 people per year for three years (to catch up on the immigrants Canada did not receive because of the pandemic restrictions). Lots of immigration makes for lots of rental demand, but it would be better if the governments solved the issues of delays in housing development before increasing immigration.
The Liberals also promised a $4B fund for major municipalities to speed up planning approvals and provide offsets for inclusionary zoning requirements. As well as being positive for rental housing developers, this could have some impact on reducing the current excess pressure on the housing markets.
CMHC’s Rental Construction Financing Initiative will likely continue, with the funding as announced over the last few years.
The Liberals also promise to continue with the National Housing Strategy (NHS), which is set to assist with the renewal and construction of 150,000 affordable homes, probably split 2/3 to renewal and 1/3 to new construction.
The NDP promised to build 500,000 new affordable housing units over 10 years with
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half of them over the first five years. They also promised financial help for tenants while that construction process played out. That was a positive promise by the NDP, who have historically focused entirely on building new social housing, rather that supporting renters with money to help them to pay their rents in the private market. Unfortunately, the Liberals seem disinclined to expand the Canada Housing Benefit beyond the modest increases already planned within the NHS.
To some degree, the government’s priorities on rental housing issues may change depending on the views of the new Minister responsible for housing. The out-going Minister, Ahmed Hussen, was re-elected handily in his riding, and he may be re-appointed to that portfolio. His Parliamentary Secretary, Adam Vaughan, a long-time Toronto City Councillor and housing advocate, did not run for re-election. ENERGY ISSUES
Under the Paris Accord, Canada’s commitment is to reduce Greenhouse Gas emissions by 30% of 2005 levels by 2030. A recent international report has called for that to be increased to 45%. The Liberals’ goal is to reduce emissions by 40 to 45%. As part of their plan to achieve that, the Liberals plan to increase the carbon tax from $40 per tonne to $170 per tonne by 2030, which will significantly raise the cost of natural gas and fuel oil.
Through the National Research Council, the government is working on a new retrofit code, addressing retrofit requirements. The Liberals promise to have that code in place by 2025. The Liberals set 2030 as the goal for all new buildings to be “net-zero energy ready”. (In practical terms, that means all new low-rise buildings would need to be built with roofs strong enough to take solar panels, but some may not have the solar panels installed.)
To achieve those major GHG emissions reductions in rental housing, what is needed is major building retrofits. To heat buildings with electricity (either through resistance heating or heat pumps), buildings need to be made much better insulated and much more airtight. That means mechanical ventilation must be added, along with insulation and air sealing. With current technology and electricity costs, the necessary retrofits are cost-prohibitive.
The rental housing industry needs better technology, cheaper electricity and/or substantial incentives to pay part of the costs of the necessary retrofits. The cost will be massive. CFAA is aware of the problem, and is working with the federal government to address it.
CFAA RENTAL HOUSING CONFERENCE 2022
The CFAA Rental Housing Conference 2022 will take place in downtown Toronto, in-person, from May 9 to May 11. Visit www.CFAA-FCAPI.ORG for more details. CFAA looks forward to seeing you there!
FRPO is a key association member of CFAA, the sole national organization representing exclusively the interests of Canada’s $600 billion rental housing industry, which houses more than ten million Canadians.
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