On April 16, 2024, the Government of Canada released its 2024 Budget: Fairness for Every Generation. The Federal Budget 2024 will see nearly $53 billion in new spending over the next five years. Let’s take a look at how this budget may impact existing homeowners. Additionally, we’ll explore whether or not homeownership will be possible for those looking to enter the market, including those currently renting.
Does the 2024 federal budget address housing shortages?
The government recognizes the urgency of the housing crisis and has made this a key priority in its 2024 budget. They introduced several measures to improve affordability and increase the housing supply for Canadians. These initiatives aim to ease the financial burden on homebuyers, ensuring every Canadian has access to safe and affordable housing. One of the biggest pillars of the budget proposes $8.5 billion in new spending for housing. As a result, this will aim to build 3.87 million new homes by 2031-32. To offset some of the new spending, Ottawa is looking to find innovative and responsible policy changes to bring in new revenue. Before releasing the budget, the government laid out what it’s calling Canada’s Housing Plan — a pledge to “unlock” nearly 3.9 million homes by 2031.
Ottawa’s proposed policy changes
To offset some of the new spending, Ottawa is pitching policy changes to bring in new revenue. The government says two million of those would be net new homes, and it believes it can contribute to more than half of them by:
- Converting underused federal offices into homes. The budget promises $1.1 billion over 10 years to transform 50 percent of the federal office portfolio into housing.
- Building homes on Canada Post properties. The government says the 1,700+ Canada Post offices across the country can be used to build new homes while maintaining postal services. The federal government says it’s assessing six Canada Post properties in Quebec, Alberta, and British Columbia for development potential “as a start.”
- Rethinking National Defence properties. The government is promising to look at redeveloping properties and buildings on National Defence lands for military and civilian use.
- Building apartments. Ottawa is pledging a $15 billion top-up to the Apartment Construction Loan Program, which says it will build 30,000 new homes across Canada.
- The budget also includes a significant increase in the capital gains inclusion rate on secondary homes. The increase is set to rise from 50% to 66.7% for dispositions on or after June 25, 2024. This change will generate additional revenue for housing initiatives, targeting wealthier Canadians and real estate investors.
Federal budget 2024: Housing solutions
The $8.5 billion in new funding is meant to deliver on specific funding commitments to support policies outlined in Solving the Housing Crisis: Canada’s Housing Plan. This includes direct funding for business subsidies, grants, tax incentives, and support for individuals. Here are some of the proposals being made to assist Canadian homeowners, as well as Canadians looking to buy or rent:
- For prospective homebuyers: The government is launching a Home Buyer’s Bill of Rights and is amending the Canadian Mortgage Charter to allow for 30-year amortizations for first-time homebuyers in new builds.
- For builders: The government is increasing the capital cost allowance for purpose-built rentals from 4% to 10% to directly subsidize new construction. The Federal Budget also expands the GST exemption to new student residences to alleviate new building costs in the face of a growing number of international students.
- Budget 2024 also increases the RRSP Home Buyers’ Plan to allow individuals to withdraw up to $60,000 (up from $35,000).
- Existing homeowners will also benefit from new $40,000 low-interest loans to construct secondary suites, or a guesthouse, on their properties.
Read more about Canada’s Housing Plan to make housing more attainable and affordable for Canadians.
- Renewed $40,000 interest-free loans under the Greener Homes Affordability Program to retrofit for energy efficiency.
- Renters will benefit from a new Renters’ Bill of Rights, and a $15 million Tenant Protection Fund. This will go a long way to send a strong signal about cracking down on illegal rent increases. The government also says it will work with banks and creditors to include rent payment history in credit scores.
- Lastly, the federal government has announced an ambitious plan to leverage publicly-owned land to speed up home-building. The government says the program will unlock 250,000 new homes by 2031, using Canada Post locations and federal office buildings, as well as exploring development on National Defence properties, such as unused armories.
Federal budget 2024: Businesses
The Federal Budget 2024 also includes considerations for direct funding for business subsidies, grants, and tax incentives, in addition to support for individuals:
- $6 billion for water and wastewater infrastructure through a new Housing Infrastructure Fund
- A $400 million top-up to the Housing Accelerator Fund for direct deals with municipalities to speed up home construction. With a total spend of $4.4 billion, the government says the latter program will build 750,000 new homes.
- Preserving below-market affordable housing for the most vulnerable Canadians, the Budget also invests $1.3 billion in Canada’s Homeless Strategy.
- Provide $1.5 billion to help non-profits acquire rental housing to maintain ultra-affordable apartments for those on low and fixed incomes.
- For builders, the government is increasing the capital cost allowance for purpose-built rentals from 4% to 10% to directly subsidize new construction.
- The Budget also expands the GST exemption to new student residences. This helps to alleviate new building costs in the face of a growing number of international students.
Building up hope of homeownership in young Canadians
The housing market in Canada has been experiencing unprecedented growth, with home prices skyrocketing in major cities, like Toronto and Vancouver. This surge has led to concerns about housing affordability, especially for First-Time Homebuyers (FTHB) and low-income families. In her budget document, Finance Minister Chrystia Freeland outlined a handful of measures the government plans to take to make homeownership attainable for younger generations. “We are restoring the chance to make progress towards homeownership. We’re creating more tax-free ways to save for your first down payment,” she says in the document. “We’re giving renters credit for rental payments. So, when it comes time to apply for that first mortgage, you’ll have a better chance of qualifying.”
Federal Budget 2024: Addressing rental unit shortages
With demand still far outpacing supply for rental units, the government is promising it will top up its Apartment Construction Loan Program — which gives low-cost loans to developers and municipalities to build affordable rental apartments — with an additional $15 billion starting in 2025-2026. That brings the program to over $55 billion. Of the additional amount, $100 million will be used to build homes above existing shops and businesses, particularly in big cities. The government says the top-up will help to build over 30,000 new homes across the country, bringing the program’s overall output to 131,000 new homes by 2031-2032. The loan program will also see some reforms. This includes an extension on loan terms and making financing more accessible for student housing projects.
$9 billion investment in Indigenous communities
The Trudeau government is also promising $9 billion in new cash for Indigenous communities over the next five years. This is a smaller spend than some past budgets, one the government says builds on past investments and maintains an upward trend. The plan sparked mixed reviews from Indigenous leaders, with no single big-ticket item for Indigenous Peoples this year. The spending plan offers $918 million for Indigenous housing and community infrastructure, on top of $5 billion already available this year from past budgets. The purpose is “to narrow housing and infrastructure gaps” in Indigenous communities.
So, does this close the gap?
AFN National Chief Cindy Woodhouse Nepinak gave the budget a score of five out of 10. National Indigenous organizations estimated it will cost more than $425 billion to close the overall gap in Indigenous infrastructure, which the Liberals have promised to do by 2030. Woodhouse Nepinak says it was disheartening to see the Liberals “way off track” on the pledge, a comment echoed by others. “[The] budget fell well short of what’s required to fulfill that promise,” said Akwesasne Grand Chief Abram Benedict in a statement on behalf of the Chiefs of Ontario.
Budget 2024: Final Thoughts
The 2024 federal budget marks an important step forward in the Government of Canada’s commitment to addressing the country’s housing shortage. These proposed measures are geared towards making homeownership more accessible for Canadians. Initiatives to improve the housing supply, such as ‘Canada Builds’ and the Housing Accelerator Fund top-up, aim to alleviate the shortage. As Canada navigates its way out of the pandemic, the need for safe and affordable housing remains more critical than ever. The federal budget 2024 offers a roadmap towards that goal, paving the way for a more inclusive and sustainable housing market. As always, if you’re looking for home insurance for your new home or rental property, give us a call or get a home insurance quote today.
