Commonwealth _ The upcoming fiscal update, set to be presented by the federal finance minister, is poised to introduce substantial measures to address housing challenges in Canada. According to a senior government source speaking to CBC News, these measures aim to inject billions of dollars into the housing sector through loans and direct funding, primarily targeting the construction of affordable housing. Key elements of this update include the allocation of $15 billion towards 10-year loans for the construction of new rental housing. Additionally, a $1 billion fund will be dedicated to accelerating the creation of more affordable housing units. This announcement coincides with the introduction of new mortgage rules tailored to assist lenders in managing homeowners at risk of financial strain. The underlying purpose of these measures is multifaceted, striving to deftly address the housing crisis gripping the nation. They seek to not only alleviate the weight of soaring living expenses but also serve as a catalyst for economic resurgence and the creation of new employment opportunities. By strategically targeting affordable housing construction and implementing revised mortgage rules, the aim is to mitigate the housing predicament while ensuring financial stability for homeowners. Simultaneously, this approach endeavors to bolster economic growth, fostering a conducive environment for job generation. These concerted efforts underscore a holistic approach to tackling pressing housing challenges while invigorating the economy.
The Canada Mortgage and Housing Corporation (CMHC) will play a pivotal role in facilitating lending to builders and ensuring favorable terms for these loans. The government estimates that this financial injection will support the construction of approximately 30,000 new homes across the country. The funding provides builders with a sense of stability during the most precarious phases of housing projects, ensuring their completion—an essential factor in meeting the growing housing demands. Regarding mortgage rules, the focus is on outlining the government’s expectations for mortgage relief for homeowners facing financial instability. These rules, forming part of a comprehensive six-point charter building upon existing guidelines by the Financial Consumer Agency of Canada, will enable the extension of amortization periods and waive fees related to delayed payments. Moreover, a new requirement will mandate proactive communication from mortgage lenders to homeowners, assessing options four to six months before mortgage renewal, crucial given the anticipated increase in interest rates in the coming years.
An important aspect of this update is the allocation of $1 billion specifically aimed at bolstering non-profit and public housing through direct funding, a departure from loans offered to builders. Beyond housing initiatives, the update also includes measures addressing short-term rentals. These proposed changes complement recent announcements made by the Liberal government. The fiscal update will incorporate additional amendments to the Competition Act, separate from those outlined in Bill C-56, aimed at removing the GST from new rental housing construction and empowering the Competition Bureau to address unfair competition, particularly in the grocery sector. Among the notable provisions, Ottawa seeks to disallow tax deductions for owners of short-term rental properties in areas where such practices are prohibited. This proposal aims to restrict owners from deducting rental expenses, including interest costs, property taxes, or repairs. The intended effective date for these legislative changes is January 1. To enforce compliance, the Canada Revenue Agency is set to deny tax deductions to owners violating provincial or municipal regulations on short-term rentals. The overarching goal of these measures is to reduce the profitability of short-term rental properties, discouraging rule-breaking landlords and ultimately freeing up more housing for long-term occupancy.
