Home ASIA POLITICS Gimme shelter: Breaking down the housing promises on the campaign trail

Gimme shelter: Breaking down the housing promises on the campaign trail

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Gimme shelter: Breaking down the housing promises on the campaign trail

Housing in Canada is expensive and in short supply, so it is little wonder that it has figured prominently in the early days of the current federal election campaign.

All three major parties realize the electorate’s pain points, and have released housing policies aimed at addressing affordability issues.

Interestingly, their housing platforms have another thing in common — they are mostly directed at young voters, an important demographic that is more likely to be politically undecided and that makes up the bulk of the country’s struggling first-time homebuyers.

Here, we take a critical look at the housing platforms of the three leading parties.

The Conservatives

The Conservative Party’s four-point plan focusses on making “home ownership more affordable,” and includes promises to: “fix” the mortgage stress test and extend amortizations for first-time homebuyers; launch an inquiry into the impact of money laundering on real estate prices; and open up surplus federal land for housing development.

While the Conservatives have offered few details on how they will change the stress tests for first-time homebuyers, doing anything at all will earn them points in some quarters.

The stress test forces borrowers to qualify for the higher of either the Bank of Canada’s five-year benchmark rate or the mortgage interest rate plus two per cent, but there have been concerns in the real estate industry that it is too tough and inflexible. Across Canada, sales and prices dropped when insured mortgages, in addition to uninsured mortgages, were brought under the stress test starting in January 2018.

Something more concrete is the Conservative platform’s proposal to extend the mortgage amortization period on uninsured mortgages from 25 to 30 years for first-time homebuyers, something that would lower monthly payments and improve affordability.

For existing homeowners, the Conservatives are also proposing to exempt mortgage renewals from the stress test. As it stands today, homeowners must renew their mortgage with the same lender to avoid being subject to the stress test. The current regulation limits homeowners’ ability to shop around for a better deal.

Critics of the Conservative platform believe that relaxing the stress test or lengthening the amortization period will further increase debt burdens on Canadians.

The Liberals

The Liberal platform comprises measures that were announced in the March 2019 budget and new items, such as the provision for up to $40,000 in interest-free loans for renovations that improve the energy efficiency of homes. Those buying zero-emissions new homes may be eligible for a grant of up to $5,000.

The key Liberal initiative, announced earlier in the budget and revised as of late, is the shared equity mortgage (SEM) program, in which the government would help first-time homebuyers by essentially buying a stake in their homes. Under the plan, about 100,000 households earning less than $120,000 could qualify for five per cent (if buying an existing home) or 10 per cent (if buying a new home) in shared equity from the government.

The Liberal platform promises to increase the price limit for eligible homes from under $500,000 to $789,000. However, this concession applies only to Toronto, Vancouver and Victoria in recognition of higher housing prices.

Like the Conservatives, the Liberals are focussing on first-time homebuyers who are the sole beneficiaries of the shared equity plan. Though SEM will help reduce monthly mortgage payments by a few hundred dollars (the amount depends upon the price), critics believe the uptake might be low because of the qualifying restrictions and a hesitation on part of the borrowers to share profits with the government.

The Liberals are also addressing house-price inflation by proposing a one per cent annual vacancy and speculation tax on residences owned by non-residents or non-Canadians.


The New Democrats have the most aggressive plan for housing supply. They have proposed the construction of 500,000 new affordable homes over a 10-year period with an injection of $5 billion in the first 18 months in office. In addition, the party is pledging to eliminate the federal portion of the GST/HST for those constructing affordable rental homes. And like the Liberals, the NDP proposes low-interest loans for homeowners to retrofit their homes for energy efficiency.

Homebuyers get a nod in the NDP platform as well through plans to double the Home Buyer’s Tax Credit to $1,500 to lower closing costs. Furthermore, the New Democrats are also proposing Foreign Buyer’s Tax and will introduce measure to fight money laundering to address speculation in housing markets.

The NDP housing platform commits to building co-ops, social and non-profit housing. They say they will do so by establishing fast-start funds to help “communities get the expertise and assistance they need to get projects off the ground.”

What’s missing

The platforms are missing details on how much it will cost to implement the plans and how the future governments will fund these programs. At the same time, the supply-side solutions promoted in the platforms are focussed mostly on the construction of owner-occupied housing. The Liberal platform, for instance, speaks of building 100,000 affordable homes (not necessarily rental housing) over ten years. Though, the Liberals have pledged $10 billion to help with the financing of purpose-built rentals over the next decade.

While the details are sketchy on the supply-side solutions, one needs clarity on the plans to determine whether they will be sufficient.

For instance, how much of the federally owned land is in cities that are struggling with housing affordability? Furthermore, with land-use planning being a municipal concern, how effective will the federal authorities be in influencing the municipal regulations?

What is not headlined in the party platforms is rental housing. The alarmingly low vacancy rates and the subsequent increase in rents in large cities impose greater hardships on renter households whose incomes are often less than that of the homeowners.

The rental challenges are mostly a result of a dearth of supply of purpose-built rentals (PBR). While the Liberal plans to assist with the financing of PBR and the Conservative plans to make available the federal surplus lands for new housing would help, these interventions are at best tweaking at the margins.

The rental housing industry has highlighted the capital gains tax and vacancy decontrol (rent control) as the two primary impediments to the construction of new purpose-built rental housing.

The radical changes needed to give a boost to rental housing construction are nowhere to be found.

Murtaza Haider is a professor of Real Estate Management at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.

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