Budget 2021 –Analysis by Ron McKinnon, MP What is in Budget 2021 for Housing Affordability?
May 4, 2021
What is in Budget 2021 for Housing Affordability?
More Affordable Housing
The COVID-19 recession has widened gaps in Canadians’ access to housing. These gaps, if not addressed, could deepen divisions in our communities and exacerbate social inequalities. By contrast, investments in affordable housing can act fast to create jobs and prosperity.
Furthermore, investments to make housing more affordable for the most vulnerable, coupled with limiting foreign speculation in the housing market, will help ensure that our economic recovery is an inclusive one that allows more people to join the middle class. Access to affordable homes will give more Canadians opportunities to find better jobs and create better futures.
After years of inaction, the government restored support for the construction of affordable housing in 2017, recognizing that these are vital investments.
To help Canadians find affordable housing, spur job creation and local economic recovery, alleviate cost pressure in the housing market overall, and grow the middle class:
Budget 2021 proposes to provide an additional $2.5 billion over seven years, starting in 2021-22, to the Canada Mortgage and Housing Corporation, including:
- An additional $1.5 billion for the Rapid Housing Initiative in 2021-22 to address the urgent housing needs of vulnerable Canadians by providing them with adequate, affordable housing in short order. At least 25 percent of this funding would go towards women-focused housing projects, and units would be constructed within 12 months of when funding is provided to program applicants.
- Overall, this new funding will add a minimum of 4,500 new affordable units to Canada’s housing supply, building on the 4,700 units already funded in the 2020 Fall Economic Statement through its $1 billion investment.
- $600 million over seven years, starting in 2021-22, to renew and expand the Affordable Housing Innovation Fund, which encourages new funding models and innovative building techniques in the affordable housing sector. To date, this program has committed funding to support the creation of over 17,600 units, including more than 16,300 affordable housing units and units for persons with accessibility challenges. This new funding will support the creation of up to 12,700 more units, bringing the total to over 30,000 units.
- $315.4 million over seven years, starting in 2021-22, through the Canada Housing Benefit, to increase direct financial assistance for low-income women and children fleeing violence to help with their rent payments.
- $118.2 million over seven years, starting in 2021-22, through the Federal Community Housing Initiative, to support community housing providers that deliver long-term housing to many of our most vulnerable.
In addition to these new investments, Budget 2021 proposes to advance and reallocate $1.3 billion, on a cash basis, of previously announced funding, including:
- $750 million in funding under the National Housing Co-Investment Fund, which is proposed to be advanced to 2021-22 and 2022-23. That will accelerate the creation of 3,400 new units and the repair of 13,700 units.
- $250 million in funding under the National Housing Co-Investment Fund, which will be allocated to support the construction, repair, and operating costs of an estimated 560 units of transitional housing and shelter spaces for women and children fleeing violence. This targeted funding is being reallocated—including advancing $200 million to 2021-22 and 2022-23—to ensure the government delivers on its commitments. It reinforces the government’s efforts to address gender-based violence, including the measures outlined in the forthcoming National Action Plan to End Gender-Based Violence (more details in Chapter 9).
- $300 million in funding in 2021-22 and 2022-23 from the Rental Construction Financing Initiative, which will be allocated to support the conversion of vacant commercial property into housing. As the demand for retail and office space has changed due to COVID, some landlords, particularly in major urban cores, are facing higher vacancies. That is an opportunity for property owners and communities to explore converting excess space into rental housing, enhancing the livability and affordability of urban communities. This funding will explore this new approach to development and target excess commercial property space conversion into 800 units of market-based rental housing.
Lower Home Energy Bills Through Interest-free Loans for Retrofits
The 2020 Fall Economic Statement put forward a program to provide Canadians with one million free energy audits and up to 700,000 grants, valued at up to $5,000, to complete energy-efficient home improvements. To help homeowners and build on these measures:
- Budget 2021 proposes to provide $4.4 billion on a cash basis ($778.7 million on an accrual basis over five years, starting in 2021-22, with $414.1 million in future years) to the Canada Mortgage and Housing Corporation (CMHC) to help homeowners complete deep home retrofits through interest-free loans worth up to $40,000. Loans would be available to homeowners and landlords who undertake retrofits identified through an authorized EnerGuide energy assessment. In combination with available grants announced in the Fall Economic Statement, this would help eligible participants make more profound, more costly retrofits that significantly impact reducing a home’s environmental footprint and energy bills. This program will also include a dedicated stream of funding to support low-income homeowners and rental properties serving low-income renters, including cooperatives and not-for-profit-owned housing.
Tax on Unproductive Use of Canadian Housing by Foreign Non-resident Owners
Across the country, young Canadians who are starting to build their future are running up against sky-high housing prices.
In the 2020 Fall Economic Statement, the government announced that it would take steps over the coming year to implement a national, tax-based measure targeting the inefficient use of domestic housing that non-resident, non-Canadians own. That will help to ensure that foreign, non-resident owners, who use Canada as a place to store their wealth in housing passively, pay their fair share.
- Budget 2021 announces the government’s intention to implement a national, annual 1 percent tax on the value of non-resident, non- Canadian owned residential real estate that is considered to be vacant or underused, effective January 1, 2022. The tax will require all owners, other than Canadian citizens or permanent residents of Canada, to file a declaration about the current use of the property, with significant penalties for failure to file.
To read the Budget 2021 speech or to review the budget documents, please visit https://www.canada.ca/en/department-finance/services/publications/federal-budget.html