What is in Budget 2022 for Housing?

Launching a New Housing Accelerator Fund

To make housing more affordable, more housing needs to be built. Building more housing will require investments, but it will also require changes to the systems preventing more housing from being built.

The federal government aims to incentivize the cities and towns that are stepping up to get more housing built while also ensuring that municipalities can get the support they need to modernize and build new homes.

• Budget 2022 proposes to provide $4 billion over five years, starting in 2022-23, to the Canada Mortgage and Housing Corporation to launch a new Housing Accelerator Fund. The fund will be designed to be flexible to the needs and realities of cities and communities. For example, it could include support such as an annual per-door incentive for municipalities or up-front funding for investments in municipal housing planning and delivery processes that will speed up housing development. Its focus will be on increasing supply, but government supports will be targeted to ensure a balanced supply that includes a needed increase in the supply of affordable housing.

This new fund will target 100,000 net new housing units over the next five years.

The Housing Accelerator Fund will have a flexible single application system and will still allow municipalities to access other related programs.

Rapidly Building New Affordable Housing

Additional affordable housing units are urgently needed, particularly for those experiencing or at risk of homelessness. To ensure that more affordable housing can be built quickly, the government proposes extending the Rapid Housing Initiative for a third round.

• Budget 2022 proposes to provide $1.5 billion over two years, starting in 2022-23, to the Canada Mortgage and Housing Corporation to extend the Rapid Housing Initiative. This new funding is expected to create at least 6,000 new affordable housing units, with at least 25 percent of funding for women-focused housing projects.

Speeding Up Housing Construction and Repairs for Vulnerable Canadians

Over the last five years, the National Housing Co-Investment Fund has supported the construction and repair of 108,000 housing units for the most vulnerable Canadians. Projects like shelters, homes for seniors and persons with disabilities, and supportive housing account for 75 percent of units committed to so far, with demand for those units exceeding supply. To protect housing affordability tomorrow, the government is accelerating its investments today.

• Budget 2022 proposes to advance $2.9 billion in funding, on a cash basis, under the National Housing Co-Investment Fund so that all remaining funds will be spent by 2025-26. This will accelerate the creation of up to 4,300 new units and the repair of up to 17,800 units for the Canadians who need them most.

Taking lessons from the Rapid Housing Initiative, the National Housing Co-Investment Fund will be made more flexible and easier to access, including more generous contributions and faster approvals.

Using Infrastructure Funding to Encourage More Home Construction

Every year, the federal government provides significant amounts of funding to provinces, territories, and municipalities to help them deliver important public infrastructure projects. Yet, at the same time, there is not enough housing being built to keep up with the needs of Canadians.

A coordinated approach involving all levels of government is required to ensure public spending is working to build more of the homes Canadians need.

• To this end, Budget 2022 signals the government's intention to create flexibility within federal infrastructure programs to tie access to infrastructure funding to actions by provinces, territories, and municipalities to increase housing supply where it makes sense to do so. This flexibility would be included within the Canada Community-Building Fund when its current administrative agreements with provinces and territories are renewed; and other future infrastructure programs.

Together with the new Housing Accelerator Fund, this represents nearly $43 billion in new and existing federal funding over the next ten years that will be leveraged to encourage the construction of more homes for Canadians across the country.

Leveraging Transit Funding to Build More Homes

The pandemic has had an extraordinary impact on public transit ridership and the revenues that municipalities count on. As a result, on March 25, 2022, the government tabled a bill to authorize up to $750 million in 2021-22 to support municipalities as they address their public transit shortfalls.

To increase the impact of this investment, the proposed funding will be conditional on provincial and territorial governments committing to match the federal contribution and accelerate their work with their municipalities to build more homes for Canadians.

Building More Affordable and Energy Efficient Rental Units

The Rental Construction Financing Initiative (RCFI) incentivizes the construction of new rental housing by offering low-interest loans and mortgage insurance to those building more rental housing in areas where it is needed most.

• Budget 2022 announces the government's intent to reform the Rental Construction Financing Initiative by strengthening its affordability and energy efficiency requirements. Developers who significantly exceed these requirements and build highly affordable and energy-efficient units will be eligible to have a portion of their repayable loans converted to non-repayable loans.

Budget 2022 also announces that the RCFI will target having at least 40 percent of the units it supports provide rent equal to or lower than 80 percent of the average market rent in their local community. These new requirements and incentives under a more ambitious Rental Construction Financing Initiative will ensure that rental units built through this program are more affordable, that people can reduce pollution and save on energy bills, and that Canada continues to make progress toward meeting our climate projections.

A New Generation of Co-Operative Housing Development

For generations, co-ops have offered quality, affordable housing to Canadians while empowering their members through inclusion, personal development, and tenure security through their community-oriented housing model. Unfortunately, while co-ops are home to approximately a quarter of a million Canadians, not enough have been built in recent years.

• Budget 2022 proposes to reallocate $500 million of funding on a cash basis from the National Housing Co-Investment Fund to launch a new Co-operative Housing Development Program to expand co-op housing in Canada. This new program will be co-designed with the Co-operative Housing Federation of Canada and the co-operative housing sector.
• Budget 2022 also proposes an additional $1 billion in loans reallocated from the Rental Construction Financing Initiative to support co-op housing projects.

With the most significant investment in building new co-op housing for more than 30 years, an estimated 6,000 units will be constructed.

Long-Term Supports to End Homelessness

Every Canadian should have a safe place to call home, but that still isn't a reality for many, including Indigenous peoples, persons with disabilities, and veterans.

Through Reaching Home: Canada's Homelessness Strategy, the federal government has committed more than $3 billion to address homelessness, including doubling annual funding for four years in response to the pandemic. 

The government remains committed to ending chronic homelessness and is proposing significant additional investments that will help make continued progress towards that goal.

• Budget 2022 proposes to provide $562.2 million over two years, beginning in 2024-25, for Infrastructure Canada to continue providing doubled annual funding for Reaching Home. This funding will provide longer-term certainty for the organizations doing vitally important work across the country and ensure that our communities have the support they need to continue to prevent and address homelessness.

A Tax-Free First Home Savings Account

As home prices climb, so does the cost of a down payment. This represents a significant barrier for many looking to own a home—especially young people. To help Canadians save for their first home:

• Budget 2022 proposes introducing the Tax-Free First Home Savings Account that would give prospective first-time home buyers the ability to save up to $40,000. Like an RRSP, contributions would be tax-deductible, and withdrawals to purchase a first home—including investment income— would be non-taxable, like a TFSA. Tax-free in, tax-free out.

The government intends to work with financial institutions to ensure that a Tax-Free First Home Savings Account could be opened and contributed to in 2023.

It is estimated that the Tax-Free First Home Savings Account would provide $725 million in support over five years.

Doubling the First-Time Home Buyers' Tax Credit

The government recognizes that the significant closing costs associated with purchasing a home can be a hurdle for first-time home buyers. The First-Time Home Buyers' Tax Credit is intended to support Canadians buying their first home.

• Budget 2022 proposes doubling the First-Time Home Buyers' Tax Credit amount to $10,000. The enhanced credit would provide up to $1,500 in direct support to home buyers.

This measure would apply to homes purchased on or after January 1, 2022.

Supporting Rent-to-Own Projects

Many Canadians rent because they value the flexibility that comes with it. Others rent before they plan to buy their own home, but rising home prices are pushing down payments further out of reach for those working towards ownership. Rent-to-own arrangements can help alleviate that barrier by providing more time and support to renters on the path to homeownership and allowing them to live and grow in their homes.

• To help develop and scale rent-to-own projects across Canada, Budget 2022 proposes providing $200 million in dedicated support under the existing Affordable Housing Innovation Fund. This will include $100 million to support non-profits, co-ops, developers, and rent-to-own companies building new rent-to-own units.

This investment will allow Canadians to get on the path to homeownership earlier while also encouraging new housing supply that supports affordability for renters and prospective homeowners.

Examples of eligible projects, which must include safeguards and robust consumer protections, could include the repair and renewal of housing for rent-to-own purposes, innovative financing models, and programming that assists rent-to-own participants in preparing for homeownership.

To read the Budget 2022 speech or to review the budget documents, please visit: https://budget.gc.ca/