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On Friday, Canada’s federal government released a comprehensive plan to tackle our national housing crisis, entitled Solving the Housing Crisis: Canada’s Housing Plan.

While the plan sidesteps how record-high Canadian immigration contributed to the crisis, it does outline numerous beneficial policies that would increase both housing supply and affordability. 

Below, you’ll find highlights and commentary of several notable policy proposals.

Construction Incentives

The plan outlines various financial incentives for building new housing, including, without limitation:

• Increasing the capital cost allowance rate from 4% to 10% for eligible purpose-built rental projects;

• Eliminating GST for student rental housing; and

• Providing various low cost loans for apartment construction, building units above shops, and converting unused residential space into rental units. 

These policies will make construction more financially appealing, and could lead to lower costs for the eventual occupants. But massive housing demand already makes building financially appealing. Accordingly, it’s hard to believe simply making construction more financially appealing will lead to much more housing. 

Streamlining Approvals

While some experts say sluggish permitting and approvals are not responsible for Canada’s insufficient rate of construction, my own experience dealing with government suggests unresponsiveness and bureaucratic incompetence is a major problem. And I’m not alone in this view.

To address the problem, the Federal Government says it will “work with provinces and municipalities to improve their zoning and permitting processes”, and “incentivize[] the removal of zoning barriers, speed[] up permitting, and invest[] in affordable housing” by means of a $4 billion Housing Accelerator Fund. 

Ultimately, the Federal Government's capacity to address this issue is limited. Provinces and municipalities bear responsibility for setting their own accountability standards. They need to ensure bureaucrats respond to inquiries and permitting requests promptly, and operate at least somewhat effectively.

Short-Term Rental Enforcement

Until the Ontario Landlord and Tenant Board (which is under provincial jurisdiction) stops producing landlord horror stories, people are more likely to convert unused space into Airbnbs rather than rental units. And though the plan proposes a fund for municipal short-term rental (STR) regulation enforcement, ultimately municipalities have to decide to enforce these laws. 

In Toronto, our municipal bureaucrats are actively choosing not to enforce applicable STR regulations. Furthermore, I was in a meeting with former Toronto city councilors Mike Layton and Joe Cressy a few years ago discussing STR regulation enforcement. They said Council offered the STR regulation enforcement team more money and was refused. Even as misconduct consistently proliferates under watch of the bumbling, incompetent Carleton Grant, who still serves as executive director of Toronto Municipal Licensing and Standards despite my ongoing efforts to have him removed.

Combatting Financialization

The plan recognizes massive corporations’ increasing investment in the single-family home market to be a major problem, as it destroys the playing field for regular people unable to match Bay Street cash. Accordingly, the plan states that “Budget 2024 will propose that we intend to restrict the purchase and acquisition of existing single-family homes by very large, corporate investors.”

I would recommend additional regulations for massive real estate corporations that own rental stock across Canada. Often, these corporations are astonishingly mismanaged, resulting in bogus claims against tenants for rent they do not owe. This is never adequately punished with the minimal-to-nonexistent penalties available at the provincial level. Instead, tenants are often saddled with thousands of dollars in legal fees to simply enforce their rights and protect their credit. 

For large corporations, these legal fees are minimal, deductible expenses. And their groundless claims may well, on balance, end with most tenants simply paying unlawful sums to avoid prolonged, painful, and expensive fights which could potentially result in eviction. 

Modular Housing

The plan has an excellent forward-looking section on the “need to invest in ideas and technologies like prefabricated housing factories, mass timber production, panelization, 3D printing, and pre-approved home design catalogues.”

It proposes “launching a new Homebuilding Technology and Innovation Fund to help scale up, commercialize, and promote adoption of innovative housing technologies and materials in Canada’s homebuilding industry, including for modular and prefabricated homes.” Additionally, the plan proposes “earmarking at least $500 million in low-cost financing to be made available through the program for new apartments that use prefabricated or innovative home building techniques.” 

I believe modular housing is a promising option we are not adequately employing. Though some politicians have given it nods of late, this is the first concrete proposal I have seen to actively support its proliferation in Canada.

Immigration

The plan references immigration twice: once in a section about prioritizing immigration of skilled tradespeople and once as a bullet point noting that immigration falls within federal jurisdiction.

The government is absolutely right to seek prioritization of skilled tradespeople who can help with homebuilding. Already, immigrants constitute the best or only tradespeople who can perform certain work. Canada needs more such people.

However, the plan should include a commitment to both decrease the rate of immigration until housing supply can catch up with demand, and provide incentives and/or support for new immigrants to live where housing costs are not crushing and exorbitant (e.g., Regina), rather than where they are (e.g., Vancouver, Toronto). 

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