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Two years after the novel coronavirus pandemic, typical national house prices have risen by 52%, and rent shortages have spread to smaller cities. Vacancy rates in Victoria, Halifax, Gatino and Peterborough, Ontario are historically low, at about 1%.
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As the New Democratic Party agrees to support the Liberal Party by 2025, here are some housing policies that may be launched this week, the Globe and Mail of Canada reported. Both sides agree that they want to build more houses and provide more money to help low-income renters, and they both blame institutional investors for driving up housing costs.
One of the Liberal Party’s campaign promises last year was to set up a C $4 billion fund to encourage the construction of 100000 new homes in Canada’s largest city by 2025. The plan is that if municipalities increase density or add more housing units per square metre, they will receive financial incentives of km, simplify building approval procedures, develop housing around public transport, and address residents’ opposition to the construction of new houses in their communities. It is not clear whether the fund will be used for comfortable housing, ordinary market housing, or both.
“shortening the approval time will certainly help developers bring their products to market faster and more affordable,” said Heather Tremain, chief executive of Options For Homes, a non-profit developer that provides shared equity mortgages to low-income people, so they can buy homes.
Kevin Lee, chief executive of the Canadian Association of Home Builders (Canadian Home Builders’ Association), a lobbying group for home builders, says the fund can be used to encourage cities that can increase housing starts.
The Liberal Party and the New Democratic Party say they hope to solve the problem of “housing finance” by the end of 2023. They do not define financialization, but all say big investors in real estate are pushing up housing costs. They did not explain what kind of investors any of the new rules would cover.
The Liberal Party has singled out real estate investment trusts (REITs) as a ripe time for tax reform. Real estate investment trusts are exempt from net income tax as long as they are allocated to their unit holders. However, other institutional investors who invest heavily in real estate, such as Canadian pension funds and private equity firms, are also exempt from net income tax.
John Lorito, a partner at Stikeman Elliott who has worked with REITs for decades, said any move to tax REITs like a company would be “significant”.
Minto Apartment REIT, who develops and manages apartment buildings, agrees. “the impact on our business and the supply of comfortable housing in Canada will be negative,” said CEO Michael Waters.
