Thursday, November 23, 2023

At a glance (7 minute read)

  • The federal government announced a new Fall Economic Statement with initiatives aimed at bringing more affordable homes onto the market.
  • A new Canadian mortgage charter will offer support, including extensions and fee waivers, for at-risk mortgage holders.
  • $1 billion will be made available for affordable housing, $15 billion in loans for new home construction, and increased financing for rental projects.
  • New measures will help combat financial crimes, strengthen competition laws, and create an independent ombudsman for banking complaints.

Deputy Prime Minister and Finance Minister Chrystia Freeland delivered the federal government’s 2023 Fall Economic Statement on November 21, 2023.

Here’s what the statement contained for home buyers, owners, and renters. 

Mortgage relief

A new Canadian mortgage charter is being created. Canadians can expect lenders to:

  1. Allow temporary extensions of the amortization period for mortgage holders at risk.
  2. Waive fees and costs that would have otherwise been charged for relief measures.
  3. Not require insured mortgage holders to requalify under the insured minimum qualifying rate when switching lenders at mortgage renewal.
  4. Contact homeowners four to six months in advance of their mortgage renewal to inform them of their renewal options.
  5. Give homeowners at risk the ability to make lump sum payments to avoid negative amortization or sell their principal residence without any prepayment penalties.
  6. Not charge interest on interest in the event that mortgage relief measures result in a temporary period of negative amortization.

Short-term rentals

As of January 1, 2024, homeowners can’t claim income tax deductions for expenses incurred to earn short-term rental income, including interest expenses, in provinces and municipalities that prohibit short-term rentals.

Tax deductions will also not be allowed when short-term rental operators don’t comply with provincial or municipal licensing, permitting, or registration requirements. 

Municipal enforcement of short-term rentals

The federal government will provide $50 million over three years, starting in 2024-25, to support municipal enforcement of restrictions on short-term rentals.

Affordable Housing Fund

The federal government will provide $1 billion over three years, starting in 2025-26 for non-profit, co-op, and public housing providers to build more than 7,000 new homes by 2028. 

Co-operative Housing Development Program

The federal government will provide $309.3 million in new funding for co-operative housing.

GST gone from co-ops

The federal government will remove the GST from the development of new co-op rental housing.

Apartment Construction Loan Program

The federal government will provide $15 billion in new low-cost loan funding for builders to build more than 30,000 additional new homes, starting in 2025-2026. 

Low-cost rental financing

There will be a $20 billion per year increase to Canada Mortgage and Housing Corporation’s (CMHC) annual limit of support for low-cost financing on multiunit rental projects insured by CMHC.

Eligible rental projects must have at least five rental units. Funding is expected to help build up to 30,000 more rental apartments per year.

New Department of Housing, Infrastructure and Communities

Building upon the current department Infrastructure Canada, this new department will help deliver Canada’s housing priorities.

Combatting financial crimes in the real estate sector

The government will address fraud and money laundering risks in the real estate sector by:

  • extending requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to title insurers; and
  • requiring real estate representatives to identify unrepresented parties and third parties in real estate transactions.

Competition

The government will amend the Competition Act to strengthen the Competition Bureau’s powers to halt abuses and anti-competitive practices such as predatory pricing.

Independent Ombudsman for Canadians dealing with banks (OBSI)

An independent, transparent, not-for-profit, external complaints body and advocate with jurisdiction to resolve complaints at Canadian banks will be put in place November 1, 2024.

More construction workers

The federal government is taking action to attract workers our economy needs from abroad, as well as to train and retain Canadians and permanent residents ready to find well-paying jobs in the construction sector.

Funds are being re-allocated

The government is planning $2.4 billion in cuts to the federal public service. 

Toronto Real Estate Board (TRREB) response

“We especially commend the federal government for listening to many industry stakeholders, including TRREB, in establishing a new Canadian Mortgage Charter,” said Paul Baron, TRREB president in a news release.

The Charter includes the removal of the stress test requirements for insured mortgage renewals in cases where a borrower is switching lenders, something TRREB has been calling for in recent years.

Since the mortgage stress test was introduced in 2016, borrowers switching lenders when renewing their mortgages weren’t exempt from the stress test qualification rule, which currently approaches eight per cent.

With close to 60 per cent of Canadian mortgages coming up for renewal in the next three years, this measure will give homeowners more flexibility to shop for the best possible rates and products, helping them save money during a time of heightened affordability challenges.

Read the news release on the Federal Fall Economic Statement.

Read the Federal Fall Economic Statement (opens 141-page pdf).

 

If you have questions, contact Harriet Permut, director of government relations at hpermut@rebgv.org.