Its Voting Time! - Real Estate Platforms Broken Down By Party For YOU!

Posted by Paul Ambler on Monday, October 7th, 2019 at 1:10pm.




On October 21st, as Canadians head to the polls, many will be thinking about how this new government (or old one) is going to help their local real estate market. Local real estate market issues in places like Toronto & Vancouver have become hot button political topics. Affordability for home buyers in cities many major Canadian cities have become part of many of the political parties platforms. Interest rates, densification, transit & rural frustration with urban encroachment have all became part of the daily questions being peppered and federal leaders leading up to the election. We have seen the impact (or lack of impact) of the foreign buyers tax but many Canadians are more interested in seeing the federal government help reduce some of the red tape getting mortgage approvals (mortgage stress test).

So, fellow Canadians, Is it Christmas time on October 21st, or will Scrooge be arriving instead? Regardless of what hot button issues take you to the polls on October 21st, here is a breakdown of each of the political parties platform promises related to real estate in Canada.  


 

First Time Buyer Incentive Program 

The Liberal Party is poised to introduce the  First-Time Home Buyer Incentive program. This was previously released in the mid year budget earlier in 2019. In order to qualify, an applicant will need to have a household income of less than $120,000 per year and be able to come up with a five per cent down payment which is the minimum requirement for an insured mortgage with the Canada Mortgage and Housing Corporation (CMHC). The amount of the insured mortgage plus the CMHC incentive would be capped at four times the home buyers’ annual incomes, or up to $480,000. This means the most expensive homes Canadians would be able to buy under this program would be around $500,000 ($480,000 max in insured mortgage and incentive, plus the down payment amount).

Why it might help

Its not in places like Toronto & Vancouver, but in many Canadian cities/towns where you can buy property in the $500,000 price range, some may choose to use this to get into the market. 

Why it might not help

Under the terms of this incentive, home buyers and the government will be in some respect forming a partnership whereby the home owner will have to pay back 5%-10% of the profit they net on the sale of their home. It will potentially reduce their purchasing power to "step up" into a larger home should they wish to in the future. 

Vacancy Tax

The Liberal platform will also put 1% annual vacancy and speculation tax on applicable residential properties owned by non-resident, non-Canadians. 

Why this might help 

In some markets like Toronto & Vancouver this may deter some foreign speculation and could and add considerable revenue to the federal coffers. 

 Why it might not help 

Realistically, already across the Greater Golden Horseshoe, Ontario’s Non-Resident Speculation Tax levies a 15 per cent tax on real estate purchases by non-residents of Canada. It collected $181 million last year, although its impact on real estate prices remains highly debatable. The same is true with B.C.’s Speculation and Vacancy Tax, which hits foreigners with an annual two per cent annual property tax, and raised $115 million last fiscal year. Plus, outside Canada’s two biggest metropolitan areas, foreign speculation is not a real concern. Once Ottawa creates the infrastructure necessary for assessing and taxing property values nation-wide, why stop at foreign speculators? The real risk here lies in the federal government realizing this new tax could become a reliable and convenient way to get at the vast asset base held by Canadians homeowners. 

Home Energy Saving Incentive
Additionally, they would offer interest-free loans up to $40,000 to make houses weather-resilient & energy efficient.

Mortgage Stress Test 

The conservative party has heard the complaints surrounding the current mortgage stress test & has promised to "fix the mortgage stress test". Andrew Sheer has also promised to remove the stress test from mortgage renewals all together. The conservatives have also promised to increase the maximum amortization period from 25-30 years which would effectively reduce homes owners monthly payments. 

Why this might help 

The mortgage stress test has made it exceedingly difficult for first time home buyers to purchase homes in real estate markets that are already have high purchase prices. Acknowledging that this must be looked at to address the affordability problems many cities are experiencing is a good start. Extending the standard amortization period to 30 years (which used to be an option not long ago) will no doubt help reduce monthly payments as well. 

Why this might not help

We don't really know what the conservatives would do once they "looked into" the mortgage stress test so its hard to say if there would really be any changes but If they end up terminating the stress test it will open doors for new buyers already navigating challenging real estate markets. Adding another 5 years to your mortgage amortization will also help to reduce your monthly payments but that additional 5 years of interest will add up as well. 

Increasing Housing Supply

The Conservatives have promised to look into easing regulations to get new homes built. They suggest finding new ways to help increase housing supply, part of which would include introducing an incentive for municipalities to reduce red tape surrounding new construction. The party would apply a 20 per cent green homes tax credit for up to $20,000 spent over two years which will pay for energy-saving renovations.

Why this might help

Supply is one of the biggest issues surrounding affordability in cities like Toronto & Vancouver. If the conservatives can alleviate some of the red tape surrounding getting new housing projects started this could be one of the most productive party platforms being offered to Canadians in challenging real estate markets. The debate on this subject has been furious in the GTA as developers have long complained that they could build more homes quicker if there was less red tape getting projects off the ground or government opened up available greenbelt.  

 

Affordable Housing

The New Democrat party (NDP) want to build 500,000 affordable housing units within 10 years; until then, they propose a rental subsidy and to work with lower levels of government to determine the right balance of options. They would also seek to remove the federal GST/HST for those constructing new affordable units. The party has also promised that it would set up a fast-start funding option to streamline the application process for social, co-op and non-profit housing. 

Why this might help 

If they can get an agreement on lower levels of government on new affordable housing strategies this will benefit many urban centres across Canada that need housing for those who cannot afford it. The removal of the GST and HST would likely also help entice the developers to pursue more of these types of projects. 

Why this might not help

Getting multiple levels of government to agree on a federally assisted strategy can be challenging. The other issue surrounding this could end up surrounding the loss of a tax revenue stream from the GST/HST removal to developers. This would likely mean the government would need to find a replacement tax and we have no idea where this might come from at this point. 

The NDP would also reintroduce 30-year terms for mortgages insured by the CMHC for first-time buyers and give low-interest loans to retrofit energy efficient houses. The Party would also increase the Home Buyer's Tax Credit to $1,500 and would impose a foreign buyers' tax, and work with provinces to fight money laundering in real estate.

 


 

Affordable Housing

The Green party  suggest a target of 25,000 new and 15,000 renovated housing units each year for the next decade. If elected, the party would appoint a minister of housing to work on the national strategy with solutions unique to each province. 

The Green Party would increase the National Housing Co-investment Fund by $750 million for new builds. They'd increase the Canada Housing Benefit – for rent assistance – by $750,000 to help what they estimate are 125,000 households.

The party also pitches a co-op housing strategy and the elimination of the first-time homebuyers grant

 

 

Maxime Bernier's PPC has no housing-specific policy on its platform page. However, the party takes the stance that mass immigration inflates the cost of real estate in cities including Vancouver and Toronto, "which have some of the least affordable housing among big cities in the world." - Maxime Bernier. The PPC is running in part on a pitch to reduce the overall level of immigration in Canada, and to reform the current immigration policy. The party also mentions housing in the section of its platform on Indigenous policy, saying it would explore changes to individual property rights on reserves to empower residents.



 

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