At the dawn of budget submissions in Ottawa and Quebec, the founding president of the Mach group, Vincent Chiara, appeals to governments to resolve the “never before seen” shortage in the residential real estate sector. At the top of the solution stack, it calls for preferential interest rates to help developers build projects.
“The demand is there. It’s about making the numbers work. And currently, it’s not working. We must stop believing that developers make incredible income with projects,” said Mr. Chiara on the sidelines of a conference organized by the Canadian Club of Montreal on Monday.
In front of an audience of business people, Mr. Chiara touted the idea of preferential interest rates for developers, in order to encourage the construction of housing. While interest rates “are currently around 5% to 6%”, the federal government could assume part of it, “by reaching an agreement directly with the banks or through the Canada Mortgage and Housing Corporation (CMHC),” argues the promoter.
“If we want to add 100,000 doors, it would be an investment of 40 billion dollars for the private sector. What we are asking the federal government is to subsidize 2% of the financing cost. That’s 800 million per year. And if rates remain at the current level for two years, that represents 1.6 billion dollars,” detailed Mr. Chiara.
“It may seem like a large amount, but we have just invested billions in Northvolt,” he gave as an example. Although mentioning his support for this type of project, he recalled the “seriousness” of the current housing crisis and the urgent need to tackle it.
“People cannot house their families. It threatens social peace and governments are not paying enough attention to it,” he explained.
Other measures would give promoters some breathing room, Mr. Chiara also underlined. In particular, he reiterated his request to the Quebec government to “eliminate the QST on the construction of new housing,” as the federal government has already done for the GST.
“The government tells us that it cannot do without revenues from the QST. But unfortunately there is no construction so it does not affect it anyway,” argued Mr. Chiara.
The president of the Mach group also called on municipalities to do their part, by “accelerating the issuance of permits” or “granting more density on land”.