(Ottawa) Finance Minister Chrystia Freeland will take advantage of Tuesday’s economic statement to announce a series of measures aimed at stimulating the construction of rental housing in the country and cracking down on individuals who operate apartments for tourism purposes on Airbnb.
Minister Freeland will also announce the creation of a Canadian mortgage charter which will stipulate the obligations of financial institutions towards homeowners who must renew their mortgage and who are struggling to make ends meet due to the increase in the cost of life and rising interest rates, learned The Press.
In order to reduce the number of short-term rentals on Airbnb, owners of these accommodations that are located in areas that already restrict short-term rentals, as is the case in Quebec, will no longer be able to deduct from their tax returns their rental expenses of the income they pocket. This federal measure must come into force on 1er January 2024.
The operation of short-term housing varies from municipality to municipality and from province to province. By tightening the screws on the tax front, Ottawa wishes to encourage a greater number of cities to adopt more restrictive measures on their territory for this type of short-term rentals.
Increase in the annual limit of mortgage bonds
But one of the key measures in the statement will be to once again increase Canada’s annual mortgage bond limit by $15 billion. The limit on issuing mortgage bonds, which had already been increased from $40 to $60 billion in September, will therefore increase to $75 billion in total, according to our information.
This measure should make it possible to generate financing for the construction of rental housing through the sale of these bonds to investors by the Canada Mortgage and Housing Corporation (CMHC).
This measure has no impact on the budget, but it allows CMHC, the federal agency responsible for housing, to offer construction companies financing at more advantageous interest rates. In recent months, rental housing construction projects have been put on hold by real estate developers due to the rapid rise in interest rates over the past 18 months.
According to calculations by federal mandarins, this measure should make it possible to build up to 30,000 more rental homes per year.
1 billion for affordable housing
Freeland will also announce an additional investment of $1 billion to build affordable housing, said a government source who spoke on condition of anonymity because they were not authorized to discuss the matter publicly. This folder.
This source was keen to emphasize that the economic statement will be marked with budgetary rigor and prudence, and that it is not a mini-budget including new spending.
“One of the objectives of our economic plan is to build more housing. The fall economic statement builds on the work already accomplished by the federal government and goes even further to support more Canadians and Quebecers with mortgages and to skyrocket the number of homes built, including including apartments,” said this government source.
A new mortgage charter
The Canadian mortgage charter that will emerge should allow Canadians who are faced with an increase in their mortgage payments to evaluate the best options available to them.
This charter will have six clauses and will notably open the door to temporary extensions of the amortization period in the case of owners who are at risk. For example, the amortization period could be increased from 25 years to 30 years to avoid bankruptcies in certain cases.
Under this charter, financial institutions will be required to waive fees and costs that would otherwise have been charged for the relief measures.
They will also not be able to require that Canadians with an insured mortgage have to re-establish their eligibility using high criteria (stress test) when they change lender at the time of mortgage renewal.
In addition, financial institutions will need to contact homeowners four to six months before their mortgage renewal to inform them of their renewal options.
Tuesday’s economic statement must also contain projections of the federal government’s deficit for the next five years. According to a report from the Parliamentary Budget Officer released in October, the deficit is expected to be about $6 billion higher in the current fiscal year, to $46.5 billion, due to the slowdown in the economy and rising interest rates.