On March 22, the Government of Canada released their 2017 budget, which included several provisions related to housing and the real estate industry.
Pulling from summaries provided by the Ontario Real Estate Association (OREA) and the Canadian Real Estate Association (CREA), below is a summary of the provisions included (and excluded) in budget 2017 and how these could affect the interests of TREB Members.
What Was Included
$11.2 billion over 11 years to National Housing Strategy
$11.2 billion will be invested over 11 years to build, renew and repair Canada's affordable housing stock. The Canada Mortgage and Housing Corporation (CMHC) will be responsible for implementing a series of initiatives identified by various stakeholders as part of the National Housing Strategy consultation process, in which TREB took part in the fall of 2016.
$39.9 million over 5 years for a Housing Statistics Framework
The creation of a Housing Statistics Framework was promised in the budget. The proposed framework will include a nationwide database of all properties in Canada and data from the framework will be published by Statistics Canada starting in the fall of 2017. The Framework will also provide up-to-date information on purchases and sales, including the degree of foreign ownership, as well as information on homeowner demographics and financing. This data will allow policymakers to accurately analyze the housing market.
$5 billion over 11 years for a National Housing Fund
CMHC will receive funding to address housing issues by prioritizing support for vulnerable citizens.
$67.5 million over 4 years for Energy Efficiency Programs
In addition to the creation of a national program to review existing building codes, retrofit existing buildings and build new net-zero buildings, the $67.5 million will also be used to renew and continue existing energy efficiency programs.
Commitment to Study the Utility of Personal Real Estate Corporations (PRECs)
OREA noted that the federal government's decision to study the utility/use of private corporations doesn't preclude Ontario from acting to permit PRECs but the decision could make it more difficult for OREA to effectively lobby for this at the provincial level.
Changes to Legislation on Anti-Money Laundering and Anti-Terrorist Financing Regime
The government reinstated their commitment to strengthening the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTF) by making changes to the legislation. These changes would focus on compliance and the functionality of the legislation.
What Wasn't Included
Changes to Capital Gains Tax
Despite much speculation that the budget would see an increase in the capital gains tax inclusion rate, the federal government opted to keep the rate at 50%. Instead of raising the inclusion rate, the government has stated that it will issue a consultation paper on the use of tax planning strategies involving private corporations that allow high-income earners to reduce personal taxes.
In light of this, OREA has noted that the chances of Ontario introducing its own demand-side tax measure to try and cool the housing market have increased. OREA further suggests that when Ontario releases its budget in April, it is expected that the province will introduce a number of measures to address affordable housing, including a possible measure to curb speculation and/or foreign buying activity in the housing market.
CREA has noted that they will monitor this issue closely and participate as necessary.
Changes to Home Buyers Plan
The budget did not include a provision for the extension and indexation of the Home Buyers' Plan (HBP), an issue TREB and CREA have long lobbied for. Given the recent changes to mortgage rules amid federal government concerns about home prices, CREA notes that they did not expect this provision to be included. CREA will continue to press for improvements to the HBP in meetings between PAC representatives and MPs at CREA PAC Days this fall and TREB will join them in this endeavour.
What's Next
As CREA notes, the 2017 federal budget did not further tighten housing market regulations. The government has mentioned that changes announced in October 2016 are expected to have a modest, temporary impact on housing in the short term and that the government is ready to further adjust the housing finance framework, if and as required.
TREB will monitor and report on any developments related to federal housing policy between now and the release of the federal Fall Economic Statement in October 2017.