The 2024 Canadian federal budget was unveiled yesterday, and it includes comprehensive measures aimed at addressing the nation’s housing challenges. From boosting supply to assisting first time buyers and protecting renters, the 2024 Canadian federal budget tackles the real estate sector from multiple angles.
2024 Canadian Federal Budget: Tackling the Housing Supply Crunch
One of the central pillars of the 2024 Canadian federal budget is an ambitious plan to create 3.87 million new homes by 2031. This target includes building 2 million net new homes in addition to the 1.87 million already projected, signalling the government’s determination to alleviate the housing supply crunch plaguing many Canadian markets.
To achieve this lofty goal, the 2024 Canadian federal budget proposes several innovative initiatives:
- Repurposing Federal Office Space: The government plans to convert a staggering 50% of the federal office portfolio into housing, investing $1.1 billion over 10 years to facilitate this transformation.
- Leveraging Canada Post Properties: Over 1,700 Canada Post properties across the country will be utilized for residential development while maintaining postal services, unlocking valuable land for housing.
- Boosting Rental Construction: A $15 billion top-up to the Apartment Construction Loan Program aims to catalyze the construction of 30,000 new rental units, addressing the dire need for more purpose-built rental housing.
- Introducing “Canada Builds”: This new program combines federal loans with provincial/territorial investments to scale up affordable housing construction, fostering collaboration between different levels of government.
2024 Canadian Federal Budget: Supporting First-Time Homebuyers
The 2024 Canadian federal budget also includes measures to assist first-time homebuyers, a demographic that has faced significant challenges in recent years due to rapidly escalating home prices.
Effective August 1, 2024, first-time buyers purchasing new builds will be eligible for 30-year mortgage amortizations, up from the current 25-year limit. This change aims to improve affordability by spreading mortgage payments over a longer period, potentially enabling more Canadians to realize their homeownership dreams.
The budget also increases the Home Buyers’ Plan RRSP withdrawal limit from $35,000 to $60,000 for first-time buyers, effective immediately. This substantial increase provides greater financial flexibility for those struggling to save for a down payment in expensive housing markets.
2024 Canadian Federal Budget: Protecting Renters and Rental Supply
While promoting homeownership is a priority, the 2024 Canadian federal budget also recognizes the importance of rental market challenges faced by renters across the country.
One of the most significant announcements is the introduction of a Canadian Renters’ Bill of Rights and a $1.5 billion Rental Protection Fund. These initiatives aim to preserve affordable rental units and safeguard the rights of renters, addressing issues such as “renovictions” and steep rent hikes that have plagued many communities.
Furthermore, the budget proposes measures to help renters build credit history through their rental payments, a step that could facilitate their transition to homeownership in the future.
2024 Canadian Federal Budget: Tax Changes Impacting Real Estate
The 2024 Canadian federal budget also includes several tax changes that will directly impact the real estate sector:
Capital Gains Inclusion Rate Increase: Effective June 25, 2024, the capital gains inclusion rate will increase from 50% to 66.7% for individuals on annual gains above $250,000 and for all gains by corporations and trusts. This change will affect the taxation of non-principal residence sales, potentially impacting investors and speculators in the housing market.
Potential Vacant Land Tax: The government plans to consult on a potential new tax on vacant residentially-zoned land, aiming to spur development and discourage land hoarding that contributes to housing supply constraints.
2024 Canadian Federal Budget: Other Notable Real Estate Measures
In addition to the major initiatives outlined above, the 2024 Canadian federal budget includes several other measures relevant to the real estate sector:
- An accelerated 10% capital cost allowance for new eligible purpose-built rental projects starting construction in 2024-2030, incentivizing investment in rental housing.
- $15 million allocated to advance a national flood insurance program to protect homeowners from the increasing risks posed by climate change and extreme weather events.
- Funding to attract and train more skilled trades workers for residential construction, addressing labor shortages that have hindered housing supply.
The 2024 Canadian federal budget is clear that the real estate sector is a top priority for the government. From ambitious supply targets to measures supporting first-time buyers, protecting renters, and adjusting tax policies, this budget represents a comprehensive effort to tackle Canada’s housing challenges head-on.
While the success of these initiatives remains to be seen, the 2024 Canadian federal budget has undoubtedly set the stage for significant changes in the real estate landscape. As the implementation of these measures unfolds, industry stakeholders, policymakers, and Canadians from all walks of life will be closely monitoring their impact on housing affordability, supply, and the overall health of the nation’s real estate market.
