Author: affordablehousingchallengeproject

By Dr. Alan Walks (Professor, Geography and Planning, University of Toronto), Sean Grisdale (PhD Candidate, Geography and Planning, University of Toronto), and the Affordable Housing Challenge Partnership collective

Summary

Of the three major platforms, the NDP does the best job of emphasizing the need for more affordable rental housing as a key component in addressing Canada’s housing affordability crisis. The platform commits to building 500,000 quality, affordable units in ten years. The NDP implies that the majority of this 500,000 will be rental tenure, built in collaboration with provinces, municipalities, co-ops and affordable housing providers. We are pleased with the prominent attention given to co-ops and non-profits as we consider these institutions as key to building a genuinely affordable housing landscape. We would also emphasize that the NDP’s building incentive (waiving HST/GST on affordable development) is the only building incentive among these three platforms that is explicitly attached to building “affordable” housing. Our main critique of the NDP platform is that is falls prey to two trends we see in the other platforms: promoting easier access to mortgage credit (with 30-year amortizations), and scapegoating foreign buyers as a significant cause of the housing crisis.

Positives:

• Commits to producing a significant number of new, quality, energy efficient and affordable housing units (500,000 over ten years).
• Explicitly commits to helping co-ops and non-profit housing providers build new affordable housing as fast as possible
• Waiving federal portion of HST/GST on production of affordable housing is a real incentive that will get more housing built
• Rent relief will provide immediate and important relief for society’s most vulnerable
• Policies facilitating co-housing serve an important form of niche housing that is currently underserved
• A Beneficial Ownership Land Registry will be key to identifying who owns real estate
• Commits to an “Indigenous National Housing Strategy” within 100 days of office
• Commits to ending homelessness within ten years

Negatives:

• Policies expanding access to mortgage credit will only make housing more unaffordable (eg. 30-year mortgages)
• Overemphasizes the potential impact of a foreign buyer tax
• Unclear plan for addressing role of domestic big business and speculation in the housing market

Deep Dive

The New Democratic Party Platform

There are eight stated policies or policy objectives related to housing in the NDP platform:

1. Create at Least 500,000 Units of Quality, Affordable Housing

Stated Policy Objective: “a New Democrat government will create at least 500,000 units of quality, affordable housing in the next ten years, with half of that done within five years. This will be achieved with the right mix of effective measures that work in partnership with provinces and municipalities, build capacity for social, community, and affordable housing providers, to provide rental support for co-ops, and meet environmental energy efficiency goals.”

Will this policy lead to housing that is more affordable? Yes. The stated goal would create enough new units to substantially improve the affordability of rental housing, and of potentially owner-occupied housing as well, given the greater choice provided to consumers. However, it remains unclear how many of these new units will be purpose-built rental tenure or some other tenure.

Will this policy lead to the production of new affordable rental housing? Yes. The statement says 500,000 new units of ‘quality, affordable’ housing will be built over 10 years, half of this in the first five years (which does not actually indicate speedier development early on – they are saying that half the new units will be built in the first half of the period). This translates to 50,000 units per year, which is an ambitious but eminently doable objective. It is not clear exactly how many of these units will be rental units, but the language suggests that rental tenure will be the main tenure for the vast majority of these units.

Will this policy alleviate housing-based inequality? Yes. This policy would substantially alleviate housing-based inequalities by building much-needed affordable rental housing.

2. Fast-Start Funds

Stated Policy: “In order to kick-start the construction of co-ops, social and non-profit housing and break the logjam that has prevented these groups from accessing housing funding, we will set up dedicated fast-start funds to streamline the application process and help communities get the expertise and assistance they need to get projects off the ground now, not years from now. We’ll mobilize federal resources and lands for these projects, turning unused and under-used properties into vibrant new communities.”

Will this policy lead to housing that is more affordable? Yes. The purpose of this policy is to help “co-ops, social and non-profit” housing providers build new affordable housing, and these providers are among the main experts in providing affordable housing. If the full 500,000 new units are built, this will substantially improve the average affordability of rental housing across the country.

Will this policy lead to the production of new affordable rental housing? Yes. These new ‘fast-start’ funds will help “co-ops, social and non-profit housing” providers get new projects “off the ground”. Presumably, this will be linked to the construction of the 500,000 new units of quality affordable housing mentioned in the first policy statement.

Will this policy alleviate housing-based inequality? Yes. Any assistance that can be provided to co-ops, social and non-profit housing providers to produce new units will create a more equitable housing landscape.

3.Waive the federal portion of the GST/HST on new affordable rental units

Stated Policy: “A New Democrat government will also spur the construction of affordable homes by waiving the federal portion of the GST/HST on the construction of new affordable rental units”

Will this policy lead to housing that is more affordable? Yes. This policy will improve the construction cost equation for building new affordable rental units, which will mean the resulting units can be rented for less than they would have otherwise, producing more affordable units.

Will this policy lead to the production of new affordable rental housing? Yes. This policy is intended to incentivize the production of new affordable rental housing. If there are projects that were previously bordering on being viable that could benefit from having this tax reduced, this policy will push them into fully viable territory, facilitating the construction of new units. Saying this, it is not clear how many units this policy could actually help produce.

Will this policy alleviate housing-based inequality? Yes. If this policy makes some projects newly-viable from a cost perspective, it will have improved the housing equity landscape.

4. Rent Relief

Stated Policy: “We’ll provide immediate relief for families that are struggling to afford rent in otherwise suitable housing, while we bring forward long- term solutions to the housing affordability crisis.”

Will this policy lead to housing that is more affordable? Unclear. Any household receiving rent relief will obviously benefit, but the provision of rent relief could mean that landlords feel there is room to raise rents further. Thus, the impact on the average rent remains in question. This does not mean that the policy is misplaced, however, as the benefit of rent relief to vulnerable households facing eviction far outweighs any potential changes in average rents, which even if they involve increases would be minor.

Will this policy lead to the production of new affordable rental housing? No. This policy is meant to provide stability for existing tenants.

Will this policy alleviate housing-based inequality? Yes. This policy helps lower-income tenants who are most vulnerable remain in their housing. It will significantly help improve the lives of the children of lower-income households, as they will not have to move to new housing as often (and in turn, move to new neighbourhoods, schools, make new friends, etc). Moving often as a child has been found to impact well-being later in life.

5. 30-Year Mortgage Terms for First-Time Buyers, and double the Home Buyer’s Tax Credit

Stated Policy: “we will re-introduce 30-year terms to CMHC insured mortgages on entry-level homes for first time home buyers. This will allow for smaller monthly payments, freeing up funds to help make ends meet for young families. We’ll also give people a hand with closing costs by doubling the Home Buyer’s Tax Credit to $1,500.”

Will this policy lead to housing that is more affordable? No. While the lower payments will initially benefit those first-time buyers who qualify for the longer amortization term and the additional Home Buyer’s Credit, the fact this allows households to bid more for housing will push up prices to the point where they are no longer better off. The eventual result will be higher prices, coupled with higher debt loads for first-time buyers. 

Will this policy lead to the production of new affordable rental housing? No. This policy is intended to help buyers to bid for housing.

Will this policy alleviate housing-based inequality? No. It is likely to increase inequalities, as the price of housing and land rises as a result of these policies. Higher prices in the owner-occupied sector lead to higher rents in the rental sector, as landlords find they need to charge higher rents to afford their own mortgage payments, and the higher prices of owner-occupation push more people to compete in the rental sector.

6. Facilitate Co-Housing

Stated Policy: “a New Democrat government will provide resources to facilitate co-housing, such as model co-ownership agreements and connections to local resources, and ease access to financing by offering CMHC- backed co-ownership mortgages.”

Will this policy lead to housing that is more affordable? Yes. Co-housing models have traditionally provided affordable options for middle-income and lower-income households, so any policies that help build co-housing will improve overall affordability.

Will this policy lead to the production of new affordable rental housing? Potentially (unclear). Co-housing typically involves shared ownership, but there may be room for including some rental units in any new co-housing buildings.

Will this policy alleviate housing-based inequality? Yes. Co-housing models help serve a greater diversity of households, and help maintain housing stability for lower-income households. While co-housing will never be the main solution to the rental housing crisis, it can serve an important niche in helping create a more equitable housing landscape.

7. Foreign Buyer’s Tax

Stated Policy: “To help put an end to speculation that’s fuelling high housing prices, we’ll put in place a 20% Foreign Buyer’s tax on the sale of homes to individuals who aren’t Canadian citizens or permanent residents.”

Will this policy lead to housing that is more affordable? Not likely. As noted above, foreign buying was already minimal before the pandemic (especially, after the introduction of provincial taxes on foreign buyers) and it has dwindled to very small numbers during the pandemic. It has had minimal effect on housing prices, so an additional tax is not likely to do much at all.

Will this policy lead to the production of new affordable rental housing? No. The policy only targets sales of property.

Will this policy alleviate housing-based inequality? No. As noted in relation to the platforms of the Liberal Party and Conservative Party, if there were a number of foreign buyers waiting on the horizon for the pandemic to end in order to unleash a new wave of foreign buying, this policy could help prevent that from occurring. However, there is no evidence of that wave waiting to happen. Furthermore, if implemented in similar fashion to the policies in British Columbia and Ontario, this tax could reduce the incentive to immigrate to Canada (given the lack of affordable rental housing new immigrants face in Canada). And a policy like this makes it seem like foreign buying is one, or perhaps THE, cause of the housing affordability crisis, when in fact there is no evidence of this, but the perception can lead to greater inequalities as a result of rising racism, xenophobia and discrimination.

8. Fight Money Laundering

Stated Policy: “New Democrats will also fight money laundering, which fuels organized crime and drives up housing prices. We will work with the provinces to create a public beneficial ownership registry to increase transparency about who owns properties, and require reporting of suspicious transactions in order to help find and stop money laundering.”

Will this policy lead to housing that is more affordable? Potentially. As noted in relation to the other platforms, Canada needs more data on fraud and money laundering, and the latter typically leads to higher costs, so this initiative is welcome and could (slightly) lead to improved affordability.

Will this policy lead to the production of new affordable rental housing? No. This policy is not directed to producing new rental housing.

Will this policy alleviate housing-based inequality? Potentially. Lower-income households are more likely to be victimized by fraud, so addressing the latter will produce more equitable outcomes overall. As with the other platforms, a beneficial ownership registry would help the public understand who owns land and housing, and help produce a more transparent, fair and democratic housing system, but more detail is required to fully assess the impacts on inequality.

By Dr. Alan Walks (Professor, Geography and Planning, University of Toronto), Sean Grisdale (PhD Candidate, Geography and Planning, University of Toronto), and the Affordable Housing Challenge Partnership collective

Summary

The Liberal Party, as the current governing party, began rolling out their National Housing Strategy (NHS) in 2018/9, and their platform proposes to add to and extend this program if elected. Our opinion is that the policies contained in the Liberal platform will not adequately address the root causes of Canada’s housing crisis. The platform does make some long-awaited commitments to funding the renovation of some of Canada’s deteriorating purpose built rental housing stock. It also proposes to add a small amount (20,000 units) of new affordable rental housing to its current NHS commitments of supporting the construction of 160,000 “affordable” rental units. However, it’s important to note that almost half (45 percent) of these 160,000 rental units are planned through the Rental Construction Financing Initiative (RCFI), an NHS program whose affordability requirements are so minimal and so brief as to, in our view, not deserve the title “affordable”. Consequently, we remove the 71,000 units planned through RCFI from our calculation, concluding that the total number of affordable rental units planned through the NHS, should the Liberal’s be elected and follow through on their platform proposal, is 109,000. These are laudable, if modest, ambitions. These policies are also counterbalanced by commitments to new homeownership policies that we argue will make the affordability crisis worse. Indeed, their proposals to expand access to home ownership through a first-time home buyer incentive, and tax-free savings entitlements are only likely to increase house price inflation and household debt. Finally, as with the Conservative platform, the Liberals scapegoat foreign actors for the housing crisis despite evidence that domestic policies, as well as domestic speculators and corporations (eg. REITs and Private Equity firms) play a far more significant role.

Positives:

• Commits to adding 20,000 units of affordable rental housing, bringing their total commitment through the NHS to 109,000 affordable rental units.
• A Beneficial Ownership Land Registry will be key to identifying who owns real estate
• Commits to co-developing an “Urban, Rural and Northern Indigenous Housing Strategy”
• Commits to ending chronic homelessness

Negatives:

• An overemphasis on policies expanding access to mortgages and homeownership will only continue to drive housing price inflation, as well as household debt levels
• Many positive policies would appear to be beyond federal jurisdiction (eg. addressing NIMBYism, inclusionary zoning, public transit, rent controls and eviction bans).
• Overemphasis on foreign buyers as opposed to financialized and corporate buyers (both domestic and foreign)
• Policies addressing domestic speculators and corporations are weak and not likely to be effective

Deep Dive

The Liberal Party of Canada Platform

There are 14 stated policies or policy objectives, some multi-dimensional, in the Liberal Party platform.

1.New Tax-Free First Home Savings Account.

Stated Policy: “A re-elected Liberal government will: Introduce a tax-free First Home Savings Account will allow Canadians under 40 to save up to $40,000 towards their first home, and to withdraw it tax-free to put towards their first home purchase, with no requirement to repay it. Combining the features of both an RRSP and a TFSA, this plan would allow young Canadians to set aside 100% of every dollar they earn up to $40,000 and shorten the time it takes to afford a down payment.”

Will this policy lead to housing that is more affordable? No. In fact, this is certain to make existing housing less affordable on average. Funds put into this new TFFHSA will have to be spent on buying real estate, which will push up overall demand. The additional money from these funds will allow bidders to bid higher prices for the same house. While it may help those who are able to avail themselves of this fund, on average it will mean higher prices for everyone, and lead to greater inequalities related to affordability (see below).

Will this policy lead to the production of new affordable rental housing? No. This policy funnels money only into owner-occupation. By driving up land values in the process, it may make rents less affordable too (as landlords raise rents to cover all their costs).

Will this policy alleviate housing-based inequality? No. In fact, it will increase housing-based inequality. This policy will allow those under 40 years old who have $40,000 in savings to put them into this new TFFHSA and not only receive an immediate tax deduction, but also enjoy tax-free growth inside the fund. How many under-40s have $40,000 in savings? Only those who already enjoy higher incomes than others, perhaps because they have parents who are wealthy and have helped them (with education and training, rental housing costs etc). In fact, it is even more likely that it is the wealthy parents (largely from the boomer-generation) that this policy is targeting. This new fund allows the $40,000 to be gifted, providing wealthy ‘banks of mom and dad’ a new tax-subsidized vehicle for helping their kids get into owner-occupied housing. By providing dual-deductions (both going in, and coming out of the fund) the federal government will provide a significant tax subsidy worth upwards of $12,000 to the select group of borrowers (and their parents) that is able to access it.

Allowing these already-advantaged families even greater advantage will create greater inequality among this age cohort, as well as within the boomer generation (as only the wealthier boomers will have the funds to gift to their kids for this new TFFHSA). Furthermore, by cutting off the eligibility criteria at age 40, this policy will augment further inequalities between generations (why should someone who is 41 be so discriminated against?). This policy is a recipe for creating greater housing-based inequalities and future political divisions between and within generations, and it will be funded by a regressive tax subsidy to already-wealthy people. 

2. More Flexible First Time Home Buyer Incentive

Stated Policy: “In 2019, we launched the First Time Home Buyer Incentive (FTHBI), an innovative new tool that allows middle class families looking to buy their first home, reduce the size of the mortgage they require, and reduce their monthly housing costs. FTBHI is a shared-equity mortgage, where, upon sale, the government incurs a portion of any increase (or decrease) in a home’s value. A re-elected Liberal government will: Allow you to choose between the current shared- equity approach or a loan that is repayable only at the time of sale. This would let you keep more of any increase in the value of your home, while still reducing your monthly mortgage costs.”

Will this policy lead to housing that is more affordable? No. While this could potentially help an individual or family who otherwise might not be able to afford to purchase real estate, other things remaining equal this will add to demand in the more affordable segment of the housing market, and make housing in that segment less affordable on average.

Will this policy lead to the production of new affordable rental housing? No. This policy is only geared at the owner-occupied sector, and not the rental sector.

Will this policy alleviate housing-based inequality? Unclear. There is a possibility that home-buyers that use this program will see their own housing equity grow at slower rates than other home-buyers, for two reasons: 1) a portion of their equity is repayable to the federal government upon sale, reducing the buyer’s equity, and 2) because of the price-stimulating effect among units purchased through this program, those who buy in this segment may have bought at elevated prides and in turn see their long-term equity grow slower than property whose value was not as artificially raised. Saying this, the equity-growth potential of the underlying property assets accessible to those eligible for this program is not likely to have any significant impacts on overall inequality.

3. Reducing Closing Costs for First Time Buyers

Stated Policy: “A re-elected Liberal government will: Double the First-Time Home Buyers Tax Credit, from $5,000 to $10,000, which will put $1,500 in your pocket to make a home purchase a little bit easier.”

Will this policy lead to housing that is more affordable? No. By increasing the total demand, this policy will lead to higher overall prices, although it may (but in fact may not, if prices rise more) help those who are able to take advantage of it.

Will this policy lead to the production of new affordable rental housing? No. This policy is only geared at the owner-occupied sector, and not the rental sector.

Will this policy alleviate housing-based inequality? No. This tax credit is targeted at first-time buyers, which are a highly diverse group.

4. Reduce Your Monthly Mortgage Costs

Stated Policy: “Canadians who have a down payment of less than 20% of the cost of their house or who have a mortgage over $1 million dollars pay insurance premiums that can be up to 4% of the purchase price of a home. On the average Canadian home, this means a homebuyer could be paying close to $30,000 in premiums over the life of their mortgage. Typically, the smaller your down payment is, the higher your premiums. This puts financial pressure on families that can least afford it. A re-elected Liberal government will: Reduce the price charged by the Canadian Mortgage and Housing Corporation on mortgage insurance by 25%. For a typical homebuyer, this will save $6,100 [and] Increase the insured mortgage cut-off from $1 million to $1.25 million, and index this to inflation, to better reflect today’s home prices.”

Will this policy lead to housing that is more affordable? No. It will help stimulate more demand, leading to higher prices on average. It may benefit those who see their premiums drop, but overall those same buyers are likely to see average prices rise as the additional buying power bids up prices.

Will this policy lead to the production of new affordable rental housing? No. This policy is only geared at the owner-occupied sector, and not the rental sector.

Will this policy alleviate housing-based inequality? No. In fact, this policy could lead to greater inequalities in the future. CMHC premiums exist in order to help cover the losses associated with defaults, for instance in the case of a recession when people lose their jobs and can’t afford to make their mortgage payments. With lower CMHC premiums, this means that if a recession hit the federal government would be required to cover more of these losses, and to pay for this may have to reduce spending on other welfare supports, which mostly help low-income households. If this happens, it could increase inequality.

5.“Build, Preserve or Revitalize” 1.4 Million New Homes

Stated Policy Objective: “Our plan will build or revitalize an additional 250,000 homes over 4 years. On top of the 285,000 homes currently being built each year, this will mean nearly 1.4 million homes will be built, preserved, or revitalized by 2025-26 under a re-elected Liberal government.”

And: “The Liberal Housing Plan will support the construction of 100,000 middle class homes, helping more families achieve the goal of home ownership, while also building more than 20,000 more units of new affordable rental housing, and ensuring 130,000 units are revitalized from a state critical disrepair”

Will this policy lead to housing that is more affordable? Highly unlikely. If this policy led to sufficient new supply, it could help alleviate price increases, but the policy is not only about producing new housing, but ‘preserving’ and ‘revitalizing’ existing housing. The policy only forsees adding 100,000 new “middle class” homes over and above what otherwise would have been built, and only 20,000 “new affordable rental housing” units, across the entire nation. Presumably, the remaining 1.28 million units will be ‘preserved’ or ‘revitalized’. These numbers of new units are far too low to affect prices, whether in the rental or ownership sectors. Given the low numbers of new units proposed as a proportion of the total, this policy suggests that the federal government will help pay to renovate existing properties, which could lead to higher overall prices.

Will this policy lead to the production of new affordable rental housing? Yes. 20,000 new units of ‘new affordable rental housing’ are proposed.

Will this policy alleviate housing-based inequality? Unlikely. The number of new units, in either the owner-occupied sector (100,000) or the rental sector (20,000), is really too low to have an effect on housing-based inequalities at the national scale.

5.1. Help Cities Accelerate Housing Construction

Stated Policy: “A re-elected Liberal government will:

• Invest $4 billion in a new Housing Accelerator Fund which will grow the annual housing supply in the country’s largest cities every year, creating a target of 100,000 new middle class homes by 2024-25. This application-based fund will offer support to municipalities that: grow housing supply faster than their historical average; increase densification; speed-up approval times; tackle NIMBYism and establish inclusionary zoning bylaws; and encourage public transit-oriented development. This fund will support a wide range of eligible municipal investments, including red tape reduction efforts, and reward cities and communities that build more homes, faster.
• Help speed up the time it takes to build more homes by investing in e-permitting technology and help communities streamline the planning process.
• Work with municipalities to identify vacant or underused property that should be converted to housing on the principle of use it or lose it.”

Will this policy lead to housing that is more affordable? Unlikely. As noted above, the number of new units is quite low compared to the underlying need, and will have little affect on prices. It is also unclear whether the municipal approvals process is actually a problem, excepting the problems of NIMBYism which have been present in Canadian cities for over a century. But the federal government has no jurisdiction to intervene in municipal affairs, except for the case of housing for Indigenous residents. It is unclear whether the federal government can actually affect municipal decisions.

Will this policy lead to the production of new affordable rental housing? No. The policy only mentions building ‘100,000 new middle class homes by 2024-2025’, and does not mention rental housing at all. This is despite the fact that NIMBYism mainly affects rental housing, not owner-occupied or middle-class housing.

Will this policy alleviate housing-based inequality? Unclear. If the federal government were actually able to help alleviate NIMBYism, there is potential for reducing housing-based inequalities. But the federal government does not have jurisdiction over municipal affairs (municipalities are the ‘creatures of the Provinces’), except in the case of housing for Indigenous peoples. But the policy does not even mention Indigenous peoples, or the rental housing the is usually the target of NIMBYism.

5.2. Build and Revitalize More Affordable Housing

Stated Policy: “A re-elected Liberal government will: Permanently increase funding to the National Housing Co-investment fund by a total of $2.7 billion over 4 years, more than double its current allocation. These extra funds will be dedicated to helping affordable housing providers acquire land and buildings to build and preserve more units, extending the model of co-operative housing to new communities, accelerating critical repairs so that housing supply remains affordable and is not lost, and developing projects for vulnerable groups, such as women, youth, and persons with disabilities.”

Will this policy lead to housing that is more affordable? Yes. While the devil is in the details (which are not spelled out in this policy), if cooperatives and other affordable housing providers are provided with more funds they wil be able to reduce their costs and pass this along to households. It is not clear exactly how many units would be affected though.

Will this policy lead to the production of new affordable rental housing? Yes. The policy states that these ‘extra funds will be dedicated to helping affordable housing providers acquire land and buildings to build and preserve more units’. It remains unclear how many units will be affected by this policy, but the overall objective states that 20,000 new units of affordable rental housing will be built, so this is likely the target number for this policy.

Will this policy alleviate housing-based inequality? Yes, but by a small amount. Even if all 20,000 new units of affordable rental housing are built, this is a very small number in relation to the underlying need.

5.3. Convert Empty Office Space into Housing

Stated Policy: “A re-elected Liberal government will: Double our existing Budget 2021 commitment to $600 million to support the conversion of empty office and retail space into market-based housing. We’ll convert space in the federal portfolio, and commercial buildings [and] Work with municipalities to create a fast-track system for permits to allow faster conversion of existing buildings, helping maintain the vibrancy of urban communities.”

Will this policy lead to housing that is more affordable? Unclear. The kinds of housing that will  be produced out of the former office space is not specified.

Will this policy lead to the production of new affordable rental housing? Unclear. It is not clear what kind of housing the former office space will be converted to, nor how many units this might produce. The details are missing.  

Will this policy alleviate housing-based inequality? Unclear. Apart from the question of whether this might help alleviate housing affordability problems, this policy also raises questions about where people living in cities might work. Is this policy based on an assumption that the pandemic has permanently restructured live-work relations, and that many people currently working from home will continue to do so? If offices and retail spaces are converted to housing, there will be less space available for employment, especially in areas where traditionally one found higher concentrations of rental housing. If those jobs disappear, will renters need to buy cars in order to commute the longer distances where the remaining places of work are found? During the pandemic, renters were more likely to work in jobs that required them to come to the job site.

5.4. Help Bring Different Generations Under One Roof

Stated Policy: “A re-elected Liberal government will: Introduce a new Multigenerational Home Renovation tax credit to help families add a secondary unit to their home for an immediate or extended family member. Families will be able to claim a 15% tax credit for up to $50,000 in renovation and construction costs, saving up to $7,500.”

Will this policy lead to housing that is more affordable? Potentially. This policy could help alleviate pressure on existing rental units, by bringing family members back into the family home in new units.

Will this policy lead to the production of new affordable rental housing? Yes. The policy is meant to subsidize some of the costs of creating new units within the family home. It is unclear how many new units are envisaged as resulting from this policy.

Will this policy alleviate housing-based inequality? Unclear. This policy would help households who have space in their existing family homes to turn that space into separate units. It will therefore subsidize homeowners will larger houses, who are statistically wealthier on average (although there is much variation), and will benefit the family members of these higher-income households. But the freed-up space in the rental market could help alleviate some of the pressure on rising rents, benefitting others trying to find housing in the existing rental market. Once again, the devil is in the details, which are not provided in the platform.

6. New Rent-to-Own Program

Stated Policy: “A re-elected Liberal government will:

• Introduce a new rent-to-own program to help make it easier for renters to get on the path towards home ownership while renting. The program will be designed based on three principles: the landlord must commit to charging a renter a lower-than- market rate to help Canadians build up savings for a down payment; the landlord must commit to ownership in a five-year term or less; and proper safeguards will be in place to protect the future homeowner.
• Create a stream for current renters and landlords, particularly those in condo settings, to immediately enter into a rent-to-own agreement.
• Commit $1 billion in loans and grants to develop and scale up rent-to-own projects with private, not-for- profit, and co-op partners.”

Will this policy lead to housing that is more affordable? Unclear overall. On average by taking units out of the traditional owner-occupied market this program could lead to rising prices in that market. But by requiring that rents be lower than the market rent, it could lower average rents across the board (but may not affect the actual rents of those outside the program). Of course, those who meet the criteria for this program (but who otherwise would have remained renters) should benefit. Saying this, the policy is to provide ‘loans and grants to develop and scale up rent-to-own projects with private, not-for-profit and co-op partners’. Does the latter mean that this program will also be used to turn existing rental housing currently located in cooperatives and non-profits into owner-occupied housing? If so, this could mean a reduction in the number of rental units, and seriously impact the ability of cooperatives and non-profit housing providers to deliver their services, making rental housing more expensive. This is another policy where the devil is in the details, yet there are not sufficient details provided.

Will this policy lead to the production of new affordable rental housing? Unclear. The policy  appears intended to merely convert already-existing or already-planned units into rent-to-own units.

Will this policy alleviate housing-based inequality? Unclear. In other nations (such as the United States), rent-to-own programs have a chequered history, with many private rent-to-own programs actually working as vehicles for dispossession and equity-stripping. This is obviously not the intention here, but more detail will be needed before any assessment of the equity effects of this policy can be undertaken.

6. Support Indigenous Housing

Stated Policy: “A re-elected Liberal government will:

• Work with Indigenous partners to co-develop an Urban, Rural, and Northern Indigenous Housing Strategy and support this strategy with dedicated investments.
• Work with Indigenous partners to create a National Indigenous Housing Centre with Indigenous people overseeing federal Indigenous housing programs once fully realized.
• Make additional investments in First Nations, Inuit, and Métis Nation housing, as we continue to work towards meeting our 2030 commitment on closing the gaps for Indigenous Infrastructure.”

Will this policy lead to housing that is more affordable? Hopefully (but unclear). There is not enough detail in the policy statement to actually assess this question

Will this policy lead to the production of new affordable rental housing? Hopefully (but unclear). The policy is to “Make additional investments”. Does this mean building new housing? Or repairing existing housing? There are not enough details in the policy statement to answer this question.

Will this policy alleviate housing-based inequality? Unclear. Again, there is not enough detail provided to answer this question.

7. End Chronic Homelessness

Stated Policy: “A re-elected Liberal government will: Appoint a new Federal Housing Advocate within the first 100-days of a new mandate to ensure the federal government’s work toward eliminating chronic homelessness, as well as other housing commitments, are fulfilled, [and] Move forward with our plan to invest in Reaching Home: Canada’s Homelessness Strategy to support communities across the country.”

Will this policy lead to housing that is more affordable? Hopefully (unclear). The appointment of a Federal Housing Advocate is a positive objective. Not enough detail is provided about how this might affect affordability.

Will this policy lead to the production of new affordable rental housing? Unclear. There is no mention of building new housing units.

Will this policy alleviate housing-based inequality? Hopefully (maybe). If chronic homelessness could be ended, or even partly ameliorated, this would really help to reduce housing-based inequalities. But the data needed to assess the equity outcomes of this policy are not present in the statement.

8. Home Buyers’ Bill of Rights

Stated Policy Objective: “A re-elected Liberal government will: Create a national Home Buyers’ Bill of Rights so that the process of buying a home is fair, open, and transparent. [and] Convene federal and provincial regulators to develop a national action plan to increase consumer protection and transparency in real estate transactions.”

And: “The Home Buyers’ Bill of Rights will:

• Ban blind bidding, which prevents bidders from knowing the bids of other prospective buyers, and ultimately drives up home prices.
• Establish a legal right to a home inspection to make sure that buyers have the peace of mind that their investment is sound.
• Ensure total transparency on the history of recent house sale prices on title searches.
• Require real-estate agents to disclose when they are involved in both sides of a potential sale to all participants in a transaction.
• Move forward with a publicly accessible beneficial ownership registry.
• Ensure banks and lenders offer mortgage deferrals for up to 6 months in the event of job loss or other major life event.
• Require mortgage lenders act in your best interest so that you are fully informed of the full range of choices at your disposal, including the First Time Home Buyer Incentive.”

Some of these policies are within federal jurisdiction, but others are within provincial jurisdiction. To deal with this problem, we have separated these policies into two batches:

8.A – Those aspects of the ‘Home Buyer’s Bill of Rights’ that are under Provincial Jurisdiction:

• Ban blind bidding, which prevents bidders from knowing the bids of other prospective buyers, and ultimately drives up home prices.
• Establish a legal right to a home inspection to make sure that buyers have the peace of mind that their investment is sound.
• Ensure total transparency on the history of recent house sale prices on title searches.
• Require real-estate agents to disclose when they are involved in both sides of a potential sale to all participants in a transaction.

Will this policy lead to housing that is more affordable? Not likely. Blind bidding, optional home inspections, and full disclosure by agents, have been the norm for many years in a number of provinces already, even in times when prices rose much more slowly. Transparency of house sales is an excellent idea for establishing fairer and more transparent markets. But Nova Scotia has publicly released transparent sales histories for many years, and it suffered just as bad of a rapid price increase in the cost of housing as the rest of the country during the pandemic. Not only do these measures appear to have minimal effect on prices, but they are under provincial jurisdiction, so it is unclear how the federal government expects to accomplish these goals.

Will this policy lead to the production of new affordable rental housing? No. These measures only affect existing housing.

Will this policy alleviate housing-based inequality? Not likely. Making sure that transactions are fair and transparent, and that there is full disclosure of the interests of agents, will improve the perception and legitimacy of real estate markets, and could perhaps reduce fraudulent activity. But it is not clear that this would have much of an effect in reducing material inequalities.

8.B – Those aspects of the ‘Home Buyer’s Bill of Rights’ which are under Federal Jurisdiction:

• Ensure banks and lenders offer mortgage deferrals for up to 6 months in the event of job loss or other major life event.
• Require mortgage lenders act in your best interest so that you are fully informed of the full range of choices at your disposal, including the First Time Home Buyer Incentive.”
• Move forward with a publicly accessible beneficial ownership registry.

Will this policy lead to housing that is more affordable? Yes, slightly. By requiring lenders to offer mortgage deferrals, and act in the best interest of borrowers, they will need to charge higher average interest rates on uninsured mortgages, and be more open about borrowing options. The higher interest rates should help keep demand more stable (helping, in some small way to alleviate rapid price rises). Doing a better job at informing borrowers about their options should mean that borrowers are better matched with mortgage products that meet their needs, including lower-priced options, and better able to avoid predatory forms of lending. Note that this policy could only apply to federally-regulated lenders (like the large banks) and not the provincially-regulated lenders (like credit unions).

Will this policy lead to the production of new affordable rental housing? No. These policies mainly relate to existing housing.

Will this policy alleviate housing-based inequality? Yes. Borrowers who lose their jobs will not have their housing taken away in the first six months, providing some relief in the case of unemployment. This will help to partially decouple housing loss and job loss, providing more stability to housing careers. This is will be particularly beneficial for children living in affected households, as they will not have to move as often and/or in such highly-stressful situations. The latter (children moving often between units) has been found to affect well-being later in life. Furthermore, it is low-income households that will benefit the most from requiring lenders to act in their best interests, as low-income households are disproportionately affected by ‘mis-selling’, predatory lending, and other kinds of lending that take advantage of a household with fewer options.  Making the beneficial ownership registry publicly accessible would allow the public to see who owns each property, which will enhance democratic procedures and perhaps put pressure on owners to be more responsible with tenants.

9. Keep Your Rent Fair

Stated Policy: “To help better protect renters, a re-elected Liberal government will: Stop “renovictions” by deterring unfair rent increases that fall outside of a normal change in rent. [and] Require landlords to disclose, on their tax filing, the rent they receive pre- and post-renovation, and implement a proportional surtax if the increase in rent is excessive.”

Will this policy lead to housing that is more affordable? Yes. While once again the devil is in the details, more scrutiny of rent increases, and penalties for above-guideline rent increases (rent increases that are above the annual guideline set by the province, in those provinces that practice such guidelines), could help protect existing tenants from ‘renoviction’ (evicting the tenant explicitly in order that renovations can be made that increase the chargeable rent on a unit). Saying this, rent control is not within federal jurisdiction. And the Liberal Party has not said it would prevent CMHC mortgage guarantees from being used by ‘renovictors’ (which the NDP has promised). It is unclear just how much power the federal government would have to influence patterns of renoviction merely through federal tax policies.

Will this policy lead to the production of new affordable rental housing? No. This policy will only apply to existing housing, and is not meant to increase the supply of rental housing.

Will this policy alleviate housing-based inequality? Yes. Low-income households are far more likely to face eviction and ‘renoviction’, and any protection they can be granted will disproportionately benefit them, creating a more equitable rental landscape.

10. Curb Speculation and House Flipping

Stated Policy: “To reduce speculative demand in the marketplace and help to cool excessive price growth, a re-elected Liberal government will: Establish an anti-flipping tax on residential properties, requiring properties to be held for at least 12 months. Canadians who encounter changes in life circumstances due to, for example, pregnancy, death, new jobs, divorce, or disability will be exempt from this policy. As this tax is introduced rules will be established to ensure that sellers subject to this tax are able to deduct legitimate investments in refurbishment.”

Will this policy lead to housing that is more affordable? Not likely. The policy only applies this tax to sales within the first 12 months, so would-be ‘flippers’ might be expected to now wait 13 months. At any rate, it is not clear that most ‘flippers’ always do their flipping in the first 12 months. This policy will not likely have much of an effect on actual housing investment or behaviour.

Will this policy lead to the production of new affordable rental housing? No. This policy only applies to sales of existing housing.

Will this policy alleviate housing-based inequality? Not likely. Given this new tax is not likely to actually reduce speculation, it is not likely to reduce speculation-induced forms of housing inequality either.

11. Crack Down on Foreign Ownership

Stated Policy: “A re-elected Liberal government will:

11.A. Ban on Foreign Buying

• Ban foreign money from purchasing a non- recreational, residential property in Canada for the next two years, unless this purchase is confirmed to be for future employment or immigration in the next two years.

Will this policy lead to housing that is more affordable? Not likely. Even before the pandemic, available statistics suggest that foreign buyers were only a small fraction of the total market: after British Columbia and then Ontario instituted taxes on foreign buyers, their share dropped to very small numbers. The pandemic has reduced this further. The rapid rise in prices during the pandemic is due to Bank of Canada’s ‘Quantitative Easing’ program, in which the Bank purchases government bonds, and mortgage-backed securities, in order to bring mortgage rates and other interest rates down, as well as the federal government’s Insured Mortgage Purchase Program (IMPP), in which the federal government has purchased very large numbers of qualifying mortgages from the banks, taking the risk off the banks and spurring them to lend more, to more people. A ban on foreign buying will have no direct effect on this, and in turn, on current prices.

Furthermore, the ban will only apply to ‘non-recreational, residential property’, meaning that foreign buyers will *still* be able to purchase property for recreational use (cottages, ski resorts, etc), as well as purchase property for agricultural use. This policy will not prevent agricultural land from being bought up by foreign companies.

Will this policy lead to the production of new affordable rental housing? No. The policy has little to do with rental housing production.

Will this policy alleviate housing-based inequality? Not likely. Might this policy prevent a new wave of foreign buying post-pandemic? There is no evidence that such a wave is imminent, but perhaps this policy could prevent one from occurring if such a wave were to emerge in a world divided by covid-based safety concerns. On this, one can only guestimate. However, a policy like this makes it seem like foreign buying is one, or perhaps THE, cause of the housing affordability crisis, when in fact there is no evidence of this; but the perception can lead to greater inequalities as a result of rising racism, xenophobia and discrimination.

11.B. Non-Resident Tax on Vacant, Underused Housing

• Extend Canada’s first-ever national tax on non- resident, non-Canadian owners of vacant, underused housing, announced to begin on January 1, 2022 to include foreign-owned vacant land within large urban areas.
• Work with provinces and municipalities to develop a framework to better regulate the role of foreign buyers in the Canadian housing market so that this money does not deter housing from being available for, and used by, Canadians.”

Will this policy lead to housing that is more affordable? Unlikely. There is currently not enough data on the extent to which non-residents own vacant, underused housing. If the latter is extensive, then a national tax could spur owners to rent out more of this underused housing into the long-term rental market, or perhaps offer it for sale, in turn providing more competition in the housing market. Current data suggest that non-resident ownership is not substantial, however. Until there is sufficient data on non-resident ownership, the true impact of this policy remains unknown.

Will this policy lead to the production of new affordable rental housing? No. This policy applies to existing vacant, underused housing.

Will this policy alleviate housing-based inequality? Unclear. Because of insufficient data, it is not possible to assess whether this policy would have much of an effect, nor what kind of effect, on prices, rents, and the level of housing-based inequality.

12. Stop Excessive Profits in the Financialization of Housing

Stated Policy: “Large corporate owners of residential properties such as Real Estate Investment Trusts (REITs) are amassing increasingly large portfolios of Canadian rental housing, making your rent more expensive. Homes should be for people to live in, not financial assets for investment funds to speculate on. A re-elected Liberal government will:

• Review the tax treatment of these large corporate owners.
• Put in place policies to curb excessive profits in this area, while protecting small independent landlords.
• Review the down payment requirements for investment properties.”

Will this policy lead to housing that is more affordable? Potentially. REITs and other large real estate asset management firms have been purchasing increasing numbers of rental buildings across the country, and then raising rents, with those rents flowed out to investors. Many of these firms seek to evict existing tenants after buying up the buildings so they can charge higher rents to new tenants. This leads not only to eviction, but higher average rents. Any attempt to dampen this type of behaviour should help maintain affordability. However, the policy only suggests that the federal government will ‘review the tax treatment’ of these firms and ‘put in place policies to curb excessive profits’. But what are ‘excessive’ profits? The federal government will apparently allow these practices to continue as long as the profits are not ‘excessive’ by their definition. They are not promising to stop the evictions or rent increases, so it is not clear how much of an impact this policy will have, if any. The proposal to “review the down payment requirements for investment properties” is too vague a statement to make any assessment of it. It is not clear that downpayment requirements are a major factor that is stimulating the financialization of rental housing.

Will this policy lead to the production of new affordable rental housing? No. REITS and other larger real estate asset managers generally purchase existing rental housing (not build new housing), and this policy itself says nothing about spurring the production of any new rental housing.

Will this policy alleviate housing-based inequality? Potentially. Again the devil is in the details. If the federal government merely moves to reduce ‘excessive’ profits, but allows these types of firms to otherwise continue with their general practice of evicting tenants so that they can raise rents with new tenants, then this policy will not have much of an effect.

13. Protect the Stability and Security of the Housing Market

Stated Policy: “To strengthen federal oversight of the housing market, a re-elected Liberal government will:

• Establish the Canada Financial Crimes Agency as Canada’s first ever, national law enforcement agency solely dedicated to investigating and combatting all forms of major financial crime.
• Increase the power of federal regulators to respond to housing price fluctuations and ensure a more stable Canadian housing market.”

Will this policy lead to housing that is more affordable? Potentially. This new Canada Financial Crimes Agency could provide data that is currently lacking, and help policy-makers create policies that better address financial fraud. All of that is welcome. But the second promise to ‘increase the power’ of regulators to deal with house price fluctuations is woefully under-explained. Federal regulators currently have enough power to respond to house price fluctuations if they choose, and they have done so by modifying lending criteria from time to time, including and particularly in relation to mortgages. It is not clear why they might need more power than this, or what extra powers are being suggested. Why haven’t they used the powers they already have to reduce speculation and risky lending? What new powers are being suggested?

Will this policy lead to the production of new affordable rental housing? No. This policy does not directly relate to the rental housing market.

Will this policy alleviate housing-based inequality? Potentially. Financial fraud is disproportionately harmful to lower-income borrowers, and any attempt to reign it in will help reduce predatory forms of lending and protect vulnerable borrowers. It is not clear how new regulatory powers meant to enhance price stability would affect housing-based inequalities though.

By Dr. Alan Walks (Professor, Geography and Planning, University of Toronto), Sean Grisdale (PhD Candidate, Geography and Planning, University of Toronto), and the Affordable Housing Challenge Partnership collective

Summary

Underlying the Conservative Party’s housing platform is a core belief that the private sector and the production of new housing supply “in general” is the ultimate solution to Canada’s housing woes. In our view, this platform is missing a major component necessary to building a balanced and affordable housing supply: policies that will help produce affordable market, non-market, and rent-regulated supply.  The conservatives do not actually voice a specific commitment to new rental housing numbers, although they do promote higher density of housing near transit stations. Indeed, there is little mention of “affordable” housing in their platform. In this platform, the housing crisis is blamed primarily on four scapegoats: lack of supply (which is odd given that housing starts have remained high over the last decade), foreign speculators, corruption, and money laundering. However, the implication that Canada’s housing affordability problems are primarily due to foreign actors is inaccurate at best, and ignores the significant role that domestic speculators and corporations (eg. REITs and Private Equity firms) also play.

Positives:

• Commits to transit-oriented housing infrastructure (though this is not a federal jurisdiction)
• Commits to incentives for private land donations to land trusts and cooperatives
• A Beneficial Ownership Land Registry will be key to identifying who owns real estate
• Commitments to a “For Indigenous by Indigenous” housing strategy
• Incentives for foreign investors to build affordable rental housing

Negatives:

• An overemphasis on policies expanding access to mortgages and homeownership will only continue to drive housing price inflation, as well as household debt levels
• No specific commitments to producing “affordable housing” (only “housing” in general)
• Relies on privatizing public land and infrastructure
• Commits solely to incentivizing private developers to increase private housing supply
• Their homelessness strategy has no direct housing component, and appears to assume homelessness is merely a by-product of addiction
• Overemphasis on foreign buyers as opposed to financialized and corporate buyers (both domestic and foreign)
• No intention to address role of domestic big business and speculation in the housing market

Deep Dive

The Conservative Party of Canada Platform:

There are five large multi-part policies or policy objectives related to housing in the Conservative platform.

Will this policy lead to housing that is more affordable? Unclear. This policy is based on the assumption that supply has not increased enough to meet demand, especially near public transit locations, and that an increase in supply near transit should make housing more affordable. While building more units near transit stations IS a laudable goal, and will help the household budgets of tenants who might not be able to afford a car, it is not clear that this policy on its own will affect average unit prices in any substantial way. Again, the devil is in the details. It is also not clear that municipalities are slowing down the building of new units near transit stations in any meaningful way, so there may not be much low-hanging fruit that this policy could help correct.

Will this policy lead to the production of new affordable rental housing? Maybe (unclear). This policy is intended to spur the building of new units near transit stations. While the tenure of these units is not mentioned, traditionally units in high-density buildings near transit are more likely than other units to be rented out on the long-term rental market, due to the higher level of demand for such rental units. So, it would be expected that this policy, to the degree that it helps produce new units, will in turn produce new rental units. However, it is not clear whether these new units would be affordable. If they are found in ‘luxury’ condo buildings, then these new units might have expensive rents.

Will this policy alleviate housing-based inequality? Potentially. The effect on housing-based inequality depends on whether the new units will include affordable rental units. Ideally, all the new units built near transit would meet the criteria for affordable rental units, and if this were the case, then this policy would improve housing-based inequalities. If, on the other hand, the new units built under this policy are expensive owner-occupied units, then it will have allowed higher-income households to benefit from this policy, producing greater housing-based inequalities.

1.2. Review the extensive real estate portfolio of the federal government – the largest property owner in the country with over 37,000 buildings – and release at least 15% for housing while improving the Federal Lands Initiative

Will this policy lead to housing that is more affordable? Unclear. This policy essentially states that the federal government will ‘release’ (sell off?) 15% of its 37,000 buildings to other owners for housing. That is, it appears to be a policy of privatizing public assets. Will these buildings be used to create affordable housing, or instead will they create housing that does not meet the criteria for affordability? Private owners typically target the upper-income segments of the market, as that is where the profits are greatest. A better policy, from the perspective of affordability and equity, would be to maintain public ownership of these buildings, and turn them into social affordable housing.

Will this policy lead to the production of new affordable rental housing? Unclear. Not only is it unclear whether the housing units that might eventually result from this policy be in the rental sector (vs the owner-occupied sector), but it is not clear whether the units would meet the criteria for affordability, or even whether this policy will result in a net growth of units.

Will this policy alleviate housing-based inequality? Unclear. If this policy results in the sale of public assets to private owners who target the upper-income segment of the housing market, it could create greater inequalities, without a parallel profusion of new rental units for lower-income households.

Will this policy lead to housing that is more affordable? Unclear. Allowing landlords to defer capital gains when trading properties certainly will ‘incent’ more trading, but it is not clear that this would make the units more affordable. It benefits the landlords. Meanwhile, the idea of converting office space to housing would have unclear affects, especially given there are no more details concerning what kinds of housing might be created, and at what price levels.

Will this policy lead to the production of new affordable rental housing? Unclear. Only the suggestion of converting office space to housing has the potential for creating new units, but no details are provided of whether these would be rental units, or how affordable they might be. If the federal government were to convert office buildings to social affordable rental (retaining ownership of the buildings), this would certainly produce new affordable rental units, but the policy does not state this.

Will this policy alleviate housing-based inequality? Unclear. The same lack of clarity, and issues that would have to be dealt with, are present here in the Conservative Platform as in the Liberal Platform on office space. A policy of converting offices to housing raises questions of where people in cities might work in the future. If lower-income households become forced to drive to far-away locations to find work, this could lead to new housing-based inequalities. The same comment applies to both the Conservative and Liberal policies in this regard. 

1.4. “Continue the Conservative commitment to Reconciliation with Canada’s Indigenous Peoples by enacting a “For Indigenous, By Indigenous” strategy [and]

Canada’s Conservatives are committed to putting a stop to federal paternalism and instead partnering with Indigenous communities and empowering Indigenous Peoples with the autonomy to meet their own housing needs.

Enhance the viability of using Community Land Trusts for affordable housing by creating an incentive for corporations and private landowners to donate property to Land Trusts for the development of affordable housing. The incentive will mirror that which exists for donating land to ecological reserves.”

Will this policy lead to housing that is more affordable? Yes. First of all, if Indigenous Peoples are given more power and control over their housing needs, as long as this is accompanied by additional resources to see their ideas to fruition, they will come up with better solutions for their own communities. Second, community land trusts have been shown to be a positive solution for creating and maintaining affordable housing in the long term. Federal incentives to donate land for community land trusts would help keep land out of speculative markets and help produce more stable and affordable housing.

Will this policy lead to the production of new affordable rental housing? Yes. Importantly, community land trusts typically keep the land in trust, and develop housing for either rent or long-term lease above ground. They are able to offer much more affordable rental rates over the long term.

Will this policy alleviate housing-based inequality? Yes. Not only would greater Indigenous control and power (as long as this is accompanied by sufficient resources) help Indigenous Peoples to create more equitable outcomes within their communities, this will help create a more equitable nation. Community land trusts, likewise, will help preserve housing within cities for a diversity of populations, at affordable costs, and in turn will help produce more equitable neighbourhoods and cities.

2. Root out the Corrupt Activities that Drive Up Real Estate Prices. “To root out the corrupt activities that drive up real estate prices and put homeownership out of reach, we will:

• Implement comprehensive changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and give FINTRAC, law enforcement, and prosecutors the tools necessary to identify, halt, and prosecute money-laundering in Canadian real estate markets
• Establish a federal Beneficial Ownership Registry for residential property.
• Closely examine the findings and recommendations of the Commission of Inquiry into Money Laundering in British Columbia, which is doing important work, and quickly implement recommendations at the federal level.”

Will this policy lead to housing that is more affordable? Potentially. Currently it is not known to what extent fraud and money laundering have inflated real estate markets, so it is important to investigate this issue to provide solid reliable data. The Federal Beneficial Ownership Registry is a very positive step that would allow the public to identify the owners of property. Saying this, it is not clear that these policies would on their own reduce housing costs.

Will this policy lead to the production of new affordable rental housing? No. This policy is directed at existing housing and sales of new owner-occupied housing.

Will this policy alleviate housing-based inequality? Potentially. Fraud and illicit activity typically has a greater negative impact on lower-income households, and raises overall costs. As noted for the Liberal Platform, making the beneficial ownership registry publicly accessible would allow one to see who owns each property, which will enhance democratic procedures and perhaps put pressure on owners to be more responsible with tenants.

3. Arrest and Reverse the Inflationary Impacts of Foreign Buyers and Speculation. Stated Policy: “we will ensure that housing in Canada is truly for Canadian citizens and residents first…We will:

• Ban foreign investors not living in or moving to Canada from buying homes here for a two year period after which it will be reviewed.
• Instead, encourage foreign investment in purpose-built rental housing that is affordable to Canadians.”

Will this policy lead to housing that is more affordable? Unclear. As noted, foreign buying was already low before the pandemic, and has been minimal during the pandemic. A ban on foreign buying is not likely to affect prices or rents. At the same time, this policy seeks to ‘encourage foreign investment in purpose-built rental housing that is affordable’. It is unclear how this will be done. And how it is done matters a lot. Policies that encourage such foreign investment could stimulate REITs and other large firms to move more aggressively into rental markets, and this could lead to higher rents (because these firms often do not build new housing, but instead seek to squeeze more rent out of existing tenants). But if the policies could be fine-tuned to only stimulate the building of new rental units, this could go some way to making housing more affordable. The devil, once again, is in the details.

Will this policy lead to the production of new affordable rental housing? Yes. The policy explicitly seeks to ‘encourage foreign investment in purpose-built rental housing that is affordable’. It is not clear how many new units are being targeted, however, so it is difficult to say how much of an effect this policy will have.

Will this policy alleviate housing-based inequality? Not likely. As noted for the Liberal Platform, if there were a new wave of foreign buying on the horizon, the ban could stave that off, but there is no evidence of such a potential wave. If the other part of the policy stimulating foreign investment in new rental housing does create new units with affordable rents, this could alleviate housing-based inequalities, but there is not enough information in the policy statement to suggest that this would be the case. Also, importantly (as also noted for the Liberal Platform and the NDP Platform), a ban on foreign buying makes it seem like foreign buying is one, or perhaps THE, cause of the housing affordability crisis, when in fact there is no evidence of this; but the perception can lead to greater inequalities as a result of rising racism, xenophobia and discrimination.

4. Address Homelessness. Stated Policy: “To address homelessness, we will:

• Re-implement the Housing First approach, which has been watered down by the current federal government, to aid in the fight against Canada’s addictions crisis.
• Revise the federal government’s substance abuse policy framework to make recovery its overarching goal.
• Invest $325 million over the next three years to create 1,000 residential drug treatment beds and build 50 recovery community centres across the country.
• Support innovative approaches to address the crises of mental health challenges and addiction, such as land-based treatment programs developed and managed by Indigenous communities as part of a plan to enhance the delivery of culturally appropriate addictions treatment and prevention services in First Nations communities with high needs.”

Will this policy lead to housing that is more affordable? Unclear. This policy appears to assume that homelessness is mainly the result of drug addiction and mental health challenges, and not the result of a lack of affordable housing. Treating addictions and mental health challenges is very important, and coupled with Housing First strategies, this could benefit the homeless. However, the policy does not appear to also seek to reduce the cost of housing.

Will this policy lead to the production of new affordable rental housing? Not likely. It is unclear whether the ‘re-implementation’ of the Housing First approach will mean the addition of new units. Typically, Housing First strategies have used existing housing units in social housing buildings to house the homeless.

Will this policy alleviate housing-based inequality? Yes. Any additional help for those experiencing homeless will help reduce housing-based inequalities, although an acknowledgment that housing costs are also a factor creating homelessness, coupled with policies to reduce those costs, would be even more impactful.

5. Make Mortgages More Affordable. Stated Policy: “To make mortgages more affordable, we will:

• Encourage a new market in seven- to ten-year mortgages to provide stability both for first-time home buyers and lenders, opening another secure path to homeownership for Canadians, and reducing the need for mortgage stress tests.
• Remove the requirement to conduct a stress test when a homeowner renews a mortgage with another lender instead of only when staying with their current lender, as is the case today. This will increase competition and help homeowners access more affordable options.
• Increase the limit on eligibility for mortgage insurance and index it to home price inflation, allowing those in high-priced real estate markets with less than a 20% down-payment an opportunity at home-ownership.
• Fix the mortgage stress test to stop discriminating against small business owners, contractors and other non-permanent employees including casual workers.”

Will these policies lead to housing that is more affordable? No. Each of these four policies will increase housing and land prices, because they will allow bidders to borrow greater amounts when bidding for housing. The higher bids will drive up prices very quickly, defeating the purpose of these policies. So, while these policies may temporarily make ‘mortgages’ more affordable for the households who initially access these mortgages, the housing that is purchased with those mortgages will become more expensive, and over time even the mortgage payments will rise back to their current (or worse) level of affordability. The result will be more indebted home-owners, and higher prices. Rising prices in the owner-occupation sector over time will mean fewer can afford to own, pushing up competition in the rental sector, leading to rising rents as well (unless many new units of rental housing are also built).

While it may seem counter-intuitive to many readers, housing affordability would be more improved by making it tougher to get a mortgage, and by reducing the amounts one could borrow. This would reduce the average bids for property, producing more of an even playing field among buyers and sellers, and producing a soft landing in prices. The rapid rise in housing costs was caused by so many borrowers being able to take out such large mortgages. It is a debt-fuelled housing affordability crisis. Reducing the amounts that people can borrow will mean lower average prices over time.

Saying all this, the stress test should be made more equitable for small-business owners and the self-employed, and the requirement for conducting a new stress test should be removed when renewing a mortgage with another federally-regulated lender. These are good policies and should be implemented in the service of fairness, although they are not likely to affect overall average affordability in any way.

Will this policy lead to the production of new affordable rental housing? No. These policies apply to housing purchase.

Will this policy alleviate housing-based inequality? No. Instead, on average they are likely to lead to greater levels of inequality (with one caveat about greater equity between the self-employed and those with salaried jobs) due to rising housing prices. Rising prices will mean rising debt loads, which disproportionately affect lower-income households. And rising prices will mean more competition in the rental sector, leading to rising rents and greater rental inequality.

By Dr. Alan Walks (Professor, Geography and Planning, University of Toronto), Sean Grisdale (PhD Candidate, Geography and Planning, University of Toronto), and the Affordable Housing Challenge Partnership collective

Affordable housing has emerged as one of the biggest concerns of voters during the 2021 federal election, in part because of the rapid increase in house prices that has occurred over the last two decades, and especially during the COVID-19 pandemic.

Each of the main national-scale political parties has promised new policies they claim will promote greater affordability of housing. The newsmedia is already full of commentaries on how these policies will or will not affect housing affordability. Of course, what is meant by ‘affordable housing’ is rarely defined, whether by these commentators or the political parties themselves, yet the definition of ‘affordable’ matters very much to these conversations.

In this blog post, we offer our thoughts on each of the housing policies contained in the major national-scale federal party platforms, and we comment on their effects in both a) making housing more affordable, which we define as declining average real rents in the rental sector, and declining average real prices in the owner-occupied sector, and b) building new rental units that are affordable according to i) the principles set out by the CMHC, which states that housing is affordable if the household spends less than 30 percent of their before-tax budget on housing, and ii) a common definition of affordable rental housing in Ontario, which states that a rental unit is affordable if it rents for less than 80 percent of the average market rent in its locality.

Furthermore, any discussion of housing affordability cannot avoid discussions of housing equity and equality. If a policy leads to declining rents or prices for the rich, but rising prices or rents for lower-income households, it is a policy that increases housing inequality and hurts those who need affordability the most. It is therefore important that we comment on the equity aspects of each policy. Ideally, we should only see policies that a) make housing more affordable, and b) produce new affordable rental units, and c) reduce housing-based inequalities. However, our analysis suggests that many of the policies being promoted by the federal political parties fail on one or more of these criteria.

Three national-scale political parties have released lengthy policy platforms: the Liberal Party of Canada, the Conservative Party of Canada, and the New Democratic Party. We comment on how and whether each of the policies listed in those platforms would lead to:

1. New affordable rental housing,
2. Alleviation (or augmentation) of existing housing-based equalities, and
3. Housing that is more affordable (declining rents and prices).

Detail is provided for the assessment of each policy below.

It is instructive to calculate what proportion of the stated platform policies from each political party would actually make housing more affordable and/or reduce housing-based inequalities (see above). Each political party is proposing some policies that would make housing more affordable or create affordable housing, yet at the same time each political party is also proposing measures that make housing LESS affordable.

On balance, the NDP platform contains the largest proportion (50 percent) of policies that would actually lead to greater affordability, and is tied with the Conservative Party for having the least number of policies that would actually make housing less affordable (13 percent). Only a small proportion of both the Liberal Party platform (15 percent) and Conservative Party platform (13 percent) involves policies that would produce greater affordability with any certainty. However, there are also some policies that could potentially improve affordability in each of the Liberal platform (15 percent), Conservative platform (13 percent) and NDP platform (13 percent). There is a similar pattern related to the proportions of each platform that would produce new affordable rental units. A greater proportion of the NDP platform policies (38 percent) would result in the construction of new rental housing than the Conservative platform (25 percent of policies) or the Liberal platform (15 percent). This means that a majority of the policies proposed by each of the three parties would NOT result in the production of new affordable rental housing. However, in terms of the actual numbers of affordable rental units promised, at upwards of close to 500,000 new units the NDP proposal is far ahead of the Liberals, who have only promised 20,000 new units, or the Conservatives, who did not list a targeted number of new units they think their platform would help build.

In terms of policies that would reduce housing-based inequalities, as a proportion of the policies directed to housing in the party election platforms, the NDP is far ahead with 63 percent of their policies promoting greater housing-based equality, compared to the Liberals (15 percent) or the Conservatives (25 percent). However, it is also instructive that 25 percent of both the NDP and Conservative platforms, and 35 percent of the Liberal Party platform, involve policies that would actually worsen housing-based inequalities. Furthermore, in many cases not enough information is provided about how the policy will work to properly assess the outcomes, in which case the outcome is deemed unclear.

Below, each of the policies related to housing in each party platform is considered. Click through to read our reports.