Multi-billion-dollar housing plan still a few steps short
By Adam FreillConstruction Residential
Residential builders association says federal fall economic statement is encouraging, but more action is needed.
Measures rolled out by the federal government in its fall economic statement are a step in the right direction towards tackling the most critical housing crisis in generations, but the government can and must do more, says the Residential Construction Council of Ontario (RESCON).
“Billion-dollar fixes are being proposed, but the housing supply crisis and affordability issue is a trillion-dollar problem, as noted by the CMHC,” stated RESCON president Richard Lyall. “We are encouraged that housing is a main focus of the feds but there are still many impediments that were not addressed such as the enormous infrastructure funding gap faced by municipalities that impedes new home construction. We need a Marshall plan-styled strategy with respect to the chronic housing supply shortfall.”
RESCON was pleased the government announced $15 billion in new loan funding for builders of rental properties and $1 billion to support the building of affordable housing, as well as a mortgage charter that will clarify rules for homeowners who are facing renewals and ensure that lenders have appropriate mortgage relief policies in place for consumers facing hardship.
“These measures are commendable as they will have a positive impact on homeowners who are looking at hefty increases in their mortgage payments,” stated Lyall. “We are also encouraged at measures to spur rental housing construction by offering builders loans that have favourable terms.
“However, many impediments to housing construction were not addressed, such as reducing taxes associated with purchasing a home and the unacceptably long approvals process that builders must endure when starting a project. Without tackling these issues, and the huge infrastructure funding gap being faced by municipalities, the housing problem will not be solved,” he explained. “Municipalities are in a challenging position and the feds must pick up the slack by funding the necessary public infrastructure to support housing.”
Municipalities have very limited means to fund housing-related municipal infrastructure and rely on revenue tools such as development charges. However, taxes, fees and levies now add up to 31 per cent to the cost of a home for new buyers. RESCON provided the example of a consumer buying a $1-million home. That homeowner ends up paying $310,000 in taxes, fees and levies. Amortized over the life of a mortgage, it amounts to hundreds of thousands of dollars in interest. Also concerning is that the federal government collects 39 per cent of tax revenue from new housing yet only invests seven per cent back into infrastructure in Ontario.
“The federal government is uniquely positioned to take action on these issues and bring down the cost of rental and ownership housing,” added Lyall. “It is imperative that the feds step up to the plate and do what is right to make housing more affordable for Canadians. RESCON will continue to press for more expansive and impactful policy and funding measures. Our future depends on it.”