New 'Canada Mortgage Charter' among housing measures in fall economic statement - Action News
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Politics

New 'Canada Mortgage Charter' among housing measures in fall economic statement

The Trudeau government moved Tuesday to provide help to homeowners hit hard by high housing costs with measures meant to make it easier to pay rents and mortgages.

Much of the new spending is forecast for after the next election

An image of two construction workers standing on the roofs on a string of houses being built.
New homes under construction in Ottawa on Monday, Aug. 14, 2023. (The Canadian Press)

The Trudeau government moved Tuesday to provide help to homeowners hit hard by high housing costs with measures intended to make it easier to pay rents and mortgages.

The government is also taking steps to increase the supply of homes in Canada. It's movingto discourage property owners from turningapartments and condosinto short-term rentals for tourists, removing the GST from construction of eligible new co-op rental housing, working with municipalities to reduce hurdles for new builds and making the construction of affordable housing more attractive for developers.

"Our government really understands that housing is an urgent concern of Canadians, and housing is so connected to affordability for Canadians," Finance Minister Chrystia Freeland told reporters as she unveiled her fall economic statement.

Freeland's economic outlook comes as Canadians across the country grapple witha sharp increase in interest rates. While homeowners whohave had to renew their mortgages in recent months, orhavevariable homeowner lines of credit, are feeling the squeeze already, others are looking at significant increases in their mortgage payments as they prepare to renew.

Meanwhile,rents in many Canadian cities have been rising.

Starting in the next fiscal year, Ottawa will make $15 billion available in new loan funding under the Apartment Construction Loan Program an initiative meant to spur the construction of affordable homes.That program is expected to cost the federal government $342 million.

That program is expected to deliver 101,000 new homes by 2031-32, the economic statement said.

The economic statementunveiled something called a Canadian Mortgage Charter, which calls on financial institutions to provide more relief to Canadians hit hard by high interest rate increases.

The charter calls on lenders toallow temporary extensions to amortization periods for homeowners stretched thin, waivefees and costs that institutions might otherwise charge for relief measures, and give mortgage holders the option of making lump sum payments or selling their homes without mortgage prepayment penalties.

"From my perspective, the charter is one of the most important things that we're putting forward today, because I really recognize that with interest rates having gone up very quickly, there are many, many Canadians who are ... concerned about being able to afford to stay in their own homes," Freeland told reporters. "What we're saying today is we understand this is a challenging situation and we are here to help."

While the government is budgeting $6.2 billion between now and 2028/29 for the new measures,much of the spending is planned for the years following the next election. The governmenthas not budgeted any money for the mortgage charter.

A GST holiday for co-op housing

The biggest housing measure Freeland unveiled Tuesday removes the GSTfromconstruction of eligible new co-op rental housing projects.

The measure won't apply to substantial renovations of existing units a limit the government says is meant to reduce the chances of owners "renovicting" tenants.

The government is encouraging provinces to also remove their sales taxes from rental home construction.

The government is budgeting $1 billion between 2025/26 and 2028/29 to encourage the construction of 7,000 affordablenon-profit, co-op and public housing homes.

Short-term rentals

The government's plan to tighten up the tax rules for short-term rentals in cities and provinces that have cracked down on them will go into effect "on or after" Jan. 1, says the update.

The economic statementproposes to deny income tax deductions for expenses incurred to earn short-term rental income in areas where these units arenot in compliance with local laws.

The government says that in Montreal, Toronto and Vancouver, an estimated 18,900 houses and apartments were being used for short-term rentals on platforms like Airbnb and Vrboin 2020.

"Canada needs more long-term housing for Canadians to live in, and the federal government is taking action to crack down on these short-term rentals which are keeping homes in Canada off the market," says the economic update.

The government says its plan to protect international students from fraudulent organizations that take advantage of them will also improveaccess to housing. Details of that plan are to be unveiled in the coming months.