Federal Election Housing Platforms – what to know if you are planning on buying or selling a home....
With the Federal Election in Canada September the 20th, many are interested if the election will have a result on the Toronto Housing Market, and especially are they going to cause Toronto house prices to drop? This is important stuff for homeowners!!
Here are highlights of the parties’ platforms with my comments below – I have just chosen to focus on new initiatives, not changes to existing programs in the 3 main parties. Full party platforms are linked. The key issues are:
- Housing Supply in Canada
- Qualification for buying a home
- Anti-fraud/anti-crime measures
- Financial assistance
- Miscellaneous
Liberal Housing Platform
The Liberal Party Housing Platform received the most media coverage, partly because it was announced in Hamilton last week. There has been a lot of industry reaction from realtors because their platform addressed issues like bidding. Key for the Liberal Party is increasing Housing Supply. Highlights include:
- Building 1.4 million homes in 4 years
- $2.7 Billion over 4 years to National Housing Co-investment Fund
- 2 year ban on foreign, non-resident purchases of residential property (excl. recreational)
- Flipper tax - 100% capital gains tax if owned < 12 months
- 25% Mortgage insurance premium reduction (this applies to home buyers with less than 20% down payment, properties $1m or less & primary residences)
- $40,000 tax free First Home Savings Account
- Reno tax credit of 15% (max $50,000 / $7,500) for family members
- Rent to Own Program - $1 Billion
- Stop excessive profits in the Financialization of Housing - possible new REIT tax
- Home Buyers' Bill of Rights:
- ban on blind bidding
- Right to a home inspection
- Lenders must provide up to 6 month mortgage deferral for life events
My Take on Open Bidding: As a realtor, many of the rules we follow are set at a Provincial level. These provincial guidelines are then interpreted by our local Real Estate Board. They are not controlled federally. Current rules generally favor consumer choice & anti-competition laws which allow property owners to choose how they can sell their home. For example, in Ontario you may sell your home by auction if you wish, or sell privately, even though most people choose to sell a house in Toronto with a Realtor. Proponents of ending blind bidding often mention the Australian system of property selling which can include auctions, but that’s not the only way you can sell your home there. Interesting to note, these auctions have not tempered the Australian market in major cities, and, in fact there are plenty of articles you can find that show the weaknesses of which can include auction frenzy bidding and the lack of protection for buyers.
Can there be a hybrid system? Do I think disclosure of other bidders offer contents will prevent a buyer severely over paying? Likely, but our Local Boards and Regulatory systems are super slow to change policy. Will make house prices drop in Toronto? Unlikely – increasing interest rates would likely be more effective.
Australian Housing Market Prices Soar
Australian Home Buyers frustrated with Auctions
Conservative Housing Platform
Introduced earlier on with less fanfare, with creating housing supply in Canada the main focus:
- 1 million new homes in 3 years
- releasing 15% of federally owned properties for housing
- 2 year ban on foreign, non-resident investment of residential property
- Stress test exemption for renewing borrowers
- Stress test 'fix' for small business owners, contractors and other non-permanent employees
My take on releasing federally owned properties to increase housing supply: This is an interesting proposal, but is it feasible? Just what would that impact have on supply? Is it practical? a quick Google search shows that the feds have:
- 20,091 owned and leased properties
- 40,605,815 hectares of land area
- 37,299 buildings,
- and 27,597,655 square meters of floor space
A deeper dive finds this interactive map for the GTA area. Interesting! Most properties are government offices, and most land is in park and crown land (therefore not in high-demand areas like cities where housing supply is strained. I am not sure how practical a solution this is to the housing supply, especially in the Greater Toronto Area.
Federally owned properties in Canada
Interactive Map of Federally owned properties in Canada
NDP Housing Plan
The NDP focus on Housing is focused, unsurprisingly on affordability rather than supply. Key points are:
- 500,000 affordable units over 10 years, 50% in 5 Years
- create a fast-start fund to streamline project start ups
- waive the federal GST on construction of affordable rental units
- 20% Foreign Buyers Tax for non citizens / non-permanent residents
- 30-Year Amortizations for First Time Buyers for Starter Homes
- Easier co-ownership funding through CMHC
- Double the Home Buyers tax Credit
My take on their plan for creation of affordable housing - it's just too little: generally, housing price increases are driven by supply and demand. Affordable housing is definitely needed, and cutting red tape and a fast start fund to streamline start ups is needed. But 250,000 affordable housing units in 5 years only results in 50,000 per year – divided by province and city sounds like a proverbial drop in the bucket! Non resident taxes are already in place in many high demand cities like Toronto & Vancouver. So not much on the table here to address the main issue, which is improving housing supply. I don’t see anything that will affect Toronto Home Prices significantly.
In summary:
There will likely be some changes to affect Real Estate, especially if the Liberals are re-elected. Expect the trickle down to be slow as it needs to pass through provincial and local real estate boards to take effect, especially in Toronto. External factors like interest rate increases may slow the market quicker than policy change! No party, in my opinion has a cohesive plan to address the supply issue.
Other articles you might find interesting:
Mortgage professionals weigh in on Federal Election Housing Platforms
BlogTO on Justin Trudeau's plan to Temporarily ban Foriegn Buyers
Toronto Real Estate Blog weighs in on how the Federal Election can shape the Toronto Housing Market
