Tax credit, savings account will make homes more affordable, federal finance minister says

Click to play video: 'No ‘silver bullet’ when it comes to fixing Canada’s housing crisis, Freeland says'
No ‘silver bullet’ when it comes to fixing Canada’s housing crisis, Freeland says
WATCH: No "silver bullet" when it comes to fixing Canada's housing crisis, Freeland says – Apr 13, 2022

Federal Finance Minister Chrystia Freeland took the opportunity Wednesday to remind Canadians about several measures aimed at making housing more affordable for young people in B.C. and across the country.

Freeland made the announcements at the unveiling of a new modular housing project in Surrey, B.C., where she said “housing is a basic human need and we need to make sure everyone in Canada has a place to call home.”

The new project will contain 44 units and will be for women experiencing or at risk of homelessness.

As previously announced in the budget, last week, Freeland said the Canadian government is doubling the first-time home buyers’ tax credit to $10,000, which will apply to homes purchased on or after Jan. 1. The first-time home buyer incentive is also being extended to March 31, 2025, Freeland added.

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In addition, a tax-free first home savings account will allow first-time homebuyers to contribute up to $40,000 and withdrawals to purchase a first home would be non-taxable.

The government is also imposing a two-year ban on foreign capital coming into Canada to buy residential real estate, including making sure property flippers pay their fair share of taxes and working to bring forward a national plan to end blind bidding.

“We need housing that is affordable for everyone, and that means we have to take significant steps to ensure an entire generation of Canadians is not priced out of owning a home,” Freeland said.

“Budget 2022 represents the most ambitious plan that Canada has ever had to solve that fundamental challenge.”

Click to play video: 'Federal politicians battle over housing affordability in B.C.'
Federal politicians battle over housing affordability in B.C.

She acknowledged that the biggest issue facing Canadians is housing supply and it is not an issue that is going to be fixed tomorrow.

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For those who want to live in a multigenerational home, they will now be able to apply for a home renovation tax credit that would provide up to $7,500 to build a secondary suite in the home.

The budget promised $1.5 billion in funding for the rapid housing initiative, which helps build homes quickly for vulnerable people. At least a quarter of that is set aside for women-focused projects.

The Liberal budget also announced more than $10 billion in funding to speed up home construction and repairs, along with measures to cool the market and help those trying to buy their first home.

But advocates say while the focus on housing affordability in the federal budget is promising, its measures could go further to help people in the most dire need.

A report last month from the Union of BC Municipalities (UBCM) found that while B.C.’s housing inventory is keeping up with population growth, many of those new homes remain unattainable.

The report shows that the province’s population grew 7.6 per cent while the number of dwellings grew 7.2 per cent between 2016 and 2021.

In some major cities — including Vancouver, Kelowna and Victoria — new housing supply actually outpaced local population growth, the report found.

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Yet the UBCM said investor-driven real estate practices and pre-sale flipping, among other practices, have continued to drive up home prices, making it difficult for first-time homebuyers in particular to enter the market.

The province has acknowledged the need for more housing supply and has even floated the idea of overriding municipalities to speed up the pace of approving new developments.

Legislation was also introduced last month for a “cooling off period” intended to stop so-called blind bidding on home purchases. But industry representatives have raised concerns that the move would simply push more risk onto sellers and do little to address the market overall.

Click to play video: 'B.C. reaction to federal budget housing investments'
B.C. reaction to federal budget housing investments

— with files from Sean Boynton and The Canadian Press

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