2024 Budget: Housing Updates

These federal intentions are inked and aimed at home buyers and owners.

A bold chapter on housing, initiatives are slated to be rolled out over the next few years, and some may directly affect you. Here's the gist.

Apr 17, 2024

As the ink flows ... into action?

The 2024 Federal Budget was tabled on April 16 after a rather lengthy preamble that saw most measures rolled out to the press in a steady lead-up.

It contains the usual big-time spending initiatives (like building or making available a heap of homes over the next 5 years) — but also a few subtler items that may interest you.

Some inked are already a reality, and others have a 'let's figure it out later' treatment, with more details to be included in the 2024 Fall Economic Statement.

Here's a quick summary. (Watch for future blogs on some of these topics.)

"This budget is housing-focused like never before. It underscores how far we need to go for improved home affordability and a healthier housing market."
– Dan Eisner, True North Mortgage Founder and CEO

First up: Addressing the housing crunch.

An ambitious strategy to unlock 3.9 million new homes by 2031 is intended to stabilize home prices, improve access to homeownership for primary residence dwellers, and ease the affordability equation for both renters and first-time home buyers. Much of it needs the cooperation of provinces and municipalities to turn words into action.

The government wants to pencil those homes into existence by building, encouraging building, or converting empty or unused offices and land:

Build homes on public and leased land (e.g. land owned by Canada Post)
Convert underused federal offices into homes
Tax vacant land to incentivize construction
Build and encourage the building of more apartments to ease rent payments and housing demand (which could also help de-pressurize home prices)
Scale up modular housing and create a housing design catalogue
Cut red tape (aka offer incentives) to build almost 800K more homes and essential infrastructure to go with it, including the leveraging of transit-connected funding
Recruit and train more trades workers (we can't build homes if there's no one to build them)
Address Indigenous housing and community infrastructure gaps
Align immigration with housing capacity
Increase supportive housing for those who can't afford a place to live

More help for first-time home buyers.

Starting August 1, 2024 — When purchasing a newly-built home with less than 20% down (an insured mortgage), the mortgage amortization can be extended from 25 to 30 years, which reduces payments and improves affordability ratios
Read more here: A new break on new builds
Under the Home Buyers' Plan, first-timers would be able to withdraw up to $60K from their RRSPs (instead of $35K), and some users would have longer to start their repayments
Read more here: RRSP Home Buyers' Plan
Encourage lenders to take on-time rental payment history into account for easier first-home qualification and access to lower mortgage rates (which means that in addition to lenders being on board — landlords, credit bureaus, and fintech companies would also need to align for this goal)
Canadian Mortgage Charter

More mortgage relief for those in dire need.

The federal government wants lenders to extend 35-year amortizations (for the life of the mortgage) for those struggling to meet their payments (complete documentation must be supplied to support any mortgage relief measures)
Lenders are asked to contact certain clients coming up for renewal one year before their maturity date to discuss options and affordability versus the (previously set) 6 months
Canadian Mortgage Charter

The Canadian Mortgage Charter: Well-Intended Words

The federal government unveiled the Mortgage Charter in Fall 2023, outlining the expectations for lenders in helping out struggling mortgage holders amid current higher interest rates. Many of the missives already exist or are lender-optional.

If a point is added to the Charter from this budget, it doesn't necessarily mean you'll be able to access it, now or later. We suggest, as always, talking to an expert True North broker about your unique situation and the help that may be available to you.

Short-term rentals and home-flipping continue to be written out.

In addition to denying tax deductions for short-term rental income that doesn't comply with local laws (effective as of January 1, 2024), the government is launching a $50M enforcement fund, working with municipalities to unlock primary homes for full-time living
Read more here: Airbnb-ing to help cover mortgage payments?
Ensure the profits from flipping homes are subject to taxation to discourage investor speculation

Halal mortgages are to be written in on a larger scale.

Expand access to Sharia-compliant mortgage products to help more Muslim Canadians and other diverse communities participate in homeownership
Establish a 'sandbox' with lenders to establish tax-treatment changes and regulations for a viable alternative mortgage product that offers consumer value

Go green, save on energy costs.

Add over $6.7M for the Canada Greener Homes Grant and Loans programs
Over $750M for the Oil to Heat Pump Affordability program
Continue giving Canadians access to the above funds, grants ($5K) and interest-free loans (up to $40K) to make homes more energy-efficient for reduced expenses

Deter fraud by enabling direct CRA income verification.

Consult with the mortgage industry for a tool that will verify line 15000 (annual income before deductions) directly with the Canada Revenue Agency
Accessible only by banks and mortgage lenders (not mortgage brokers or realtors) to ensure privacy and consumer protection
This policy would add another layer of verification to deter income-reporting fraud, helping to reduce lender and borrower mortgage costs

Encourage secondary suites in primary homes.

Launch a Canada Secondary Suite Loan Program, allowing homeowners to access up to $40K in low-interest loans to add a secondary suite in (or to) their home
This program is in conjunction with the recent municipal zoning reforms in Canada's major cities that aim to reduce red tape to create extra living spaces on a property
Also aimed at helping seniors age in place or to better accommodate those with disabilities

Save home values in high-risk flood zones.

Establish an arm of CMHC to implement access to a national low-cost flood reinsurance program by 2025
For high-risk properties (i.e. in flood zones) to help protect home values if private flood insurance options are no longer available

Keep large corporate investors from buying single-family homes.

Restrict the purchase of these homes to individuals so they don't have to compete with corporate money to buy in a neighbourhood
This policy is to be further outlined in the 2024 Fall Economic Statement

Thinking of selling your cottage? You may soon pay more taxes.

Effective June 25, 2024, the capital gains inclusion rate will go from 50% to 66.67% for annual profits over $250K
Sale of a primary residence is exempt from this change
This policy could impact the sale of second homes, vacation homes, and investment properties (there are many complex rules around real estate capital gains; please consult a tax professional for how this new policy may affect you)

While the ink dries, get great advice.

The mortgage industry is constantly changing. From updated regulations to new document requirements to new ways to save, we have you covered.

We're on top of the latest policy moves and how they may affect your mortgage application and homeownership strategies.

Your expert broker can advise you if you're waiting on government word to take advantage of a program.

No matter your mortgage needs, whether straightforward or complex, we offer an exceptional experience for a deal done right that saves you thousands. There's never been a better time to get an expert True North broker in your corner.