The 2021 federal election, called by Prime Minister Justin Trudeau amidst varying COVID-19 lockdowns, compelled millions of Canadians to head to the polls on Monday, September 20. This decision, made during a period of significant public health challenges, placed unprecedented focus on pressing national issues, with the escalating housing crisis emerging as a central concern across the political spectrum. As citizens navigated public health measures to cast their votes, the promises made by political parties regarding housing attainability and affordability became a pivotal factor in their electoral choices.
Historically, prior to the current provincial Ford administration in Ontario, the Progressive Conservative party was often perceived as being more attuned to, or at least considerate of, the challenges faced by residential landlords. However, in recent years, a noticeable shift has occurred, blurring the ideological lines between the major parties. Many observers now feel that all three main political entities have gravitated towards positions reminiscent of the New Democratic Party (NDP), particularly concerning housing policy. Each party has presented ambitious proposals aimed at resolving Canada’s housing crisis, promising enhanced affordability and accessibility for both prospective homebuyers and renters. Yet, a deeper examination reveals that many of these proposals may lack the comprehensive understanding required to address the deeply entrenched, multifaceted issues at play.
A Critical Review of the Conservative Party’s Housing Affordability Plan
The Conservative Party’s Recovery Plan outlined its platform on housing affordability actions, spanning pages 55 to 56. While presenting several initiatives, a detailed analysis reveals potential shortcomings and areas for improvement. Let’s delve into the specifics of their approach and explore alternative viewpoints.
Capital Gains Deferral: A Limited Incentive
- The proposal for a capital gains deferral, while mildly intriguing on the surface, primarily offers a temporary reprieve rather than a genuine incentive. As the capital gains tax still remains to be paid eventually, its long-term impact on stimulating housing supply is questionable. A critical missing element is the specified timeframe for re-investment. If this period is limited to just one or two years, its effectiveness is severely diminished, considering the multi-year processes involved in approving new developments or locating financially viable purpose-built properties for sale. Developers and investors require significantly longer horizons to plan and execute projects. Moreover, many current property owners lack compelling reasons to sell, and numerous disincentives exist, leading to seller price expectations that frequently outpace a property’s financing potential. Given that approximately 85 percent of residential rental properties are financed, this disconnect creates a significant hurdle in increasing market supply. A truly effective incentive would likely need to involve a permanent exemption or a substantially longer deferral period tied to tangible contributions to housing supply.
Converting Federal Properties to Housing: Practical Hurdles
- The idea of converting federal administration or office properties into residential housing might seem like an efficient solution to increase housing stock. However, this concept has been explored by numerous developers who have encountered a myriad of real-world challenges. Issues such as inadequate natural light, the presence of environmental contamination beyond acceptable tolerance levels, architectural constraints like expansive windowless floor plates, undetected mold, and hidden structural deterioration often render such conversions economically unfeasible. Many developers who have attempted this approach have concluded that it is often more cost-effective and practical to demolish existing office structures and rebuild them from the ground up as residential units, rather than undertaking complex and costly conversions. This highlights the need for a more realistic assessment of urban planning and construction feasibility when proposing such initiatives.
Targeted Housing Initiatives: A Broader Perspective
- While creating special initiatives for Indigenous housing needs holds political appeal and addresses a crucial disparity, it is imperative to recognize that a vast segment of non-Indigenous Canadians are also grappling with severe housing insecurity. The multi-year consequences of the debilitating COVID-19 pandemic have plunged many into desperate financial straits, rendering them homeless or at risk of losing their homes. A holistic approach to housing must acknowledge and address the diverse needs of all vulnerable populations, ensuring that no group is inadvertently overlooked while others receive targeted support. The housing crisis is a national challenge that requires broad, inclusive solutions.
Land Trusts and Serviced Land: Beyond Mere Availability
- The proposal to incentivize land trusts to donate land sounds commendable in theory. However, the practical utility of such donations is often limited, as most donated lands are typically unserviced, lacking essential infrastructure such as electricity, water, waste removal, and accessible roads. The core issue in Canada is not a scarcity of land itself; indeed, according to a government website, a staggering 87 percent of Ontario consists of Crown land. The real bottleneck lies in the availability of serviced lands and the laborious, multi-year municipal zoning and approval processes. Bylaw departments, often rigidly adhering to existing regulations, can inadvertently exacerbate the housing crisis by discouraging rental developments, operating under the premise of “just doing their job.” For any federal housing initiative to be genuinely effective, it requires seamless alignment and cooperation among federal, provincial, and municipal housing agencies, all working towards a common goal of resolving the crisis. Without this coordinated effort to streamline processes and provide necessary infrastructure, land donations alone will do little to alleviate the housing shortage.
“Corrupt” Activities and Beneficial Ownership: Misdiagnosis of the Problem
The Conservative Recovery Plan attributes rising real estate prices to “corrupt” activities, a term they leave undefined. This assertion, frankly, appears to be a fundamental misdiagnosis of the problem. While establishing a beneficial ownership registry for residential property might aim for transparency, it carries undertones of “big brother” oversight and echoes the shortcomings of previously failed initiatives like the Rent Control Bureau. It’s worth recalling that CMHC once reported foreign investors constituted less than 0.5 percent of Canada’s residential housing investments, though other statistics indicate non-residents owned 3.1 percent of Toronto’s condos in 2020. Regardless of the exact figures, the phenomenon of housing speculation – which the Conservatives might label “corrupt” practices – can only truly thrive in an environment characterized by high demand and critically low supply.
Practices such as property “flipping,” assignments without ever taking ownership, and other price-inflating activities are not the root cause but rather symptoms of this fundamental imbalance. These practices would naturally dissipate if housing supply were significantly increased, providing buyers with ample alternatives beyond quickly renovated homes or multi-year delayed condo constructions. Focusing on “corruption” deflects from the more systemic issues of insufficient housing development, restrictive zoning, and slow permit approvals that are the true drivers of escalating prices.
Foreign Investment in Purpose-Built Rental Housing: Meaningless Motherhood Statements
The concept of encouraging foreign investment specifically in purpose-built rental housing holds merit, as it can inject much-needed capital into development. However, qualifying this with “…affordable to Canadians…” renders it a largely meaningless motherhood statement without concrete definitions or measurable targets. Such a vague condition could also inadvertently prove detrimental to Canada’s long-term economic interests. Any foreign investor will meticulously calculate the costs associated with building and maintaining a purpose-built property against the potential profit margin. Invariably, under current market conditions and without robust, specific incentives, such investments may prove unattractive for all but the largest condo projects, and perhaps not even then. To genuinely attract foreign capital for affordable housing, Canada would need to offer tangible, clearly defined benefits and a stable, predictable regulatory environment that makes such ventures financially viable and competitive on an international scale.
The Elusive “Missing Middle” Housing: Economic Realities and Incentives
A significant gap in today’s housing market is the “missing middle” – housing types like duplexes, townhouses, and small apartment buildings that bridge the gap between single-family homes and high-rise condos. These properties are often deemed unprofitable by developers. However, the issue may not be inherent unprofitability but rather that these housing types aren’t perceived as the “highest and best use” for most serviced land, nor do they offer the same economies of scale and return on investment as larger rental properties. This is precisely where government intervention is crucial. Compelling incentives are needed to encourage the development of missing middle housing, which could include streamlined zoning, reduced development charges, or direct subsidies. The challenge, however, is a vicious circle: missing middle properties would generate significantly lower property taxes per square foot compared to “condo-scrapers,” creating a disincentive for municipalities reliant on property tax revenue.
Immigrant Homeownership: A Question of Rights and Contribution
From a social conscience perspective, it is problematic to simultaneously declare housing a human right and then prevent immigrants from purchasing a home for a specified period. This creates a dichotomy that undermines the very principle of welcoming newcomers who aspire to build a new life and contribute significantly to Canada’s prosperity and cultural fabric. Restricting homeownership for immigrants contradicts the ethos of an inclusive society and can hinder their integration and long-term economic stability. A more constructive approach would involve strategies that increase overall housing supply for all residents, rather than imposing restrictions on specific groups.
“Housing First” and Addiction: Addressing Causes, Not Just Symptoms
Reinstating the Conservative “Housing First” initiative, which focuses on creating more addiction centers, while well-intentioned, primarily addresses the symptoms of a deeper problem rather than its root causes. The fight against addiction must fundamentally begin with stringent regulation of pharmaceutical companies and their distribution networks. The unchecked proliferation of powerful and highly addictive opioids, initially prescribed for chronic pain but leading to rapid dependence – especially fentanyl – has fueled the addiction crisis. From a public health perspective, legalizing and regulating drugs, rather than “combating” drug abuse through criminalization, could be a far more effective approach. This strategy, as learned from America’s Prohibition era, may not eliminate addiction but would almost certainly diminish the criminal element associated with the drug trade and potentially foster a self-sustaining, regulated industry focused on addiction control and treatment. Housing is a necessary component, but it cannot solve addiction in isolation.
The Insurance Industry: The Need for Regulation and Innovation
The Canadian insurance industry demonstrated remarkable profitability in 2020, reporting one of its most successful years despite the global pandemic. This outcome, where consumers across the country paid high premiums amidst unprecedented economic hardship, raises serious questions about profiteering. The Competition Bureau’s inability to investigate without a whistleblower highlights a significant regulatory gap that politicians must address. Beyond oversight, there’s a lack of innovation in the market. In discussions with the Insurance Bureau of Canada, it was revealed that virtually no companies offer multi-year insurance plans for rental properties. Introducing a mandatory or incentivized multi-year insurance scheme for rental properties would provide much-needed predictability for property owners regarding these substantial operational costs, ultimately benefiting both landlords and tenants by stabilizing expenses.
Mortgages and Amortization: Balancing Affordability and Equity
One of the most direct and effective ways to enhance mortgage affordability is to extend the amortization period. Even an additional five years, moving from 25-year to 30-year amortization, can significantly lower monthly payments, making homeownership accessible to a wider segment of the population. The clear upside is improved monthly cash flow and affordability. The trade-off, however, is a slower accumulation of home equity, which could potentially impact the country’s GDP-to-debt ratio and contribute to a slowdown in the economy or even a recession. Nevertheless, for many, slow-building home equity is still a vastly superior outcome to perpetual renting with no equity accumulation whatsoever. Currently, most mainstream Canadian banks do not offer amortization periods exceeding 25 years, with some limiting it to 15 or 20 years. Banks generally resist longer amortization periods due to increased risk exposure, but CMHC insurance could effectively mitigate this concern, potentially drawing consumers back to CMHC-insured mortgages after the corporation’s market position diminished last year. Banks often discourage borrowers from obtaining CMHC insurance, preferring to retain the premium upside for themselves and citing the often onerous and unappealing paperwork and qualification process associated with CMHC.
The Stress Test: A Double-Edged Sword
Unlike many realtors, lenders, and real estate boards, I believe the mortgage stress test offers more positive benefits than negative ones, primarily by safeguarding the financial system and preventing individuals from taking on unsustainable debt. However, its unintended consequences are significant. Homebuyers who fail to qualify due to their debt servicing ability being deemed too risky are typically forced to remain in their rental units. This creates a cascading “damming” effect within the rental market: more affluent individuals, who might otherwise purchase a home, remain in their rental units, often leveraging rent control as a de facto savings plan towards future homeownership. This, in turn, locks out lower-income renters and vulnerable groups who might otherwise have been able to access the lower end of the rental market. The stress test, while prudent for preventing individual financial distress, exacerbates the rental crunch by reducing turnover at all levels.
A genuine solution to this logjam would be to provide robust incentives for the construction of more purpose-built rental housing and secondary suites. Such an increase in supply could alleviate market pressure to the extent that the stress test, in its current form, might become less critical. However, for federal incentives to genuinely take root and make an impact, provincial residential housing legislation, particularly in British Columbia and Ontario, and to a lesser extent in Quebec, must be addressed. These provincial frameworks are often brutal on landlords and developers, creating an uninviting environment for new rental property investment and construction.
Summary: The Search for Sustainable Housing Solutions
In conclusion, the Conservative Party’s proposed solutions within their Recovery Plan for addressing housing availability and affordability appear, in my assessment, to be largely ineffectual. They demonstrate an ongoing failure to grasp the fundamental root causes of Canada’s complex housing crisis, offering remedies that are often superficial or misdirected.
While I haven’t undertaken a detailed review of the Liberal and NDP parties’ plans, historical patterns and current rhetoric suggest that their approaches would likely lean towards a massive increase in government spending and, consequently, national debt. This trajectory carries significant risks. An unsustainable rise in government debt would ultimately weaken or undermine the perceived value of our currency, potentially triggering a crippling recession when combined with already rapidly increasing inflation. If the current challenges of affordability, especially for seniors and low-income earners, seem daunting today, a scenario of hyper-inflation coupled with a recession could devastate the savings of countless Canadians, pushing many into unprecedented economic hardship.
My observation from many government initiatives is a tendency to allocate available budgeted money to problems (e.g., “build more houses”) rather than to engineer long-term, self-sustaining mechanisms that can endure beyond changes in government. True solutions might involve systemic reforms, such as reclassifying passive income from rental properties as active income for tax purposes or significantly reducing amortization rates on residential rental housing capital costs. These are the kinds of structural changes that create lasting impacts.
The call for government to endlessly spend more money on constructing “affordable social housing” is, and has always been, fundamentally flawed. Such projects often maintain artificially low rents, which neglect the inevitable capital costs typically covered by reserve funds in private condo corporations. Over time, many social housing projects degrade to the point where they become uninhabitable and must be removed from the social housing inventory, as tragically exemplified by Toronto’s recent loss of 1,100 affordable units.
Given the critiques and the general landscape of party platforms, the question then becomes: which party truly deserves your vote? The answer, arguably, must extend beyond housing. It would necessitate a careful examination of each party’s action plans for other critical non-housing issues that resonate with you and an evaluation of their broader approach to governance. However, when it comes to the complex, deeply rooted housing crisis, it appears that none of the major parties have yet articulated a truly comprehensive, sustainable, and effective strategy capable of addressing its multi-faceted challenges.