The Federal and Provincial Budget 2023
What you need to know on both budgets!
On March 28th, the Canadian Government released their 2023 budget. With affordability of housing drifting away, I was optimistic that there would be some good actionable items in it, however, after reviewing the housing initiatives, it was a bit of a let down. What is creating a bit more buzz is the BC Provincial Budget, which is focusing more on supply. This week we break down both budgets on housing and what you need to know.
The Federal Budget 2023
1. Tax-Free First Home Savings Account for Canadians As of April 1, 2023, financial institutions will be able to offer Tax-Free First Home Savings Accounts to Canadians. This new initiative will allow first-time homebuyers to save more efficiently to purchase their first home by earning tax-free interest on their savings.
2. Removal of Regulatory Barriers for Diverse Communities The federal government has committed to consulting on changes required to remove regulatory barriers that hinder homebuyers from diverse communities from accessing alternative financing products.
3. Protection for Canadians with Mortgages Facing Exceptional Circumstances The Financial Consumer Agency of Canada has published guidelines to protect Canadians with mortgages facing extraordinary circumstances. These guidelines will provide Canadians with more protection and resources if they face financial distress while paying their mortgages.
4. Low-cost Flood Insurance Program and Online Portal The government will provide $31.7 million over three years to establish the Low-Cost Flood Insurance Program for homes at high risk of flooding and without access to adequate insurance. Additionally, it will provide $15.3 million over three years for building a publicly accessible online portal to inform Canadians about their exposure to flooding.
5. Home Buyers' Bill of Rights and Financialization of Housing The federal government aims to tackle the financialization of housing by committing to existing measures and developing a Home Buyers' Bill of Rights with provinces and territories.
Housing Supply Measures:
6. Allocation of Funding for New Affordable Homes The National Housing Co-Investment Fund's repair stream will be reallocated to its new construction stream, as required, to boost the construction of affordable homes for the Canadians who need them the most.
7. Commitment of Additional Funds for Indigenous Housing Budget 2023 proposes an additional $4 billion commitment over seven years, starting in 2024-25, to implement a co-developed Urban, Rural, and Northern Indigenous Housing Strategy.
The Provincial Budget 2023
1. Delivering more middle-income small-scale, multi-unit housing: The government plans to increase the availability of affordable housing options like townhomes, duplexes, and triplexes by making zoning changes and proactive partnerships on normal single family lots.
2. Offering forgivable loans for homeowners: The government plans to provide forgivable loans for homeowners who build and rent secondary suites at below-market rates to increase affordable rental supply quickly.
3. Building thousands more affordable homes: The government aims to build thousands more affordable homes for renters, Indigenous Peoples on and off the reserve, women and children leaving violence, as well as thousands more on-campus student housing units.
4. Delivering homes near public transit: The government plans to deliver thousands of new homes near public transit and launch BC Builds to use public land to deliver affordable homes for people.
5. Introducing a flipping tax: The government plans to introduce a flipping tax to discourage short-term speculation, which can drive up housing prices.
6. Providing annual tax credit for renters: The government plans to provide an annual income-tested tax credit of up to $400 per year for renters to make renting more affordable.
7. Providing more homes and supports for the homeless: The government plans to provide more homes and supports for people experiencing or at risk of homelessness to ensure that everyone has a safe and affordable place to call home.
8. Streamlining and modernizing permitting: The government aims to streamline and modernize permitting processes to reduce costs and speed up approvals to get homes built faster.
9. Strengthening enforcement of short-term rentals: The government plans to strengthen enforcement of short-term rentals to ensure that rental units are available for long-term renters.
We don't know what all this will look like when and if they all come into play, on paper some ideas really address the issues of supply, however, they do not take into account some potential repercussions. For instance, in the provincial budget they are looking at proactive rezoning of lots to allow multiple units on them. They may or may not take into account issues like services (water, sewer, power) and if these current services can withstand the additional density, and if not, what are the costs and time delays associated with upgrading the services. Time will tell how this will all play out.
I hope everyone has a great week and reach out if you ever have any questions! -Mark and Maddie