The federal government tabled its annual budget on Tuesday with a promise to open the door to homeownership for millennial and Gen Z renters. You’ll have to read the fine print to find measures for young renters who can’t buy a home — or just don’t want to.
In her budget document, Finance Minister Chrystia Freeland outlined a handful of measures the government plans to take to make homeownership attainable for younger generations.
“We’re restoring the chance to make progress towards homeownership. We’re creating more tax-free ways to save for your first down payment,” she says in the document. “We’re giving renters credit for rental payments, so when it comes time to apply for that first mortgage, you’ll have a better chance of qualifying.”
One of the budget’s priorities is to move young people out of the rental market and into the homebuying market. It plans to allow 30-year amortizations for first-time buyers who are buying new homes and introduce a measure that would let rental payments count toward a person’s credit score.
“Typically, when we see measures that try to push homeownership or make homeownership more attainable, they ultimately circle back to kind of negate themselves,” said Robert Kavcic, a senior economist with BMO Capital Markets in Toronto.
“They might sound great at first, but ultimately what they do is they create more demand for housing.”
Young Canadians made up the largest share of renters in the 2021 census, according to RBC Economics. Some can’t afford a home. Others don’t want to buy one. So what does the 2024 federal budget offer Gen Z and millennial renters who don’t have any plans to buy?
Building more units
With demand still far outpacing supply for rental units, the government said it will top up its Apartment Construction Loan Program — which gives low-cost loans to developers and municipalities to build affordable rental apartments — with an additional $15 billion starting in 2025-2026. That brings the program to over $55 billion.
Of the additional amount, $100 million will be used to build homes above existing shops and businesses, particularly in big cities. The government says the top-up will help to build over 30,000 new homes across the country, bringing the program’s overall output to 131,000 new homes by 2031-2032.
The loan program will also see some reforms, such as an extension on loan terms and making financing more accessible for student housing projects.
Student housing
The federal government already removed the GST from construction of new rental apartment buildings, but what it calls “niche housing” — including housing for students — didn’t meet the eligibility criteria.
The budget relaxes some of those criteria to make student housing eligible for the GST removal. The budget says that measure will encourage educational institutions to build more units for students.
The federal government proposes to spend $19 million over five years, and then $5 million per year ongoing, to fund the measure.
The budget also includes a proposal to update a formula used to calculate student housing costs, which the government says hasn’t been updated in 26 years. It will update that part of the Canadian Student Financial Assistance Program and spend just under $155 million over five years.
One quirk of this year’s budget is a proposal to use public lands — including Canada Post offices and “underused” federal offices — to build more housing.
The budget includes $500 million over the next five years to launch a Public Lands Acquisition Fund to buy back land from various levels of government — and $112.6 million to top up the Canada Mortgage and Housing Corporation’s Federal Lands Initiative.
There are a few other measures in the budget that trim housing-related costs for renters, such as a plan the government says will lower energy bills by retrofitting older homes with green technology like heat pumps.
Renters Bill of Rights
One of the government’s headline proposals, the so-called Renters’ Bill of Rights, includes several measures targeted at renters on the cusp of homeownership.
For 29-year-old Arjun Singh, a private sector worker in Toronto who rents with a roommate and doesn’t aspire to own a home, some of those measures are compelling — such as the plan to make rental payments count toward credit scores.
But homeownership isn’t on the table at this point in his life, Singh said.
“With the amount of money I make right now and at this stage of my life, I don’t think I can afford it. And I don’t want to,” he told CBC News. He said he’s more interested in seeing government measures that would expand the housing supply.
Prime Minister Justin Trudeau tells CBC’s The Early Edition about new housing measures he says are intended to help renters, particularly young people in the country, to qualify for a mortgage and eventually buy a home.
To that end, the government will budget $477.2 million over five years starting in 2024-2025, and $147.8 million in future years, to launch a $1.5 billion Canada Rental Protection Fund, which is meant to help affordable housing providers buy up units and preserve rent prices.
Protections for tenants
The government also has proposed a Tenant Protection Fund which would put $15 million over five years toward legal services for tenants.
That amount is a “drop in the bucket” for legal clinics, said Sahar Raza, the director of policy and communications at the National Right to Housing Network.
“It’s not that that one necessarily lacks teeth, but that it’s only $15 million [for] five years. So not a lot of funding that they’re saying will be deployed to tenant organizers and to legal clinics,” Raza said.
The government also promises to crack down on steep rent increases and renovictions, introduce a country-wide standard lease agreement and require landlords to disclose the history of an apartment’s rent.
The federal government will have to depend on many other players to make that a reality.
“It’s a little bit awkward because … rental rules and things like standardized lease agreements … are typically down at the provincial jurisdiction, and a lot of the provinces have that already,” said Kavcic.
“So I’m not quite sure what Canada’s role in this is federally, other than to maybe push some ideas down to the provincial level.”