Updated November 16, 2020

As the COVID-19 situation continues to evolve, CHBA is heavily engaged in dialogue with the federal government as it takes actions to support Canadians, industry, and the economy. CHBA is in constant discourse with government and stakeholders to inform further responses and support you during this challenging time.

Issues Watchlist

Wage subsidy extended to June 2021; providing up to a maximum of 65 per cent of eligible wages until December 19

The federal government announced another extension to the Canada Emergency Wage Subsidy program, a key part of its emergency response to COVID-19. It will now be offered through until June 2021 to help businesses through subsequent waves and give them a longer runway to resume operations in recovery. The bill to unlock the extension is currently before the Senate. In August, the federal government introduced a sliding scale for all qualifying businesses, where the base wage subsidy is proportional to any revenue loss, which should help more businesses across the economy receive some level of relief. It also introduced a stepping down of support through to December 19 (November 21 for some based on the changes). As of August 18, these changes are now live and accepting applications (subsidy retroactive to July 5). As part of the recent extension, the federal government announced it CEWS will remain at the current subsidy rate of up to a maximum of 65 per cent of eligible wages until December 19, 2020 It is unclear what will happen thereafter, however CHBA remains engaged and will continue to represent the sector in program discussions. Early on CHBA determined that initial eligibility criteria proposed for the temporary 75% wage subsidy would not work for many businesses in residential construction, whose revenues are seasonable and highly dependent on closings. Slow uptake of the program overall has forced the federal government to consider further changes to broaden access. Accordingly, CHBA has been in constant contact with Finance Canada and other relevant Ministers’ offices to share ongoing feedback from members and offer guidance, including during the formal consultations process in May. CHBA has previously helped secured greater flexibility on the revenue calculation (through the option of using cash or accrual method) and reference periods (comparing last year or Jan/Feb this year) when demonstrating revenue declines, which has helped more members access the program.

CECRA for small businesses expires; replaced with new rent subsidy

The Canada Emergency Commercial Rent Assistance program, which was announced on April 16, expired at the end of September. On October 9, 2020, the federal government announced, it will be replaced by the Canada Emergency Rent Subsidy that will include a mechanism to allow direct application and relief to small businesses, addressing a key concern with its predecessor.  It is available for businesses and non-profits that have suffered a revenue drop, on a sliding scale, up to a maximum of 65 per cent of eligible expenses until December 19, 2020. Organizations would be able to make claims retroactively for the period that began September 27 and ends October 24, 2020. There will also be a top-up of 25 per cent for organizations temporarily shut down by a qualifying public health authority, in addition to the 65 per cent subsidy.

CHBA secures important changes to CEBA; program now accessible to more businesses and extended to December 31, 2020.

The federal government announced further details on its pledge to extend federal emergency loan programs, including the $40,000 government-backed interest-free Canada Emergency Business Account (CEBA) loan, will be extended to the end of the year. The federal government is also making an additional $20,000 in credit available, with 50% forgivable, building changes to the program announced on May 19 respond directly that CHBA recommendations, opening the program to business with >$20,000 in payroll expenses, namely sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and those that pay employees through dividends, who have a business operating account, CRA number, 2018 or 2019 tax return, and non-deferrable expenses of between $40,000 and $1.5 million. They also addressed the ongoing issue around non-business banking accounts. This should allow many more businesses within the residential construction sector—and across the economy—access much needed support, although we’ve raised concern about the threshold for non-deferrable expenses, which will be hard for home-based businesses to meet. This builds on earlier successes that expanded eligibility by decreasing the minimum annual payroll threshold from $50,000 to $20,000 and the maximum from $1 million to $1.5 million. The CEBA has been available (as of April 9) through businesses’ respective financial institutions, and the new changes for those >$20,000 in payroll expenses was made available as of June 26. CHBA is awaiting more details.

Lumber issues increasing cost of residential construction; long-term implications for housing affordability

Price escalations and shortages on critical residential construction inputs, most notably lumber, are impacting construction costs and timelines for builders and buyers (and continue to be a threat to housing affordability). There are a series of converging and compounding factors are influencing the price and availability of lumber, from efficiency and capacity limitations across the supply chain as a result of COVID-19, to unexpected surges in consumer demand. CHBA remains engaged with the lumber industry, and understands they are working to correct the imbalance in supply and demand. Concurrently, CHBA is calling for federal leadership to work with domestic lumber producers to accelerate the ramp up of production, continue to support a back-to-work transition for workers post-COVID-19, strive for avoidance and timely resolution of trade disputes and consider other ways to offset material shortages and rising construction costs. A letter to that effect has been sent to Minister Ng, Bains and O’Regan.

Transition plan from CERB to EI complete

The federal government has moved millions of Canadians still out of work off the Canada Emergency Relief Benefit (CERB) and onto a revamped EI system (starting Sept. 27). The reworked EI can be claimed for between 26 and 45 weeks. The government is freezing the EI premium rate for two years at $1.58 per $100 for employees and $2.21 per $100 for businesses. For those not eligible for EI has launched three new benefits: the “Canada Recovery Benefit” (workers who are self-employed, gig or contract workers); the “Canada Recovery Caregiving Benefit” (workers who need to care for a child or family member); and, the “Canada Recovery Sickness Benefit” (workers who don’t already have paid sick leave through their employer). CHBA is pleased to see the latter is a temporary measure, providing $500 per week for two weeks for COVID-19 recovery/isolation, with funds from the federal Consolidated Revenue Fund, with no expectations for business still recvering from the first wave of COVID-19 and bracing for the second wave. Residential construction is being increasingly affected by supply shortages, driven partly by production inefficiencies that are a result of a lack of available labour. It is important to help more Canadians return safely to work, and to have supply chains become more robust to support the activity returning to the sector.

New Minister of Finance to lead development of federal economic stimulus plan; CHBA advocating for housing and residential construction to play key role

With the federal government now working on what is expected to be a significant economic recovery plan, CHBA is engaging the new Minister of Finance Chrystia Freeland and advocating for a range of smart solutions that will to maximize the economic potential of the residential construction sector to generate jobs, investment and support the homeownership aspirations of millions of Canadians. This includes responsibly addressing demand-side levers such as the stress test and re-introducing 30-year amortizations, strategically implementing tax incentives, and showing leadership to improve how we build our homes and communities. The federal government can support the housing needs and aspirations of Canadians, while also meeting other public policy objectives, including reducing emissions, and helping seniors age-in-place. Please see CHBA’s Getting Building: An Action Plan For Economic Recovery in Residential Construction for more details.

Support for the not-for-profit sector

Recognizing many of the CHBA federation of associations are struggling financially due to the severe impact COVID-19 is having on non-due revenues (e.g. cancellations of conference, home shows, parades of homes, dinner meetings, etc.), CHBA has added our voice to a call by the Canadian Society for Association Executives’ (CSAE) for fiscal support for the association sector. As a result, government programming like the wage subsidy is indeed being made available to not-for-profits, including the HBAs within our Association, which has also now been adjusted to better reflect not-for-profit cash flows. CHBA has also provided a template letter for provincial HBAs to consider sending to their provincial governments with the recommendations they match federal funds. A copy of CHBA’s letter to the Minister of Finance is available here. 

Construction as an essential service

To date, each level of government has taken a different approach to try to contain the spread of the virus. Federally, the government has urged Canadians to stay home, while provinces have implemented their own measures, leveraging new powers unlocked through public health or state of emergencies while declaring some service essential. Residential construction has not been shutdown in any province other than Quebec (which has since been lifted). As of April 4 in Ontario, new restrictions for permits were implemented (but also since lifted) that limited the start of new projects, while ongoing projects were able to continue. Through this, CHBA has been producing best practice guides and supporting tools (like site signage) to encourage health and safety on worksites and other company environments to help member companies stay healthy and safe, while also helping to ensure residential construction can continue to operate to build the housing needed for Canadians. CHBA has also provided all of this information to federal government agencies to support the same.

Benchmark qualifying rate change for insured mortgages

As part of the response to COVID-19, OSFI announced that it was suspending consultations on all regulatory initiatives, including changes to the benchmark qualifying rate for uninsured mortgages (the stress test). Finance Canada announced concurrently that they were suspending the implementation of the new benchmark qualifying rate for the mortgage stress test for insured mortgages, which was scheduled to come into effect on April 6, 2020. This move was made in response to the lowering of interest rates, deemed to be temporary and likely to rise as soon as the COVID crisis alleviates, and with the intention of keeping in lockstep with OSFI. CHBA National has been in direct communication with Finance Canada and the Minister’s office expressing the industry’s concern over this delay and the need to implement the stress test changes as quickly as possible. Adjustment to the stress test and other mortgage rule changes will be important to support Canadians and the sector in helping Canada build back from this unprecedented time. The official CHBA letter to the Minister of Finance on this subject can be found here.

CMHC’s changes to mortgage underwriting concerning amid pandemic; Private insurers step in to fill void

On June 4, 2020, the Canadian Mortgage and Housing Corporation (CMHC) announced changes to the eligibility rules for mortgage insurance, reducing borrowing limits, setting higher credit thresholds and restricting sources of down payments for anyone seeking default insurance through CMHC. CHBA—and others in the housing industry—responded that the changes were ill-timed and inject further uncertainty into the housing market, and Canadian economy, with potential implications for recovery. Fortunately, other mortgage insurers, including CHBA Alliance Network partner Genworth Canada did not follow suit and change their underwriting rules; as a result, the business should simply shift to them. Still, the signals from CMHC continue to be troubling, and CHBA has engaged with the Minister of Finance and the Minister responsible for CMHC, including sending a formal letter, outlining CHBA’s concerns and recommendations for federal policy offsets and communications that support homeownership and Canadian home buyers. CHBA remains in dialogue with the federal government on these issues.

Bank of Canada lowers overnight rate target to ¼ percent
The new Governor of the Bank of Canada said they will be maintaining the current interest rates over the near-term, given the current economic circumstances created by the COVID-19 pandemic. The rate has been reduced three times over the past few months, in an effort to leverage monetary policy to increase liquidity and the financial sector’s ability to provide and extend credit to Canadians and businesses facing COVID-related financial difficulties. CHBA continues to call for the previously promised stress test adjustments be made asap so that home buyers can best benefit from reduced mortgage rates (especially since mortgage rates are not tracking as low as interest rates given the risks financial institutions are building into their posted rates).

Engagement with Canada’s banking sector and other national associations to support the residential construction sector

As municipal governments and utilities deal with the COVID-19 crisis, many are changing or suspending operations that involve front-line inspectors and workers. These steps are causing delays to necessary inspections that allow residential construction projects to close, receive occupancy permits, and allow the builder/developer to collect the proceeds of the sale and to pay out the credit used to finance project costs. CHBA National recognizes the serious implications this can have for our members, and has engaged with the Office of the Minister of Finance accordingly. CHBA is also engaging with the Canadian Banking Association to explore options for supporting our businesses through these delays and national associations, including the Canadian Chamber of Commerce, Canadian Federation of Independent Businesses, Canada Mortgage Professionals, Canadian Construction Association, Canadian Real Estate Association and the Canadian Society of Association Executives to work together where possible to advance shared priorities.

Trade and commerce activities exempt from travel restrictions

To slow the spread of COVID-19 across international borders, the federal government has barred access to all foreign nationals by air, directing all flights to four Canadian airports: Vancouver, Calgary, Toronto and Montreal—and has temporarily restricted non-essential travel across the Canada-US border until July 21. All travellers returning home to Canada must go into mandatory self-isolation for 14 days according to new measures being enacted under the federal Quarantine Act. Trade, supply chains and essential goods and services, like food and medicine, are exempt, and some flexibility has been added for immediate family members of Canadians and Canadian permanent residents. That said, supply chains are being affected by other issues around COVID-19 and CHBA is engaged in dialogue with government officials on that issue.