2023 Federal Budget Housing Measures at a Glance
Ottawa – March 28, 2023 – Budget 2023 reinforced all of the housing commitments from last year’s budget—a budget many referred to as “the housing budget”—without much in the way of new actions for this year. The Canadian Home Builders’ Association (CHBA) was pleased that the budget reiterated the government’s commitment to increasing housing supply, improving housing affordability, and increasing the industry’s labour force. Notably, there were also several key announcements leading up to today’s budget that did impact housing in Canada, and several items not included in the budget that are worth highlighting. Below is a breakdown of the most relevant items to CHBA and its members.
Mortgage Rules and Demand-Side Measures
There was no mention of further tightening of mortgage rules, increasing of interest rates, or other demand-side measures that could additionally dampen new construction. Avoiding more demand-side restrictions was critical, and none were announced today, which is positive for the residential construction industry and housing affordability and choice in Canada. The Budget did highlight the Housing Accelerator Fund (details of which were released just ten days ago), which will encourage and incent municipalities to change their systems to enable more housing supply to come online faster. CHBA will be working actively with local and provincial associations across the country to seek to ensure municipalities make the most of this fund.
Foreign Buyers Ban and Underused Housing Tax
While the budget also alluded to the Prohibition on the Purchase of Residential Property by Non-Canadians and the Underused Housing Tax (UHT), most significant to industry members are the recent announcements on the adjustments to both of the measures—in large part thanks to CHBA advocacy—to address the unintended consequences of those measures that were severely hampering our industry and the production of new housing supply. Yesterday’s amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians, and the interpretation on the UHT provided to CHBA earlier this month (as well as a relaxed timeline for filing provided this morning), were pushed out in time to be ahead of the budget, and much needed.
Support for First-Time Buyers
CHBA has continued to seek supports for first-time buyers, and today’s Budget announced the launch of the New Tax-Free First Home Savings Account (FHSA), which the government first committed to in last year’s budget. The FHSA is a registered plan allowing prospective first-time home buyers to save $40,000 on a tax-free basis. Like a Registered Retirement Savings Plan (RRSP), contributions will be tax-deductible, and withdrawals to purchase a first home—including from investment income—will be non-taxable, like a Tax-Free Savings Account (TFSA). Tax-free in; tax-free out. Financial institutions will be able to offer the FHSA to Canadians as of April 1, 2023.
CHBA continues to emphasize to government the need to help address the skilled worker shortage in our industry, and the Budget reinforced Canada’s commitment to welcome 500,000 immigrants per year, targeting key skill sets like those needed for the building trades to address Canada’s skilled workers shortage. The budget highlighted targeted tax supports for Canadian tradespeople through the labour mobility deduction and a doubling of the deduction for tool expenses. It also highlighted the Apprenticeship Service to support first-year apprentices in construction trades, which provides employers with $5,000 for upfront costs like salary and training, or $10,000 for members of underrepresented groups.
Previous budgets sought to put still more into Canada’s building codes, further driving up costs, but there was nothing in today’s budget on this front—CHBA continues to very actively and extensively engage on challenges with the codes, and to push for innovation to meet the challenges of the future without increasing costs for would-be buyers.
Looking ahead, more must be done to support housing supply, affordability, home buyers, and the industry. CHBA continues to engage with government on its recommendations, such as 30-year amortizations for first-time buyers, indexing the GST/HST rebate, ratcheting down the stress test, and affordability as it pertains to building codes and standards. Productivity is also a key area the association is working on and will seek support from government for the industry. CHBA continues to engage with the government on these and other industry priorities on a regular basis, and CHBA’s Day on the Hill, May 8-10, will reinforce CHBA’s recommendations when our Association leaders from across the country head to Ottawa to meet with Members of Parliament.
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ABOUT THE CANADIAN HOME BUILDERS’ ASSOCIATION
The Canadian Home Builders’ Association (CHBA) is the voice of the residential construction industry in Canada, representing some 8,500 member firms across the country. Our membership spans new home builders, renovators, developers, trade contractors, building material manufacturers and suppliers, lenders, and other professionals in the housing sector.