Canada’s 2024 federal budget: What’s in it for rental housing and homelessness?
La version française de ce billet se trouve ici.
On 16 April 2024, the Government of Canada tabled the 2024 federal budget. The budget had a very strong focus on housing, even if many of the housing-related initiatives had already been announced on 12 April 2024 in Canada’s Housing Plan.
Here are 10 things to know:
1. A new Public Lands Acquisition Fund was announced. According to the budget, $500 million will be provided over five years to allow for the purchase of land from other orders of government “to help spur sustainable, mixed-market housing.” Both for-profit and non-profit developers can qualify. This will likely increase the amount of public land available for housing over the long term.
2. Some federal office space will be made available for housing. Specifically, $1.1 billion over 10 years will be made available. Admittedly, converting office space into housing is challenging, even with funding support. For example, rental housing typically needs washrooms and kitchens located in different parts of a floor than does office space.
3. The Apartment Construction Loan Program will receive more funding. Specifically, an additional $15 billion, bringing this initiative’s total to over $55 billion. Formerly called the Rental Construction Financing Initiative, this initiative provides low-cost financing to help with housing supply for middle-income renters, more so than for low-income renters. This may help ‘ready to go’ projects get off the shelf, so to speak.
4. The Housing Accelerator Fund will receive a modest increase in funding. Specifically, $400 million over four years (this was previously a $4 billion fund). This consists of grants to municipalities for housing, with a key caveat being that the municipalities must adopt various process-level changes related to housing—particularly the adoption of bylaws intended to encourage more density.
5. In a similar vein, funding was announced for infrastructure to support higher density. Specifically, $6 billion over 10 years for Infrastructure Canada to launch the new Canada Housing Infrastructure Fund (much of this will consist of grants that will be cost-shared with other orders of government). Much of it will renew aging infrastructure (e.g., water, wastewater, stormwater, solid waste infrastructure, etc.) including in parts of cities where density may increase. Some of this funding is being provided directly to municipalities, while some is being provided to provincial and territorial governments (provided the recipient party commits to creating more density—e.g., duplexes, triplexes, townhouses, and apartments).
6. Some homeowners will be incentivized to build an additional suite in their homes. This will be done with the newly-launched Canada Secondary Suite Loan Program, which will receive $409.6 million over four years. Eligible homeowners will receive up to $40,000 in low-interest loans through this initiative. This can potentially have the double-whammy effect of both creating new supply and helping existing homeowners to pay off their mortgages.
7. Private investors will be encouraged to invest in new rental housing. This will be done with the introduction of more favourable tax treatment—specifically, a temporary accelerated capital cost allowance at a rate of 10% for eligible new purpose-built rental projects. Essentially, private investors will receive more favourable tax treatment on their rental income. This measure may encourage developers that were considering not building because the cost was too high, or who were thinking of building condos rather than rental housing, to now invest in new rental housing.
8. A new Rapid Housing Stream will be added to the Affordable Housing Fund (formerly the National Housing Co-Investment Fund). This new stream will receive “$976 million over five years, starting in 2024-25…” and will focus on “deeply affordable housing, supportive housing, and shelters for our most vulnerable.” Historically, the Co-Investment Fund was viewed as being both stingy (i.e., too many loans and too few grants) and slow. Having said that, the speed of approval time for new applications has been halved from 400 days to 200 days.
9. The Canada Rental Protection Fund is being launched. This fund’s mandate will be “to protect the stock of affordable housing in Canada.” According to the budget document: “The Fund will provide $1 billion in loans and $470 million in Contributions [i.e., grants] to support affordable housing providers to acquire units and preserve rents at a stable level for decades to come, preventing those units from being redeveloped into out of reach condos or luxury rental units.” This announcement comes after considerable advocacy by many parties, including the Canadian Housing and Renewal Association. The fund will allow for the acquisition of moderately affordable units owned by private investors; non-profits will now have the opportunity to own those properties and keep rents relatively low.
10. Federal funding for homelessness will increase considerably. An additional $1.3 billion in new funding will be provided for Reaching Home over four years, including $250 million in new funding over two years for “encampments and unsheltered homelessness.” According to the budget document, the encampment funding “will require provinces and territories to cost-match federal investments, leveraging a total of $500 million.”
In sum. While important housing measures were announced in this budget, much of the funding was back ended (check out the table on pp. 84-85 of the budget document, where one can clearly see that most of the housing initiatives ramp up gradually over time). As a result, many will take years to show an impact. Further, most of these measures were not targeted to very low-income renters. Measures that could potentially have a more immediate impact on vulnerable persons might include enhancements to both the Canada Housing Benefit and the Rapid Housing Initiative.
I wish to thank Steve Pomeroy, Sylvia Regnier and Annick Torfs for assistance with this blog post.
