Feds Declare New Mortgage Charter, $15 Billion In Funding For Housing Construction At a Glance
The Canadian government has announced new measures to address the country’s housing crisis, including $15bn in funding for 10-year loans for new rental builds and $1bn for affordable housing construction. The rental funding is expected to spur the construction of 30,000 new homes across Canada, while the affordable housing funding will focus on non-profit, co-op and public housing. The government also proposed new mortgage rules for lenders to help at-risk homeowners, waived fees and costs for relief measures, and plans to discourage short-term rentals like Airbnb’s by preventing owners from making tax deductions on these properties.
The Information About Feds Declare New Mortgage Charter, $15 Billion In Funding For Housing Construction
In the recent financial update, Minister of Finance Chrystia Freeland shared several new plans to address housing issues in Canada. The government will be providing billions of dollars to fund the construction of new affordable housing as many markets in the country are experiencing shortages.
One of the measures announced is the allocation of $15 billion for 10-year loans to support the construction of rental buildings. This funding is expected to lead to the creation of 30,000 new homes across Canada. The loans will be directed towards rental projects with at least five units. Additionally, $1 billion will be allocated to the construction of affordable housing, focusing on non-profit, co-op, and public housing. The funding will be provided directly, rather than in the form of loans, over a three-year period.
The federal government plans to make further changes to the existing Affordable Housing Fund and the Apartment Construction Loan Program in early 2024 to enhance accessibility and approval processes.
A New Mortgage Rules
In addition, the government is proposing new mortgage rules to assist homeowners facing increased interest rates. The Canadian Mortgage Charter outlines new regulations for financial institutions. Under the proposed rules, lenders will be required to contact homeowners four to six months before their mortgage renewal to discuss options. Temporary extensions of the mortgage amortization period will be allowed for homeowners in need. Fees for relief measures will be waived, and homeowners will have the ability to make lump sum payments or sell their residences without penalties. Interest charges on interest during temporary negative amortization will also be prohibited.
For borrowers seeking to switch lenders at the time of renewal, the stress test requirement will be eliminated for those with insured mortgages.
Short-Term Rentals – Airbnb
To address the issue of short-term rentals, such as Airbnbs, the government aims to discourage their operation by disallowing tax deductions for property taxes, repairs, and interest costs in provinces and municipalities where short-term rentals are banned. Funding of $50 million over three years will be provided to municipalities for the enforcement of their short-term rental regulations.
These measures are intended to support the availability of long-term rental properties and affordable housing options in the Canadian housing market.
Wrapping Up
In the fall fiscal update, Minister of Finance Chrystia Freeland announced several housing-related measures aimed at affordable housing construction and addressing the shortage of housing across Canada. The government will allocate billions of dollars towards new housing construction. This includes $15 billion for 10-year loans for new rental builds and $1 billion for the construction of affordable housing. The funding for rental construction is expected to support the creation of 30,000 new homes, while the funding for affordable housing will focus on non-profit, co-op, and public housing.
The government also plans to introduce reforms to make these programs more accessible and to provide faster approvals. Additionally, the government is proposing a new mortgage charter that sets out regulations for lenders when dealing with homeowners who are at risk, including contacting homeowners before mortgage renewal and offering temporary mortgage extensions. Furthermore, the government aims to discourage short-term rentals like Airbnbs by preventing owners from making tax deductions on properties in provinces and municipalities where short-term rentals are prohibited. The fiscal update also includes funding for municipalities to enforce their own short-term rental regulations.