Liberal minority could mean more affordable housing

Liberal minority could mean more affordable housing
During the run-up to the election, all three major parties promised to help make housing more affordable. Now that Justin Trudeau’s government has been reduced to minority status, it looks like we’re in for Liberal policy, but with a fair bit of influence from the NDP.

That could mean a boost to NDP platform planks such as increasing the supply of affordable housing and rent supplements for lower-income Canadians, analysts say.

One of the NDP’s biggest promises was to build 500,000 new units of affordable housing over the next decade. Now that they’re holding the balance of power, expect them to put pressure on Trudeau to increase the supply, said John Dickie, head of the national umbrella organization representing apartment building owners.

“From the point of view of housing affordability for lower income Canadians, this is an excellent election result,” said Dickie, president of the Canadian Federation of Apartment Associations.

Under their National Housing Strategy, the Liberals had already vowed to build 15,000 affordable housing units a year over the next decade, while the NDP promises 50,000 a year.

“I think they could probably saw off the numbers on the affordable housing units. ‘We say 15,000, you say 50,000, let’s meet somewhere in the middle,’” said David Macdonald, an economist at the Canadian Centre for Policy Alternatives.

But there’s a limit to how much the federal government could afford, argues Queen’s University real estate professor John Andrew.

“I’m not sure they’d be able to do 500,000 affordable housing units in 10 years even if they’d gotten an NDP majority. You can’t do that without massive capital subsidies. It’s not really clear how they’d pay for it,” said Andrew.

Dickie, of the apartment association, also expects the Liberal government to act relatively quickly on enacting another part of the NDP’s housing platform: Eliminating the federal portion of the GST/HST on the construction of new affordable housing units.

“Removing the GST would definitely make a difference in whether some projects go forward. That’s one part of their platform they actually didn’t follow through on during their last term, so I’d be surprised if they didn’t support that,” said Dickie.

Also part of the Liberals’ National Housing Strategy is a rent subsidy, currently slated to begin next April. The Liberals expect it to help about 300,000 households by an average of $2,500 per year. The NDP, meanwhile, proposed rent supplements of up to $5,000 per year for 500,000 households.

“The sleeper is the rent supplement. Because they’ve already got the framework in place with the provinces, and it’s already coming into place next year, it would be relatively easy to increase it,” argued the CCPA’s Macdonald.

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Finally, Andrew said he wouldn’t be surprised to see the elimination of the federal portion of the GST/HST on new construction of affordable housing units, even though he’s not convinced it would significantly change the economics of any given housing project.

“Removing the sales tax would definitely help, but it wouldn’t make a project move forward just on its own. The biggest obstacle is the cost and length of the municipal approvals process,” said Andrew. “You can’t force developers to build something they’d lose money on.”
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