Three-storey walk-up apartment buildings are demolished in Burnaby, B.C., on Dec. 18, 2024 to make way for the construction of high-rise towers.DARRYL DYCK/The Canadian Press
Vancouver developer Beau Jarvis has intently studied a two-hour podcast interview given by federal Conservative Leader Pierre Poilievre, watching it twice through looking for clues as to what the would-be future prime minister might do for the housing industry.
Mr. Jarvis is far from the only one.
The federal Liberal government’s push in recent years to turbocharge new housing led to policies developers such as Mr. Jarvis, president and chief executive officer of Wesgroup Properties, have come to rely on: low-cost financing for building market rental apartments and social housing, the goods and services tax rebate on new rentals, and breaks for landlords on allowable tax writeoffs, among others.
What the future of those programs is will be determined by a new government, but Mr. Poilievre has put forward few specific ideas so far beyond a suggestion that he’d eliminate the GST on homes costing less than $1-million. That’s left people who build condos, rental apartments and social housing wondering what will happen after a federal election that could be called within months.
In the decade of then prime minister Stephen Harper’s Conservative government between 2006 to 2015, Ottawa spent a yearly average of $2.3-billion on housing. Last year alone, it spent $11-billion, according to statistics from the Canada Mortgage and Housing Corp.
The figures indicate the speed with which the issue went from what housing analyst Steve Pomeroy described as Mr. Harper’s “mild disinterest” to one that now tops voters’ lists of urgent issues.
Builders and housing analysts are hoping for a continuation of some of the Justin Trudeau-era housing policies they think worked, including direct grants for social housing and breaks for landlords on allowable capital-cost tax writeoffs. They’re mixed on whether the recent Liberal program that gave millions to cities to speed up permit processing and encourage more densification is worth saving.
And they are advocating for more changes, ones that would reduce or eliminate the fees and taxes charged on new housing by cities and provinces and offer more cheap financing to build rental apartments. They also want a loosening of the rules to encourage more foreign investors to put their money into construction.
As Toronto condo developer Brad Lamb puts it: “We just need them (governments) to stay out of the way and stop interfering in the marketplace.”
In Vancouver, Wesgroup’s Mr. Jarvis, who’s also the president of the provincial Urban Development Institute, said he wants the next federal government to expand a program to provide apartment builders with more low-cost financing. The Liberals recently increased the amount available for what is now named the Apartment Loan Construction Program from $40-billion to $55-billion between 2017 and 2023.
That financing has saved West Coast developers millions on projects and encouraged many of them to switch from condo projects to building rentals. B.C. developers have received a third of the $20-billion that has been allocated so far.
In Toronto, the country’s largest developer of purpose-built rentals is also a fan of the financing loan program. Adrian Rocca, CEO of Fitzrovia Real Estate, said the major problem with the current apartment financing program is that it’s so popular, every year’s allotment gets taken within months.
“It’s maxed out,” Mr. Rocca said.
The Liberals’ elimination of the GST on rental projects also had an impact, he said.
“It was a bold move,” said Mr. Rocca, whose company has 9,000 units under construction in the Toronto and Montreal metropolitan areas.
But Mr. Rocca said there needs to be more. The presale condo market in Toronto is almost non-existent and rental construction is down by 70 to 80 per cent compared to three years ago, he said.
Mr. Lamb added that the harmonized sales tax in Ontario is an impediment to faster, cheaper housing. The HST now amounts to 13 per cent of the purchase price of any house or condo. He noted it’s nearly impossible to make rentals work, since it costs $1,600 per square foot to build them, but top rents in standard new apartments are about $4 per square foot per month.
“We need the HST to go away or the rebate to be greatly increased.”
Development fees are another obstacle builders would like to see a new federal government tackle.
The current Liberal government, especially under then housing minister Sean Fraser in 2023 and 2024, went on an aggressive campaign of providing millions of dollars to cities if they promised to increase the amount of housing allowed and stopped hiking fees charged to developers for the infrastructure necessary to sustain new developments.
There has been no conclusive evidence on whether that Housing Accelerator Fund has been effective. Some cities have raised their fees anyway even after getting the money.
“It’s not particularly well designed. There’s not a lot of oversight on whether cities are meeting the requirements,” said Mike Moffatt, an Ottawa-based economist who is chief executive at the Smart Prosperity Institute and a leading voice on housing and immigration.
Two years ago, Mr. Poilievre proposed a private members’ bill that went nowhere that would have penalized cities that increase development fees by taking away federal money for infrastructure funding.
Mr. Lamb and other developers also want a new federal government to get rid of policies meant to reduce or eliminate foreign investment.
The vast majority of condo projects in Toronto and Vancouver over the past two decades have been possible because of the large number of foreign investors who have bought units through presales.
“Our entire industry is based on selling condos to investors,” said Mr. Lamb. “No one local is lining up to buy a home for five years from now.”
To bring back those needed investors, he said, the federal government should end programs that penalize or ban foreign investors, and eliminate the increase in capital gains taxes that the Liberal government introduced last year.
Mr. Moffatt agrees.
“I’d like to see the next federal government figure out how to attract foreign capital. We were using foreign investors as a scapegoat, but one of the things causing the big downturn in construction is some of this blocking of foreign investment.”
It’s not known what a Conservative government might do about maintaining construction money for social housing.
As housing minister, Sean Fraser had been in talks with B.C. officials about boosting infrastructure funding for new housing and money for renovating or replacing some of Vancouver’s crumbling stock of residential hotels that provide homes for some of the city’s poorest residents. Mr. Fraser’s departure as minister in December was a blow.
“A lot of folks are wondering what happens next,” said B.C. Housing Minister Ravi Kahlon. “That was the most hopeful I had felt about getting some concrete measures to improve housing.”