e-4026 (Social affairs and equality)

The Government of Canada thanks the petitioners from Kitchener Centre for sharing their concerns about housing affordability and homelessness.

We face immense affordability challenges in many parts of Canada and housing cost burdens for Canadians across the income spectrum. Canadians with low incomes are suffering acutely from high housing costs. A range of government policies as well as investments from several sources, notably the private and public sectors, are needed to lower housing costs across the board.

Through the National Housing Strategy (NHS), a $72-billion plan and growing with new investments coming out of Budget 2022, the Government is working to ensure that more Canadians have housing that meets their needs and that they can afford. Programs under the NHS address affordability challenges faced by Canadians by targeting the construction, repair, and renewal of housing across the housing continuum, which includes shelters and transitional housing, community housing, affordable rental, market rental, and homeownership. NHS programs target different parts of the housing continuum, and definitions of “affordability” vary based on the design and objectives of each program. Restoring housing affordability for more Canadians will require collaboration and coordination across all levels of government and with the private and not-for-profit sectors.

Many programs under the NHS have eligibility criteria that require proponents to maintain affordable units in their project(s) for a fixed number of years. For example, both the Rapid Housing Initiative’s Cities Stream and the National Housing Co-Investment Fund’s New Construction stream require that units remain affordable for a minimum of 20 years. 

Concerning rent and vacancy controls, this falls under provincial jurisdiction. While rent and vacancy controls do not fall within federal jurisdiction, the Government is working with other levels of government and with other housing stakeholders to create new supply, including the construction of purpose-built rental units. This approach is supported by research which demonstrates that supply-side interventions are more effective than demand-side policies in addressing erosion of housing affordability. Concerning encouraging municipalities to create affordable housing zoning to decrease land speculation and lower barriers to development permits for affordable housing, the $4-billion Housing Accelerator Fund, committed to in Budget 2022, will incentivize cities to build more housing and to speed up the planning approval process.

Concerning the prioritization of funding for non-profit and co-operative housing, in Budget 2022 we committed to a new Co-Operative Housing Development Program aimed at expanding co-operative housing in Canada, which will be co-designed with the Co-operative Housing Federation of Canada and the co-operative housing sector using $500 million from the National Housing Co-Investment to launch this program. This will be complemented by $1 billion in loans from the Rental Construction Financing initiative to support co-op housing projects representing the largest investment in building new co-op housing for more than 30 years.

Additionally, to make sure that housing is owned by Canadians instead of foreign investors, we introduced legislation to prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada for a period of two years. Parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act on June 23, 2022. This law will come into effect on January 1, 2023.

The Government thanks the petitioners for expressing their views about the importance of affordable housing.

The response from the Department of Finance to part 2), 3) and 6) is as follows:

Part 2) The government recognizes that housing should be for Canadians to use as homes. Budget 2022 announced a federal review of housing as an asset class, in order to better understand the role of large corporate players in the market, the financialization of housing, and the impact on Canadian renters and homeowners. This includes the examination of a number of options and tools, including potential changes to the tax treatment of large players that invest in residential real estate, including but not limited to, Real Estate Investment Trusts.

Part 3) The federal government continues to make significant investments in new initiatives to strengthen Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime, including specific actions to counter money laundering in real estate from either domestic or foreign sources.

For example, regulatory amendments that came into force June 2021 have strengthened AML/ATF obligations for all reporting sectors, including the real estate sector. In particular, real estate agents, brokers and developers are now required to take reasonable measures during certain transactions or activities to collect beneficial ownership information, determine if a client is a politically exposed person, and to take enhanced measures if the client is high-risk. The latter includes specific obligations such as establishing the client’s source of funds and source of wealth, and obtaining senior management review of a transaction of $100,000 or more.

More recently, to help further prevent financial crimes in the real estate sector, Budget 2022 announced the government’s intention to extend AML/ATF requirements to all businesses conducting mortgage lending in Canada within the next year.

Furthermore, to counter the misuse of anonymous Canadian shell companies for illegal activities, including money laundering, corruption, and tax evasion, the government is accelerating by two years its commitment to amend the Canada Business Corporations Act (CBCA) to implement a free, public and searchable beneficial ownership registry, which will now be accessible before the end of 2023. This registry will cover corporations governed under the Act and be scalable to allow access to the beneficial ownership data held by provinces and territories that agree to participate in a national registry. An initial package of CBCA amendments received Royal Assent in June 2022, with additional amendments to follow in a subsequent legislative vehicle.

In addition, on December 15, 2022, Parliament passed legislation (C-32) to enhance the tax reporting obligations imposed on certain trusts. These measures are intended to improve the collection of beneficial ownership information and encourage tax transparency to help provide authorities with sufficient information in order to determine taxpayers’ tax liabilities and to effectively counter aggressive tax avoidance as well as tax evasion, money laundering and other criminal activities. The new rules will apply to the tax years of trusts that end after December 30, 2023.

Part 6) The government announced its intention to introduce such a tax in Budget 2021.

The Underused Housing Tax Act, which received royal assent as part of Bill C-8 on June 9, 2022, implements an annual tax of 1% on the value of vacant or underused residential property directly or indirectly owned by non-resident non-Canadians.