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A Plan for Real Housing Progress

16 April 2025

Over the past two weeks, we’ve explored both the Conservative and Liberal plans for affordable housing. This week, we shift our focus to what a truly comprehensive housing strategy should look like. 

There are no silver bullets that will immediately solve Canada’s housing crisis. It’s a problem that has been decades in the making — and will take at least a decade, if not longer, to solve. What’s missing in the current approach is a coherent focus on addressing some of the immediate challenges:

  • Reducing the cost of building by cutting government taxes and fees and speeding up approval processes and timelines. This includes streamlining how housing programs are delivered.
  • Creating real accountability at the federal and provincial levels to ensure promised actions translate into tangible results.
  • Making rental housing development viable for private sector developers by ensuring the economics work.
  • Addressing housing in the context of productivity. Cities fundamentally exist as labour markets. Should we continue to focus on expensive, high-barrier cities like Toronto and Vancouver, where housing is highly unattainable, or turn our attention to supporting the emergence of larger, more affordable secondary cities?

Consolidating Federal Agencies

Historically, CMHC was responsible for nearly all federal housing-related activities, from research and policy to funding and land development. But over time, those responsibilities have been fragmented. Canada Lands now handles housing development. The Department of Housing, Infrastructure and Communities has taken over most of CMHC’s public policy and housing infrastructure financing roles. And with the Liberal’s recent proposal to create a new housing and finance Crown corporation – Build Canada Home – we’re seeing yet another agency added to the mix. 

Rather than layering new mandates on top of existing ones, it’s time to ask a fundamental question: why not consolidate these functions under a single housing-focused entity? The current structure is riddled with overlap, duplication, and a troubling lack of accountability.

Adding a new agency will add another layer of complexity. Having previously worked in government for several years, I’m skeptical about our ability to fund and scale solutions like modular housing. Right now, this is more of a pipedream than a plan. There’s little discussion of the challenges involved, or the specific types of construction where modular could be a solution. Without a clear and detailed plan and an ability to execute it, it’s hard to see how this approach will deliver results.

Partnering with the Provinces

CMHC gradually shifted responsibility for social housing to the provinces by creating cost-shared programs. Today, the federal government’s focus on working directly with municipalities has turned housing policy into a funding exercise with little to no control over outcomes. 

Provinces should play a more central role, sharing in the costs but also managing the outcomes. They not only have the legislative authority over municipalities, but also the fiscal capacity to finance housing initiatives. If outcomes matter, provinces are best positioned to drive them. 

Take development charges, for example—much has been made about the high costs in BC and Ontario. But rather than pressuring municipal governments to control these charges, it should be a provincial responsibility. After all, the authority to impose and regulate development charges is set by provincial legislation. 

It would be far simpler and more efficient for the federal government to coordinate with provincial and territorial governments than to try and work with every layer of local government. Programs like the Housing Accelerator Fund could continue but be delivered at a provincial level as a cost-shared program. This would allow for better oversight, increased control over outcomes, clearer accountability, and more effective use of public funds.

This approach also makes sense when we consider broader housing challenges in markets like Toronto and Vancouver. Provinces are well-positioned to treat these as regional issues and address them accordingly. For instance, the cost of land in Toronto is prohibitively high, making most forms of housing unattainable for the average Ontarian. However, with better transportation infrastructure – such as improved commuter rail – Ontario, in partnership with  the federal government, could make it more feasible for people to live farther from where they work.  

Economists Paul Beaudry and Jeremy Kronick have argued that we should focus on growing less populous cities. They highlight the benefit of agglomeration— the economic gains that come from urban growth and expanding labour markets. These benefits can still be realized if residents of smaller centres are able to easily commute to larger cities.

Under the current approach, most cities have struggled to manage deeply affordable housing effectively. Toronto Community Housing Corporation (TCHC) has faced ongoing challenges in maintaining and repairing its rental stock. Significant federal housing funds have been directed toward rehabilitating these social housing properties. Without a better model, we will repeat these same problems in the future.

Policy Focus

Historically,  housing policy was focused on helping Canadians secure a place to live, with particular focus on and support for first-time homebuyers. Over time, however, the focus shifted, largely due to the growth of the mortgage insurance industry, which is backstopped by a 90 per cent federal guarantee. The focus became less about housing Canadians and more about enabling access to mortgages financing – for rentals, vacation properties and second homes. 

While mortgage insurance has been streamlined, there’s a need to reassess where it can be more targeted, and whether it’s supporting the right goals. For example, the second home product has operated as a kind of “don’t ask don’t tell” offering. Borrowers simply need to declare that they’re selling the existing home or plan to use the second property for a family member. While some borrowers certainly meet this criteria, the product is often used to obtain lower-cost financing for rental properties—something it was not originally designed to support.

Rentals

Small-scale “mom and pop” landlords have long played an important role in the rental market. But meeting today’s demand means attracting large-scale capital—and for that, the economics must work. One key lever is land.  Federal, provincial and municipal governments should make better use of publicly held land to lower the cost of delivering new rental housing. The federal government, in particular, must lead by example and treat land as a lever to get housing developed.

While programs like MURB (Multiple Unit Residential Building) did spur new housing development in the past, the tax incentives were limited in scope and duration. Many investors were left with a limited tax write-off and no real assets when several program promoters failed. Until the Department of Finance can ensure a more reliable and transparent framework—one that avoids another Abacus Cities—it should stay away from this program.

If we’re serious about encouraging investments in rental housing, we need to look at what worked prior to the 1972 tax changes that made the economics of investing in rentals work. This will involve examining the treatment of soft costs and considering a tax-free rollover of capital gains if sales proceeds are reinvested back into rental properties.

Housing Finance

CMHC needs to take a more innovative approach to housing finance solutions. It should explore ways to expand its scope in supporting securitization and even insurance, while leveraging tools like synthetic risk transfer to manage its risk exposure. Without CMHC pushing the market, we will not see the development of new financing structures that can meet today’s housing challenges. 

The Canada Mortgage Bond (CMB) program, launched in 2001, was a significant step forward, but little has changed since then. We can’t rely on governments alone to finance the housing market. We need a system where private capital plays a larger role, supported by government initiatives to help expand the housing finance system.

Affordable Housing

There’s a common belief that affordable housing must be built by governments. While it’s true that a segment of the population cannot access affordable housing, we should question whether the current approach—relying primarily on governments as builders and landlords—is the most effective.

There may be a more viable middle ground: public-private partnerships, where governments contribute land and, where needed, housing vouchers, while the private sector is responsible for building and managing the units. This model remains unexplored in Canada.

Governments have no comparative advantage as builders or property managers, so why do we expect they can do a better job than the private sector? Governments do, however, have a social responsibility to support vulnerable Canadians. Offering targeted financial support through vouchers and reducing development costs through land contributions may be a better solution than what we are doing now.

Summary

There’s still much we can do to improve housing affordability and expand the housing stock. We have made good inroads—particularly in supporting rental housing through programs that help make the development and operation of a rental complex economically viable—but more targeted action is needed. Government programs should focus on identifying where we can reduce costs, improve efficiencies, and remove barriers that hinder private-sector development. 

For those in need of deeply affordable housing, solutions must prioritize where that housing can be delivered most economically. At the same time, we need to look at our current funding programs and determine whether current partnerships have been truly effective. We need to rebuild the strong relationships that once existed between the federal and provincial governments in delivering social housing. 

The money being directed to housing is enormous, but we don’t have any level of accountability. The next federal government must streamline how it manages the housing program, set measurable targets, and ensure public dollars are being spent effectively and transparently.

 

Independent Opinion

The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any person or organization in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice including investment advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication. Readers are cautioned to always seek independent professional advice from a qualified professional before making any investment decisions.

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