Last week, we looked at the Liberal Housing Plan. This week, we turn our attention to the Conservative Housing Plan.
The Conservatives have outlined five key housing-related priorities:
- Cutting the GST on new homes
- Unlocking federal land for housing development
- Creating incentives for municipalities to accelerate homebuilding
- Expanding the skilled trades workforce
- Introducing capital gains deferrals for made-in-Canada investments
At a high level, the Conservative plan aligns with the Liberal platform in several areas. But the differences become clear when you dig into the details.
- Cutting the GST on new homes
The Conservative GST proposal aims to “axe the sales tax on new homes, saving families up to $65,000 on the purchase of a home and $3,000 on yearly mortgage payments while spurring a massive new homebuilding boom.”
Unlike the Liberal plan, which is restricted to first-time buyers and homes priced under $1 million, the Conservative plan applies to homes worth up to $1.3 million and is not restricted to first-time buyers. To fund this program, the Conservatives would eliminate the Housing Accelerator Fund and other existing government programs.
This plan would be of greater benefit to buyers in high-priced markets like Toronto and Vancouver, compared to the Liberal plan, which is capped at $1 million. It also benefits move-up buyers, with no primary residence requirement, making this rebate available to cottage purchases and investment properties.
- Unlocking federal land for housing development
The Conservatives are proposing to “sell off 6,000 federal buildings and thousands of acres of federal land to build new homes.”
Selling, rather than leasing, these assets would generate more immediate revenue that can be redeployed into affordable housing. However, in several markets, land would need to be sold at deep discounts to make housing projects affordable.
Another significant challenge is overcoming bureaucratic inertia. Progress on these sales has been moving at a snail’s pace. Clear deadlines are needed to hold both the government and bureaucracy accountable.
- Creating incentives for municipalities to accelerate homebuilding
The plan “will incentivize municipalities to speed up permits, free up land, and cut housing taxes so homes can be built faster.”
The housing strategy announced in 2023 was much more aggressive in outlining a carrot and stick approach to encourage municipalities to accelerate homebuilding. This new proposal is not as detailed. While the Conservative plan might be more inclined to single out cities that fail to meet targets, there may be a better way to move forward. In the past, the federal government negotiated cost sharing programs with provinces, leaving it to the provinces to ensure that cities supported these programs. It is certainly easier to deal with a handful of provinces that have legislative responsibility for municipalities, rather than trying to influence and cajole cities into doing the federal government’s bidding. The feds should focus on partnerships with provinces, as they can financially support these initiatives and have the legislative purview to bring municipalities on board.
- Expanding the skilled trades workforce
The Conservatives “will bring more Boots, not Suits, backing 350,000 positions for trade schools and union halls to train red-seal apprentices to build homes, and we will bring back the $4,000 apprenticeship grant that the Liberals plan to eliminate.”
While skilled trades fall under provincial responsibility, the federal government can play a role in identifying gaps within the construction industry and aligning immigration policies to address these needs. The reintroduction of the apprenticeship grant is a positive step in encouraging young people to pursue the trades, without overreach in provincial jurisdiction.
- Introducing capital gains deferrals for made-in-Canada investments
This is a challenging promise, as it will be difficult to implement. However, what is clear is that the federal tax structure, since the early 1970s, has discouraged private investment in purpose-built rental housing. In my view, a more effective approach would be to allow investors to defer capital cost allowance recapture and capital gains on the proceeds from the sale of rental property, provided the proceeds are reinvested in another rental property within a reasonable timeframe. This is a key distinction between the US and Canadian markets, and reintroducing this provision would stimulate growth in the rental market.
Next week, we will summarize our thoughts on what a comprehensive housing plan should include.
Independent Opinion
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