The federal government tabled its annual budget on Tuesday with a promise to open the door to homeownership for millennial and Gen Z renters. You’ll have to read the fine print to find measures for young renters who can’t buy a home — or just don’t want to.
In her budget document, Finance Minister Chrystia Freeland outlined a handful of measures the government plans to take to make homeownership attainable for younger generations.
“We’re restoring the chance to make progress towards homeownership. We’re creating more tax-free ways to save for your first down payment,” she says in the document. “We’re giving renters credit for rental payments, so when it comes time to apply for that first mortgage, you’ll have a better chance of qualifying.”
One of the budget’s priorities is to move young people out of the rental market and into the homebuying market. It plans to allow 30-year amortizations for first-time buyers who are buying new homes and introduce a measure that would let rental payments count toward a person’s credit score.
“Typically, when we see measures that try to push homeownership or make homeownership more attainable, they ultimately circle back to kind of negate themselves,” said Robert Kavcic, a senior economist with BMO Capital Markets in Toronto.
“They might sound great at first, but ultimately what they do is they create more demand for housing.”
Young Canadians made up the largest share of renters in the 2021 census, according to RBC Economics. Some can’t afford a home. Others don’t want to buy one. So what does the 2024 federal budget offer Gen Z and millennial renters who don’t have any plans to buy?
Building more units
With demand still far outpacing supply for rental units, the government said it will top up its Apartment Construction Loan Program — which gives low-cost loans to developers and municipalities to build affordable rental apartments — with an additional $15 billion starting in 2025-2026. That brings the program to over $55 billion.
Of the additional amount, $100 million will be used to build homes above existing shops and businesses, particularly in big cities. The government says the top-up will help to build over 30,000 new homes across the country, bringing the program’s overall output to 131,000 new homes by 2031-2032.
The loan program will also see some reforms, such as an extension on loan terms and making financing more accessible for student housing projects.
Student housing
The federal government already removed the GST from construction of new rental apartment buildings, but what it calls “niche housing” — including housing for students — didn’t meet the eligibility criteria.
The budget relaxes some of those criteria to make student housing eligible for the GST removal. The budget says that measure will encourage educational institutions to build more units for students.
The federal government proposes to spend $19 million over five years, and then $5 million per year ongoing, to fund…
Read More: Are you renting with no plans to buy? Here’s what the federal budget has
