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April 12, 2024

What can newcomers expect from Budget 2024?

Prime Minister Justin Trudeau, as well as several Liberal ministers, have made announcements regarding what can be expected from the upcoming Budget 2024.

The Budget, which is set to be tabled to Parliament on April 16, is released annually and helps set the tone for how Canada will be governed in the coming year.

In advance of the Budget, the Liberal government has revealed significant new funding has been allocated to initiatives that will help ease the pressure on Canada’s housing crisis.

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For newcomers to Canada, this means that in the coming year (or two) it may be less difficult to find an affordable place to live, be it as renter or as an owner.

Renter’s rights and increased investment

Among the new initiatives expected in the Budget, on March 27 the Prime Minister announced that Canada will introduce a Renters Bill of Rights. The Bill is aimed at ensuring renters in Canada have more resources available to be confident they are getting a fair rental rate. For example, landlords will be required to provide potential tenants with previous rental rates for the unit. This will give renters more bargaining power and ensure they are not being taken advantage of.

Further, the Canadian government will be working with relevant authorities to ensure that those who pay rent on time have it taken into account in their overall credit score. This means that newcomers who pay rent can increase their credit score and may ultimately be eligible for a lower interest rate on a mortgage when they are in a position to purchase a home in Canada.

Trudeau also recently announced that the budget will include a $15 billion investment in the Apartment Construction Loan Program. This will bring the total investment in the program to $55 billion.

The ACLP is a low-interest loan to encourage developers to build apartments and increase overall supply in Canada. Specifically, it aims to construct at least 131,000 new apartments in the next ten years.

Additionally, a $6 billion Canada Housing Infrastructure Fund is aimed at accelerating “the construction and upgrading of critical housing infrastructure. This includes water, wastewater, stormwater, and solid waste infrastructure to support the construction of more homes.”

This has caused some controversy among Canada’s provinces as $5 billion of the fund is for agreements with provinces and territories “to support long-term priorities.” This means that provinces and territories can only access this funding if they take action that the federal government deems reasonable to increase the housing supply.

One of these requirements is that municipalities broadly adopt “four units as-of-right and allow more “missing middle” homes, including duplexes, triplexes, townhouses, and other multi-unit apartments.”

Renting as a newcomer in Canada

Many newcomers to Canada rent their first home while they work on establishing roots in their communities.

Census 2021 data revealed that growth in rentals outpaced home ownership between 2011 and 2021 (21.5 % vs 8.4%).

According to data from Statistics Canada, one in six immigrants who arrived in Canada from 2016 to 2021 (16.7%) were recent renters. Many of them were in situations that were defined as “unaffordable” (more than 30% of pre-tax household income is spent on shelter costs).

What is causing the housing shortage?

The Canada Mortgage and Housing Corporation (CMHC) says that the main problem is that the supply of housing in Canada has failed to keep up with demand.

The demand comes from Canada’s rapidly growing population, which is directly impacted by Immigration Refugees and Citizenship Canada’s (IRCC) high immigration targets for immigration in previous years, particularly following the COVID-19 pandemic. For example, in 2023 Canada welcomed 471,555 new permanent residents and over two million temporary residents (those on work or study permits and visitor visas).

This rapid increase in population comes at a time when the number of housing starts (homes under construction) is low. CMHC shows that housing starts were down 7% in 2023 compared to 2022 (in centers with a population of 10,000 or more people).

CMHC says this decline is primarily explained by a 25% decline in single-detached starts in 2023.

Further, it is expected that up to nine million Canadians will retire by 2030, many of them will leave job vacancies in high-demand sectors such as construction.

A report published by CIBC in June 2023 found that there were 80,000 vacancies in the construction sector, leading to less productivity. This means it is taking longer to build, and the cost is higher, so unit prices are higher.

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