Across the board, developers seem to be in agreement on one thing: regardless of which party gets elected on April 28, we will not see home construction pick up unless big changes are made to the status quo.
To their credit, the top contenders for the job — Conservative Leader Pierre Poilievre and Liberal Leader Mark Carney — have been taking big swings on the campaign trail. From eliminating GST on new home purchases, deferring the capital gains tax, and cracking down on red tape, both politicians have made headlines for their enticing promises.
But when STOREYS asked developers what stood out to them as the biggest obstacles to housing development, the response was unanimous; developers want to see land use restrictions loosened, municipal taxes like development charges lowered, and building permit approval timelines reduced.
"There's rhetoric around it being a housing crisis, but you know, it doesn't seem like it?" President of Vancouver-based Intracorp Homes Evan Allegretto tells STOREYS. "The building code continues to go up, fees keep going up, taxation keeps going up. They say it's a housing crisis, but really, their actions speak louder than their words."
Associations that represent developers and builders like the Canadian Homebuilders' Association (CHBA) and the Building Industry and Land Development Association (BILD) have been calling for these changes for years now, but with an election bringing the issue to the national forefront, many are hopeful for meaningful change.
Let's Sharpen Those Scissors
Since municipal and provincial governments have more direct means to change things like zoning bylaws, application processes, and municipal fee schedules, the federal government has a limited number of levers it can pull to influence municipalities to make these changes. Still, while city councils certainly do a lot of talking, money also talks, and incentive (or punitive) programs from the federal level can incite change.
On cutting red tape, both Poilievre and Carney have been clear that reducing barriers to homebuilding is at the top of their to-do lists. Their approaches differ slightly, but they're more or less the same: use federal funding to incentivize municipalities to make regulatory changes needed to build more homes.
For Poilievre's part, he intends to scrap the Liberals' Housing Accelerator Fund (HAF) and replace it with a more punitive system that withholds funding and even lowers salaries and bonuses of "gatekeepers" when municipalities don't meet housing targets. Unlike the HAF, the Conservative approach also doesn't require municipalities to make changes like lowering land use restrictions, fees, and timelines, they would only require cities reach housing targets the best way they know how.
Carney intends to keep the HAF around, but improve upon it by being more transparent about municipalities' progress in meeting goals. But if the HAF continues to be the main avenue through which the feds nudge municipalities to make reforms, developers say the program needs to undergo further improvements.
“Hopefully the Liberals [if elected] do something different than what they've been doing," says Allegretto. "Like the Housing Accelerator Fund, I think it was probably a lot of wasted money. There's only a couple of cities that actually turned [funding] into housing starts or reduced fees or something like that. Most cities used it to pay consultants or pay planners."
Evan Allegretto of Intracorp Homes
The program has also been criticized for the lack of oversight the feds have regarding where the municipalities direct the funds they're granted and for poor negotiating that resulted in cities struggling to meet goals and access funding to build more homes.
Feds Should Focus On Tax Incentives & Financing
But while developers want to see the Feds do their part to cut red tape, whether it's via a carrot-and-stick approach, many say there needs to be a greater focus on implementing tax incentives and financing to support builders and developers more directly.
"Forcing local governments to do approvals is one thing, but creating an environment that developers want to build in is more important," says Allegretto. "For example, Vancouver could approve the whole entire city, but developers don't want to build right now because the economic environment is so bad. [...] The carrot-and-stick approach on local government, I don't think will work. There needs to be some type of tax incentive base to create margins in projects that are difficult for builders to build.”
On the campaign trail, both Poilievre and Carney have made pledges to introduce tax incentives for development. One proposal widely praised by those in the development community has been Poilievre's capital gains tax deferral on asset sales when proceeds are reinvested back in Canada. Developers saw that, if implemented, this tax break would likely spur housing construction by unlocking more land for development and freeing up capital for reinvestment in real estate.
Chris Spoke, Partner at multiunit rental developer Toronto Standard, says he sees firsthand how the tax break could make development easier.
"Often, when we're buying sites [...] one of the main barriers to motivating the (owners) to want to sell is that they'll be hit with the capital gains tax, and they'd rather just sit on it," says Spoke. "So what happens is you have all these underdeveloped sites just sitting there that are not being put into productive use as a redevelopment site. I think that if you had a capital gains deferral, you'd see a lot of those get sold into development."
Chris Spoke of Toronto Standard
Along the same vein, Carney has pledged to reintroduce the 1970's-era Multiple Unit Rental Building (MURB) tax incentive, which would encourage purpose-built rental development by making it more lucrative to invest in rental properties. He's also said he would reduce the tax liability (things like sales tax or capital gains tax) for owners of multi-purpose rentals when they sell their building to a non-profit operator, land trust, or non-profit acquisition fund and reinvest the proceeds into building new purpose-built rental housing, encouraging affordable housing constructions as well.
On the financing front, Spoke says certain federal financing programs play a huge role in getting rental housing built, but that they could be expanded.
“When we're building purpose-built rental buildings — and this is true of most rental developers today — we rely on CMHC financing programs, and specifically we rely on a program called MLI select," explains Spoke. "But the requirements and rules around MLI Select financing keep getting tightened in a way that makes it harder to qualify for and makes it basically just less good of a program. What I have seen in Carney's plan is just a commitment to direct more dollars to these programs. And I think that's good. [...] but I think they should go further and take a look at the requirements and how the program is administered.”
Consistency Is King
Managing Partner and Chief Investment Officer at Toronto-based Hazelview Investments, Michael Tsourounis, agrees that federal financing is one of the strongest tools the government has to encourage development, but stresses that the design of any federal policies, including federally-backed incentive and financing programs like MLI Select, need to be more consistent to be effective.
“We need to have an operating environment and policy environment where there's stability and predictability in the long term," Tsourounis tells STOREYS. "By that, I mean a lot of these projects that get developed and built are long-term projects. [...] So when you have potential volatility in policy that governs market-rate rental housing across the country, that instability and unpredictability, it just adds higher levels of risk. And anytime there's higher levels of risk, there can be less appetite to continue to invest.”
Michael Tsourounis of Hazelview Investments
Restoring investor sentiment through their policymaking and coordination with other orders of government, was a key change developers agreed they wanted to see from the next party to take control of government.
Restoring Confidence Is Half The Battle
For one expert, Vice President of Toronto-based Altree Developments Jordan DeBrincat Mintzas, a decline in investor confidence is a significant challenge — one she hopes the next government will address.
"We need to rebuild confidence in Canada’s real estate market. I believe that would solve a significant portion of the current challenges," DeBrincat Mintzas tells STOREYS. "The remainder lies in navigating ongoing trade tensions and working with municipalities to address issues like development charges and other regulatory hurdles."
According to DeBrincat Mintzas, recent federal policies — introduced under the Liberal government — have contributed to dampening investor activity. "We previously had a strong investor market, but measures like the proposed increase in capital gains tax, which varies based on income, and the foreign buyer ban have had a cumulative effect of discouraging investment," she explains.
Ready For A Change
For her part, DeBrincat Mintzas wonders how a shift in government could influence development. "We’ve been under a Liberal government for quite some time," she says. "Regardless of political affiliation, I think many in the industry are curious to see how a different leadership approach might impact development. Every party brings its own set of priorities, and it's important to stay informed and adaptable.”
Jordan DeBrincat Mintzas of Altree Developments
Toronto Standard's Spoke also sees the potential in both parties, but ultimately just wants to see change as well.
"Both [parties] are taking the problem very seriously, but all the policies really depend on how good the execution will be. [...] Just taking the Liberal Party on its track record, they really started taking housing very seriously, I would say, within the last five years, and I don't think the execution has matched the proposals or the rhetoric at all," he says. "Carney is a new Liberal leader, but most of his team is the same old team. [Housing Minister] Nate Erskine-Smith, for many reasons, I don't think has a good handle on [the housing] file.”
For Tsourounis, it's all about who's in it for the long haul. "Finding a housing solution for Canada is [...] something that should transcend mandates, that should transcend political parties," he says. "Having pivots every four years doesn't build a long-term solution for something that we know is going to be a long-term problem."
