Canada’s New National Housing Plan
In April 2024, a new plan was announced to solve Canada’s housing crisis, including new tax incentives and proposals to build more housing on public lands to address supply and affordability challenges.
The government suggested that Canada build a minimum of 3.1 million homes by 2030 to fix the housing shortage. One of the ways the government plans to build more affordable housing is by bringing down the cost of homebuilding.
Home Buyers Plan Increase
Effective April 16, 2024, the home buyers’ plan (HBP) withdrawal limit is set to increase from $35,000 to $60,000. This means you can now confidently contribute more to your RRSP, knowing you can tap into those funds later for a down payment on your first home.
With this boost, there’s a renewed emphasis on making annual RRSP contributions to maximize the benefits of the increased HBP limit. While contributions to a first-time homebuyer’s savings account (FHSA) still offer tax deductions, sheltered growth, and tax-free withdrawals for qualified home purchases, directing remaining savings towards an RRSP now comes with additional incentives.
You could potentially double your FHSA savings over 15 years and a couple of contributions, reaching $140,000 per person.
30-Year Amortization Periods
Starting August 1st, 2024, first-time homebuyers purchasing newly constructed homes will benefit from a 30-year amortization period for insured mortgages with less than a 20% down payment.
This adjustment aims to enhance affordability, reduce monthly mortgage payments, and increase buying power by approximately 5%. Advocates commend this decision as a positive step towards facilitating homeownership aspirations.
Canada’s New Housing Plan: Combating Fraud
The federal government has unveiled plans to address mortgage fraud and enhance transparency in the housing market by consulting with the mortgage industry on income verification tools through the Canada Revenue Agency (CRA).
This initiative, part of the new housing strategy titled ‘Solving the housing crisis: Canada’s Housing Plan,’ aims to curb fraudulent practices and reduce mortgage costs for borrowers. By collaborating with industry stakeholders and allocating additional funding to the CRA to combat real estate fraud, the government is taking proactive steps toward ensuring the integrity of mortgage applications.
Industry response has been positive, with advocates welcoming the move as a significant advancement in tackling mortgage fraud. This announcement marks a pivotal moment in acknowledging and addressing the challenges of fraudulent activities within the mortgage sector.
Canada Housing Plan Infrastructure Fund
This fund had previously been announced but was included in the new housing plan, with an extra $400 million set aside for the Housing Accelerator Fund to build an additional 12,000 new homes in the next three years.
Low-Interest Loans
The plan also permits homeowners to access up to $40,000 in loans at a low interest rate to add a secondary suite to their homes.
Additional Measures
- A plan to build 3.87 million new homes by 2031, including 2 million net new homes in addition to the 1.87 million homes that the Canada Mortgage and Housing Corporation forecasts will be built by that year.
- An additional $15 billion was allocated to the Apartment Construction Loan Program to ensure the construction of at least 30,000 new rental apartments.
- $10 million invested in the Skilled Trades Awareness and Readiness program to motivate high school students to pursue careers in the skilled trades.
- $50 million was directed to the Foreign Credential Recognition Program to support residential construction and assist skilled trades workers in building more homes.
Some of the incentives for first-time buyers could really help many get into the housing market for the first time. This is particularly true with pre-construction, as the extended 30-year mortgage amortization applies to newly built condos.
Do you want to learn more about the advantages of these new incentives in Canada’s New Housing Plan? Complete our form below and we’ll be in touch to schedule a chat.