With the unveiling of the well-anticipated Canadian Federal budget for 2022, owning a home as a Canadian may have just gotten easier. The primary focus of the 2022 federal budget is geared toward making the life of the average Canadian easier and housing more affordable. Let’s go over some key real estate-related items highlighted in the budget for 2022.
The Housing Accelerator Fund
Among other real estate featured in the budget, the housing Accelerator Fund is one that directly affects you if you wish to own a house. This fund is capped at $4 billion and is regulated by the CMHC (Canada Mortgage and Housing Corporation). So, what does it do, and what makes it important to you as a Canadian?
Firstly, this fund is intended to motivate municipalities to grow real estate supply quicker than their past average supply. It’s also geared towards an increase in densification as it helps combat NIMBYism and speeds up approval time. There’s more. The housing accelerator fund will also encourage public transit-oriented development and put in place inclusionary zoning bylaws. If all goes according to plan, this fund is expected to create extra 100,000 apartments/housing units over the course of five years.
First Home Saving Account (FHSA)
Are you a first-time homebuyer? If your answer is yes, then you are in luck. From 2023 and upward, as a first-time homebuyer, you will be granted the opportunity to chip in up to $40,000 to an untaxed savings account. One of the best features of the FHSA is that you pay no tax on withdrawal when purchasing a house. Additionally, your contributions are left untaxed (tax-deductible contributions). Keep in mind that contributions for the first home saving account sit at $8,000 per annum.
Not only are your contributions tax-deductible, but with the FHSA, you do not have to repay them, unlike the RRSP loans for first-time homebuyers. In summary, the FHSA is a great initiative and is clearly an improvement compared to the RRSP loans. That’s a step in the right direction. However, seeing as it is capped at $8,000 yearly, it is going to take you a couple of years to throw in $40,000, five years to be exact. This implies that if you were to start your contributions in 2023 as a first-time house buyer, you would finish your payments by 2028. There’s no denying it; this is indeed a delay. However, the program is designed to assist first-time homebuyers to get a new house, and it does just that regardless of how long.
A new bill was passed as part of the budget; a home buyer’s bill of rights. Here are some essential items relating to real estate featured in this bill. The federal government has placed a ban on blind bidding in an attempt to increase transparency while bidding. In turn, this bill will prevent people from spending too much on bidding.
The bill also gives buyer’s the legal right to carry out a home inspection before making a purchase. Thanks to the home buyer’s bill of rights, there is an increased level of transparency regarding the previous sale prices for the property. There are several other significant items in the home buyer’s bill of rights; click here for a full brief.
Furthermore, the Canadian government has associated the housing challenge in Canada with a lack of proper supply. In this manner, as part of the 2022 budget, the federal government has set aside $10 billion towards the Canadian housing crisis.
According to Chrystia Freeland, the current finance minister, the government, over the next ten years, intends to double the number of houses built annually to roughly 400,000. This is to meet the 2031 goal of the 3.5 million homes needed, as estimated by the government. Freeman also emphasized how real estate is the Canadian budget’s main focus, saying that the government is definitely back into the housing game.
The budget also aims to offer some pricing relief on housing by placing a ban on foreign buyers looking to purchase houses for the next two years. However, exemptions have been made for refugees, international students, and permanent residents.
In summary, in the 2022 budget, the Canadian government has taken real estate as a priority and has set goals and programs meant to ease the process of owning a home for its citizens. As a first-time homebuyer permanently based in Canada, now might be the best time to prepare for your dream home.