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  • Writer's pictureRoyal LePage Estate Realty

Breaking Down How the Federal Funding Boost for Affordable Housing

Updated: Dec 4, 2023

How does this impact Canadians?

Recently on November 21st, 2023, the Canadian government announced 2023 Fall Economic Statement, an annual fiscal report that provides an update on the state of the Canadian economy and the government’s plans for future spending. The report, heavily focused on Canada's housing affordability and supply crisis, revealed fresh funding initiatives aimed at fostering the development of additional affordable housing and purpose-built rental units. Additionally, the unveiling of new regulations pertaining to the mortgage stress test was a notable aspect of the announcement.

For Canadians with plans to purchase a home or secure a rental property in the coming future, these initiatives are poised to generate essential housing supply in some of the nation's priciest regions.

Federal Funding Boost for Affordable Housing

Here’s what you need to know about housing initiatives announced in the 2023 Fall Economic Statement:

The Canadian Mortgage Charter – Since interest rates started to rise in March 2022, many variable-rate mortgage holders have faced fast-rising monthly payments and, in some cases, negative amortization as interest payments outpace their mortgage principal. Thousands of Canadians will also be required to renew their mortgage at a much higher interest rate in the next two years compared to the ultra-low rates offered during and just prior to the pandemic. In light of these financial challenges, the federal government has put forward new measures for financial institutions to provide Canadian borrowers with mortgage relief options.

The Charter includes:

  • Permitting temporary extensions of mortgage amortizations

  • Waiving fees that would have previously applied for relief measures

  • Dropping the requirement for insured mortgage holders to requalify under the insured minimum qualifying rate (stress test) when switching lenders at the time of their mortgage renewal

  • Requiring lenders to contact homeowners four to six months prior to their mortgage renewal to inform them of their financial options

  • Giving homeowners at risk the ability to make lump sum payments to avoid negative amortization, or sell their principal residence without any prepayment penalties

  • Waiving interest on interest in the event that mortgage relief measures result in a temporary period of negative amortization

New funds for affordable housing – In an effort to build more homes faster, the federal government has pledged billions of dollars in spending towards the creation of affordable and purpose-built rental housing. An additional $1 billion will be allocated over three years to non-profit, co-op, and public housing providers through the Affordable Housing Fund to build more than 7,000 new homes by 2028. The Co-operative Housing Development Program will also receive nearly $310 million in new funding.

Incentives for apartment builders – To encourage the creation of much-needed rental housing, the 2023 Fall Economic Statement outlines new funding for home builders. Starting in 2025-2026, the federal government says it has committed an additional $15 billion in funding for the Apartment Construction Loan Program, which provides low-cost financing to builders and developers. This top-up will support the creation of more than 30,000 additional new homes across Canada, bringing the government’s total goal to 101,000 new homes by 2031-2032.

Tax limitations on short-term rentals – With the demand for long-term housing options so high across Canada, the federal government is placing stricter measures on short-term rentals in the hopes of encouraging property owners to list their homes for sale or for longer leasing periods. The 2023 Fall Economic Statement introduced $50 million in funding over three years to support municipal enforcement of restrictions on short-term rentals. Additionally, income tax deductions for expenses incurred on short-term rental income will be denied in provinces and municipalities that have banned short-term rentals. This will also apply to short-term rental operators who are not compliant with provincial or municipal licensing, permitting, or registration requirements.

In conclusion, the 2023 Fall Economic Statement unveils a comprehensive strategy to address pressing issues in the Canadian housing market. These initiatives not only respond to the immediate needs of Canadians navigating the real estate market but also lay the groundwork for a more inclusive and resilient housing sector in the years to come.

We know that the housing crisis is complicated and hard to digest, but we are here to help, at Royal LePage Estate Realty, we pride ourselves in navigating the complexities of the housing crisis. Contact a professional from Royal LePage Estate Realty today, because helping you is what we do.

If you are still curious about 2023 Fall Economic Statement, please refer to the full report here.





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