Open letter - Housing crisis - Time to review mortgage structure, not cut GST

In these uncertain economic times, households across the country are being squeezed by the inordinate rise in the cost of living. There's no denying that consumers are facing increasing challenges, regardless of their income level. To counter this situation, the federal government has tabled Bill C-56, the Affordable Housing and Groceries Act, in the House of Commons.


Among the range of measures proposed by Minister Chrystia Freeland, the elimination of the GST on the construction of new rental housing for seven years is the government's preferred instrument for countering the housing affordability crisis. This proposal echoes a promise made by the Liberal Party of Canada in 2015.


As many have already pointed out, the absence of a rent control mechanism and a precise definition of the term "affordable housing" make the measure insufficient, if not ill-targeted. In our opinion, the measure is designed to stimulate the supply of rental housing, but in no way guarantees a reduction in rents.


The value of this initiative is estimated at $4.5 billion for the first five years. This sum would disappear from public coffers, and would ultimately serve only to enrich automakers. Rather than applying costly tax breaks that would be difficult to reintroduce once removed, the government could allocate the same amount to an investment fund dedicated to the construction of affordable housing. With rigorous criteria, only housing deemed affordable would benefit from this subsidy.


However, with inflation high and Canadian households carrying a considerable level of debt, we believe it is essential to protect households' access to housing against increases in the policy rate.


To achieve this, we believe that modernizing the Canadian mortgage structure would provide greater security for households. In the U.S., mortgage rates are generally negotiated over a longer period than in Canada, and the rules governing mortgage eligibility are stricter. These measures make homeowners less vulnerable to interest rate fluctuations. Although our American neighbors are also facing a real estate crisis, property prices have not risen as dramatically as they have here, demonstrating the usefulness of such measures.


In addition, the government could work with financial institutions to offer low-interest construction loans for high-density residential projects. This measure would minimize financing costs while significantly increasing the housing supply.


It's vital that we step up our efforts to guarantee access to affordable, decent housing - which, we reiterate, is a fundamental right, not a whim. We therefore call on the federal government to act, and to work with other levels of government and financial institutions to find solutions. By integrating sound financial measures, reforming the mortgage structure and tackling the problems associated with rental supply, we can get through this crisis and build a future where affordable housing is truly a reality.