Justin Trudeau announces plan to temporarily ban foreign home buyers in Canada
In a clear bid to win over millennial voters ahead of Canada's upcoming federal election, Liberal Leader Justin Trudeau just dropped a robust housing plan that includes — among other things — placing temporary bans on both speculating (house flippers) and purchases by foreign buyers.
The idea is that, by reserving houses for actual people to live in — as opposed to, say, letting them serve as tax shelters for wealthy foreign nationals or quick flip jobs for wealthy domestic capitalists — supply will increase enough to ease the demand that's been driving house prices bonkers in cities like Toronto for the past decade or so.
In other words, it's a rather bold attempt to address the affordability crisis facing what Trudeau refers to as "the next generation of homeowners"... on paper, at least.
"We're moving forward with a plan to put home ownership back within reach and make buying your first home easier, fairer and more affordable," said the Prime Minister of his most-recent campaign promise on Tuesday morning.
"And when you're ready to buy, we'll make sure the process is fair and transparent by creating a Home Buyers' Bill of Rights to stop blind bidding, pause new foreign ownership, and more."
Young Canadians deserve the same chance of owning a home as past generations. Tune in to hear our new housing plan:— Justin Trudeau (@JustinTrudeau) August 24, 2021
Les jeunes Canadiens devraient avoir la même chance que les générations précédentes de devenir propriétaires Regardez : https://t.co/0q6mGc4ctW
Skyrocketing house prices have effectively put the dream of home ownership well out of reach for anyone under 40 in major urban centres — save for people who already own a place or have significant help in purchasing one from the Bank of Mom and Dad.
Housing affordability has thus become an important election issue as we approach the Sept. 20 vote, especially among younger Canadians who live in cities like Toronto, where millennials are less likely to own a home than anywhere else in the country.
With average detached home prices now more than $1.75 million in Toronto itself and more than $1 million across most of the GTA, advocates have increasingly been calling for some type of government intervention.
Trudeau's version of that intervention includes not only freeing up supply for real home owners, but a new rent-to-own program, double the Home Buyers Tax Credit, a $40,000 tax-free First Home Savings Account and the conversion or build of more than 1.4 million new homes over four years.
The party also wants to implement a bill of rights for home buyers to stop blind bidding, establish the legal right for buyers to have homes inspected before purchase, ensure transparency on the history of recent sale prices and "require real-estate agents to disclose to all participants in a transaction when they are involved in both sides of a potential sale."
1/ Liberal Housing Plan. The words "up to" are doing a lot of work here. Also - presumably this means we can close the dumb rules around withdrawal of RRSP funds for house purchases? Finance would love that, I imagine. pic.twitter.com/Orh7mX7Gx3— Alex Usher (@AlexUsherHESA) August 24, 2021
"We will temporarily ban new foreign ownership in Canadian housing to ensure Canadians have more access to purchasing homes," reads part of the plan centred on curbing "unproductive foreign ownership."
"As a temporary measure to help stabilize the housing market coming out of COVID-19, we will ban foreign money from purchasing a non-recreational, residential property in Canada for the next two years, unless this purchase is confirmed to be for future employment or immigration in the next two years."
The plan further proposes an anti-flipping tax on all residential properties that would require them to be held for at least 12 months, unless specific life circumstances change.
"This will reduce speculative demand in the marketplace and help to cool excessive price growth," it notes. "As this tax is introduced rules will be established to ensure that sellers subject to this tax are able to deduct legitimate investments in refurbishment."
Some critics say the measures are too little too late, and that there's no way Trudeau can or will deliver on the three-pronged plan he announced while speaking in Hamilton on Tuesday morning. It's not like the policies his government enacted over the past six years have done anything to help or even stabilize the situation, after all.
Too late. Canadians locked out of housing understand you don't care about our future. You care about propping up home prices to make homeowners rich and force everyone else to suffer and struggle.— Canada Housing Crisis (@rCanadaHousing) August 24, 2021
That's all you've done during the worst housing crisis in Canadian history.
But a young Torontonian can dream, and the text surrounding Trudeau's housing plan (which you can read in full here) really plays to that sentiment.
"Every Canadian deserves a place to call home. And for many — young people in particular — the dream of owning their own home feels like it's moving further out of reach," reads the campaign website.
"You shouldn't lose a bidding war on your home to speculators. And you shouldn't have to move far away from your job, your school, or your family just to afford your rent. It's time to change that."
Trudeau is not the only leader with a housing plan, of course: Both the NDP and Conservative parties have already put out their own plans for addressing the housing crisis.
New Democrat Leader Jagmeet Singh is proposing a program that would build some 500,000 affordable homes over the next decade, as well as a 20 per cent foreign buyer's tax and the creation of 30-year insured mortgages.
Conservative Leader Erin O'Toole's platform features plans to build roughly one million homes in just three years and convert 15 per cent of federal government properties into housing.
Like the Liberals, the Conservatives would also put a two-year ban in place to stop foreign investors from eating up all of the housing supply in Canada.
Canada's Recovery Plan:— Conservative Party (@CPC_HQ) August 22, 2021
🏠 Build 1 million new Canadian homes
🚫 Ban foreign buyers from buying homes
🚆 Build more homes near publicly funded transit pic.twitter.com/qWG7ShKX2W
Federal leaders are doing their best to sway voters in one way or another during this short-but-fierce snap election campaign, and it seems as though housing issues are a good way to get the public's attention.
In theory, any of the plans proposed to date could do a lot to make buying a home easier (hell, actually possible) for some of the population.
That would also, of course, require whoever is elected as PM to keep all the promises as outlined in his platform — something I don't think any politician in the history of North America has done.
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