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Home builders urge Ottawa take measures to boost sales, renovations

A new housing developing in Calgary, Alberta, April 7, 2015. As some housing markets have softened, the industry is pushing for new measures, such as lower taxes on housing developments and a tax credit for renovations.

TODD KOROL/REUTERS

An association representing the Canadian home building industry has been meeting with the federal government and MPs to explore new measures that would spur home buying and renovations as some Canadian markets have softened.

The Canadian Home Builders' Association (CHBA) reported the highest number of lobbying meetings in Ottawa in May owing to a lobby day on Parliament Hill and about 60 discussions with government officials and parliamentarians, according to new data released last week from the Office of the Commissioner of Lobbying.

Amid low interest rates and risks of overvaluation in some Canadian housing markets, the residential construction industry group is lobbying for policy changes such as a longer maximum amortization period for first-time home buyers, lower taxes on housing development, and a tax credit for home renovations.

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The groups are hoping some measures will appeal to voters as the political parties finalize campaign platforms and promises geared toward the middle class.

"The discussions went very well. I think everybody's interested and recognizes the impact the industry has on the economy," said Kevin Lee, chief executive officer of the home builders' group. "[These] types of things can help young Canadians achieve their Canadian dream of being a home owner."

What's the issue?

The association, representing home builders, renovators, land developers, contractors and others involved in the residential construction industry, argues the government should address some affordability issues to help younger people buy homes.

That includes lower taxes on new home development, raising the maximum amortization period from 25 to 30 years for first-time home buyers, and tax credits for home renovations and energy efficiency upgrades.

The Canadian Real Estate Association is registered separately to lobby for an indexing of the Home Buyers' Plan to inflation so that the program's purchasing power isn't eroded over time. It's also lobbying to for home buyers to be able to "reuse the Home Buyers' Plan after significant life events," according to the federal lobbyist registry. The federal Home Buyers' Plan permits first-time home buyers to withdraw up to $25,000 from an RRSP for the purchase or construction of their first home.

Who's affected?

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The home builders are working with the Canadian Construction Association and the Canadian Real Estate Association on some issues related to home construction and municipal infrastructure.

The groups say they are supporting more federal dollars for community infrastructure because deficiencies in municipalities' core infrastructure – such as sewers, water systems and roads – ultimately drives up taxes and fees on development, making homes more expensive to build and purchase.

"We do work collaboratively to provide a construction industry perspective to government," said Bill Ferreira, director of government relations at the construction association, a national group of local construction associations. "Our industry knows better than most what the state of that infrastructure is across the country. We deal with that infrastructure every day."

Who's lobbying who?

The CHBA reported 61 communications with government and parliamentarians in May, more than any other group or company during the month, according to the federal lobbyist registry.

It met with senior Finance Department officials, including Sean Keenan, director of the sales tax division, and Canada Revenue Agency CEO Andrew Treusch. It also met with Labour Minister Kellie Leitch, staff in Immigration Minister Chris Alexander's office, as well as MPs and senators.

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The Canadian Real Estate Association, representing realtors, has had a few meetings since December with Sean Speer, a senior adviser in the Prime Minister's Office who is working on the Conservative party campaign platform.

The biggest challenge?

Economists and the Canadian Mortgage and Housing Corporation have warned of overbuilding and overvaluation in some Canadian housing markets, yet home building and renovation also stimulates the economy.

The Conservative federal government has made some changes to housing policy since 2008 to try to slow surging sales and prices. It lowered the maximum mortgage amortization rate to 25 years.

Finance Minister Joe Oliver said in a speech in May that some areas of the country had already felt a soft landing, and that he did not see a need for "major changes" to policy. Nicholas Bergamini, a spokesman for Mr. Oliver, said in an e-mailed statement that the government "does not plan on making any changes to mortgage lending rules at this time."

Robert Hogue, an economist with RBC Economics, said federal policy changes can be a problem because they affect the market nationally while some cities are booming and others, like Halifax and prairie cities, are weak.

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"I share the concerns about affordability in areas like Vancouver and Toronto," Mr. Hogue said. "How this can be addressed from a policy point of view is difficult … Those two markets are hot."

What's next?

The groups are hoping some of their proposals may be included in campaign platforms. With Parliament adjourned for the summer, parliamentarians are focused on the election, Mr. Lee said.

"What they're thinking about is party platforms and getting back to their ridings and being able to have the right messages that resonate with their constituents," he said.

Simon Doyle covers lobbying and the intersection of business and politics in Ottawa. He writes for Politics Insider, which is only available to subscribers of Globe Unlimited.

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