There are no big new policy discoveries to be made in what can be done to address housing ails. It sounds almost too obvious to say but for all levels of government the solution is to stop pondering changes and start implementing them.
Cutting the GST on purpose-built rental housing is one of numerous good ideas that sat around on a shelf while the cost to rent rose higher and higher. What could possibly help moderate rents? More rental buildings. What tools in the past helped build a lot of rental housing? A half century ago, major federal tax breaks spurred such construction.
Cities and builders have long advocated to cut the GST on rentals. The Liberals had it in their 2015 platform. But it was only last week, in the viselike grip of poor polling numbers, that Ottawa acted. The annual cost is about $770-million and one estimate suggested the subsidy could cut at least $140 a month in rent, per unit, in a non-profit building.
The impact will not be immediate. It takes time to build and the Liberal plan recognizes that. The tax break is in place until 2035. This is a cost of waiting around until things get really bad before acting.
Liberal policy has sometimes veered from the main issue of supply, such as trying to subsidize younger people to buy homes. The focus needs to stay on construction, from the housing strategy’s low-cost loans to build rentals and the $4-billion “accelerator” to push cities to open zoning, to cutting the GST on rentals and other tax breaks used in decades past.
Like the GST on rentals, another change too long delayed is the end of restrictive zoning. Evidence is clear that looser zoning spurs more housing and can moderate prices. Toronto and Vancouver studied the issue since before the pandemic but didn’t act until this year to allow multiple homes on lots previously restricted to one or two. The shift is overly cautious. City councils and planners remain obsessed with minimizing change: new buildings are limited to about the same height as a house. That’s not enough, given the scale of the problem.
Canada Mortgage and Housing Corp. last week updated its numbers for what it will take to truly moderate housing prices. The country has 16.5 million homes. At the current rate of building, there’ll be 18.2 million by 2030. CMHC estimates 3.5 million more are needed up and above that. Fourplexes would have been nice a decade ago. Larger four-storey apartment buildings are needed now. Cities should also embrace innovative designs such as narrow six-storey buildings.
The federal Conservatives are set to table a housing bill on Wednesday. Last week they said it would require large cities to increase home building by 15 per cent each year, compounded. The Conservatives would punish cities by withholding federal funds if they fail to reach the goal and reward those that do more. The latter is similar in spirit to the Liberals’ accelerator fund. Wielding a stick and carrot together makes sense. Cities need to ease zoning much more than planned. Ottawa can do more than ask nicely.
Requiring cities to have high-density housing built and ready to go around future transit stations is another Conservative idea, a more aggressive version of what’s in process. The Liberals are working to codify housing density as part of federal transit spending and in 2021 included affordable housing conditions for the Ontario Line subway in Toronto.
A strings-attached approach is working, slowly, in Vancouver, where a new subway is being built on Broadway, a busy street near downtown. The regional transit authority did a deal with the city in 2018 that included housing among a range of issues. It’s become a template for others. Vancouver finally approved its Broadway plan last year. Change is set to happen: proposals include a 14-storey, 152-unit rental tower to replace an old three-storey commercial building, and a 19-storey, 175-unit rental building to replace five houses. (Ottawa’s GST break would help both.)
It’s good news, with some bad. It took three years to decide on the plan but rezoning is still required. In Ontario, an expert housing panel last year said cities should allow buildings of up to 11 storeys along existing transit “as of right” – that is, no special approval required. Premier Doug Ford, for all his housing bluster, ignored that idea.
All governments watched housing worsen. Finally, there’s a broad sense an across-the-board overhaul is necessary. The good ideas are in hand. They must be aggressively deployed. What Canada needs is less debating and more building.