New Housing Legislation to Look Out for in 2024 | Condo Point

In 2024, the Canadian real estate market is set to undergo significant transformations with the introduction of new housing legislation. These changes will impact various aspects of the housing sector, from rental regulations to indigenous housing initiatives.

Federal Initiatives Driving Change

The Canada Mortgage and Housing Corporation (CMHC) has launched a Request for Proposal (RFP) process to establish an Indigenous-led National Indigenous Housing Centre. This center aims to address core housing needs among Indigenous Peoples living in urban, rural, and northern areas. The initiative aligns with the federal government's commitment to invest $4 billion over seven years to implement an Urban, Rural, and Northern (URN) Indigenous Housing Strategy. Despite this investment, concerns have been raised about the adequacy of funding to meet the depth of URN Indigenous housing needs, estimated at $56 billion over ten years.

Record Low Vacancy Rates and Rent Increases

Data from CMHC indicates record-low vacancy rates and unprecedented rent increases across Canada in 2023. Vacancy rates dropped to 1.5%, well below the three percent rate considered "healthy". Cities like Vancouver, Calgary, and Toronto experienced the lowest vacancy rates, exacerbating the housing crisis. Rent increases have also been significant, with annual growth rates as high as 14.3% in Calgary. These trends underscore the need to increase housing supply and protect renters' rights.

Federal Policies: Addressing Housing Supply Challenges

Short-Term Rental Restrictions

The government aims to incentivize short-term rental operators to transition their properties back into the long-term housing market. With this objective in mind, income tax deductions will be withheld for expenses incurred by short-term rental owners who fail to comply with provincial or municipal licensing, permitting, or registration requirements. Effective January 1st, 2024, this measure seeks to encourage greater compliance and accountability among short-term rental operators, ultimately increasing the availability of long-term rental properties.

Pre-Approved Home Design Catalogue

To streamline and expedite the construction of new homes, the federal government plans to reintroduce a policy reminiscent of the post-Second World War era: standardized, pre-approved home designs. This modernized catalogue will encompass a range of blueprints tailored to various housing needs, including low-rise and potentially higher-density dwellings. Moreover, the catalogue will explore innovative building construction methods, such as modular and prefabricated homes, to enhance efficiency and diversity in housing construction.

Consultations for developing this home catalogue are slated to commence in January 2024, allowing stakeholders to contribute their insights and preferences. By facilitating easier access to pre-approved designs, the government aims to lower barriers to entry for developers and expedite the delivery of new housing units, thereby addressing the persistent housing supply shortage across the country.

Impact on Atlantic Canada

New Brunswick's decision to cancel rent caps could have stimulated new housing development, contrary to expectations. Despite arguments from private developers that rent regulations stifle development, data from CMHC shows a decline in new housing starts in the province. Meanwhile, federal housing advocates call for improved housing conditions for Inuit communities in Newfoundland and Labrador. The Federal Housing Advocate's report highlights the "deplorable" housing conditions faced by Inuit communities and urges government action to address these issues.

Central Canada's Response to Housing Needs

Ontario has seen significant developments in housing legislation, with Hamilton passing an anti-renoviction bylaw to enhance renter protections. The bylaw aims to prevent "bad faith" renovictions and ensure that renters are not unfairly displaced. However, Brampton's landlord licensing program has faced opposition from landlords, leading to its temporary pause. In Quebec, seniors are fighting evictions from private residences amidst closures of seniors' residences, highlighting the need for stronger tenant protections.

Toronto: Responding to Housing Market Dynamics

In response to the evolving housing market dynamics, the City of Toronto has implemented several significant measures in 2024 to address various challenges and opportunities within the real estate sector.

New Luxury Home Tax

Effective January 1st, 2024, Toronto has introduced graduated Municipal Land Transfer Tax (MLTT) thresholds for high-value residential properties. Previously, homes valued at $2 million or more were subject to a flat MLTT rate of 2.5%. However, with the new regulations, additional thresholds have been established for homes priced between $3 million and $20 million. The MLTT rates will increase incrementally based on the property’s value, reflecting the city's efforts to regulate luxury property transactions.

Legalization of Rooming Houses

Starting March 31st, 2024, Toronto has legalized rooming houses, also known as multi-tenant homes, and introduced new regulations governing their operation. Previously, rooming houses were not permitted in certain areas of the city. Under the new framework, Toronto rooming houses will be subject to specific limitations regarding the maximum number of rooms and parking spaces allowed. Additionally, stringent licensing requirements and compliance programs will be enforced to ensure adherence to safety and regulatory standards. A multi-tenant house is now defined as a building with four or more rooms, potentially featuring shared washrooms and kitchens, marking a significant shift in housing policy to accommodate diverse housing needs.

Increase in Vacant Home Tax Rates

To address the issue of housing supply constraints caused by vacant properties, Toronto introduced its Vacant Home Tax (VHT) in 2023. Homeowners are now required to declare the occupancy status of their residences to the municipality annually. The VHT aims to incentivize property owners to convert empty properties into occupied homes, thereby increasing housing stock availability in the city. 

In line with this objective, the VHT has been substantially increased from 1% to 3% for the 2024 taxation year. This significant hike in tax rates is expected to encourage property owners to either occupy or rent out their vacant properties, contributing to the city's efforts to alleviate housing shortages and promote housing affordability.

Toronto's proactive approach to housing policy reflects its commitment to addressing the diverse needs of its residents while striving to maintain a balanced and sustainable real estate market. These measures signal a concerted effort by the city to navigate the complex challenges posed by urban housing dynamics in a rapidly evolving landscape.

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Source: New housing legislation to look out for in 2024

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