In Toronto and the GTA, real estate lawyers and their clients have grappled with climbing housing prices for several years. Both the federal and provincial governments have taken steps to cool Southern Ontario’s housing market, and now Ottawa appears ready to back away from a campaign pledge that it believes would exacerbate the problem.
During the 2015 federal election campaign, Justin Trudeau’s Liberal Party pledged to modernize and expand the Home Buyers’ Plan, which allows Canadians to borrow money from their registered retirement saving plans (RRSPs) to help them buy a home.
Today, the Home Buyers’ Plan permits first-time home buyers to borrow $25,000 tax free, an amount that must be repaid within 15 years. Under the Liberals’ proposed expansion, the plan would extend to individuals affected by significant life events like divorce, taking in an elderly relative, or the death of a spouse.
On December 3, the Financial Post reported that Ottawa’s inaction on this promise was due to fears that an expansion would “throw fuel on overheated housing markets” and contribute to rising household debts.
An internal document obtained by the Post via the Access of Information Act recommend that Finance Minister Bill Morneau answer questions about the Home Buyers’ Plan by explaining that policies that increase home ownership would spur demand and trigger higher prices.
“Policies to further boost home ownership by stimulating demand would exert more pressure on house prices,” the memo reads.
The memo suggests emphasizing other government initiatives aimed at improving access to housing, including increased support for struggling families, stricter mortgage rules, and billions of dollars in funding for affordable housing.
“With respect to housing affordability,” the memo notes, “at this time, the government is prioritizing investments to support Canadian households that need it most.”
Real estate lawyers provide services that help individuals buy and sell their homes. For many people living in overheated housing markets, purchasing a home now requires taking on substantial debt. This is another area of concern in Ottawa, the document reveals.
“High levels of indebtedness warrant proactive and prudent management of evolving housing-related vulnerabilities and risks,” it reads.
In today’s red-hot, ultra-competitive housing market, finding the right home for your family can feel like a daunting task. Nanda & Associate’s team of real estate lawyers has been assisting Ontarians in buying, selling, or leasing their homes for decades. If you and your family are in the market for a new home, contact us today to learn how we can help.