Good morning, Mr. Chairman and members of the committee.
The Fédération des Chambres immobilières du Québec represents over 12,000 members, who are all major socioeconomic leaders in their respective areas, and who advise Quebeckers who are trying to meet an essential need, namely housing, on a daily basis.
This year, the House of Commons Standing Committee on Finance chose Canada's place in a competitive world as the theme for this year's pre-budget consultations. In that regard, access to rental housing and property ownership are directly linked to competition. To illustrate this fact, you simply have to look at the problems encountered by the chambers of commerce of several American metropolitan areas to see that affordable housing is a significant threat to their economic development.
Of course, the situation in Canada and Quebec is completely different from the problems faced by a metropolitan area like New York city, for instance. Yet the increasing lack of affordable housing will make it harder for Canadian cities to meet private sector manpower needs. The gap in affordable housing in urban areas as compared to resource rich regions will make it harder for workers to move from a low employment area to one which is experiencing rapid growth.
In light of this situation, we would like to present, in the brief time allotted to us, several measures which may increase the number of rental housing units and make home ownership more affordable. In Quebec, the data speaks for itself. Construction on new affordable housing units, that is, rental housing which costs about 30% of average income, has stagnated. The only rental units actually being built in Quebec today are basically social housing, luxury housing and retirement homes. Without new rental housing capacity, with rents between $800 and $900 a month per family, the situation will continue to deteriorate. Clearly, access to affordable housing must be improved.
We therefore recommend that transactions involving the sale of low-income rental housing be exempt from the capital gains tax if the income is ploughed back into rental real estate. When an owner re-invests money from the sale of a rental property into another real estate property, he in fact did not realize a gain which would generate enough money to pay the capital gains tax.
This proposal addresses specific problems associated with the ownership of real estate as an asset class, such as the lack of liquidity, the difficulty of selling and the inability to increase the size of the asset, which are otherwise advantages in the securities sector and which apply, for instance, to stocks and bonds.
Rolling over a capital gain when an income-generating asset is sold, in our view, is a real way of increasing the number of rental units in Canada's largest cities; the fiscal rollover is just a way to temporarily delay paying the capital gains tax.
In order to strike a better balance in the rental housing sector and to help people become home owners, we believe the Home Buyer's Plan, the HBP, needs to be improved. Let's be clear: if you pay between $800 and $900 a month in rent, you would not be paying much more for a mortgage. The Home Buyer's Plan lets new buyers dip into their RSPs to qualify for a mortgage earlier. But the maximum amount under the HBP has been frozen since 1992 and in no way reflects real estate trends since then.
We therefore propose that the government first increase the amount allowable under the program from $20,000 to $25,000, and then to index it. In 1992, the cap represented about 20% of the average value of a home in Quebec. But today, it is only 11%. The popularity of the program is obvious: over one and a half million Canadians have used it since 1992, for a total investment of $15 billion.
For many years, the Canadian housing sector was recognized as being an integral part of the country's competitiveness. Canada stood out from other developed countries because housing, whether it was rental housing or outright ownership, was affordable.
Our ideas are based on the fact that there is a disconnect between our historic advantage and reality, based on various data provided to us by our research organizations and financial institutions. We therefore strongly recommend that the committee ensure that affordable housing remains a positive trait of the Canadian federation.