Good morning, Mr. Chair.
I am pleased to have the opportunity to address the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities as you continue your study on federal housing investments. My name is Tony Irwin, and I'm the interim president of the Canadian Federation of Apartment Associations.
The CFAA has been a leading voice of the rental housing industry in Canada for nearly 30 years. We represent owners and managers of almost a million residential rental homes through both direct members and 13 member associations across Canada.
Purpose-built rental housing plays a critical role in Canada's housing continuum, with more than 10 million Canadians living in private-market rental homes. The CFAA supports the right to adequate housing in Canada, and we believe in the importance of housing assistance that upholds the right to choose and move freely. We all know that the CMHC estimates that we will need an additional 3.5 million homes by 2030, and at least 30% of that will need to be purpose-built rental housing.
From the early 1960s to the early 1980s, Canada's rental housing industry built hundreds of thousands of rental homes during a time when the economics made sense, aided by government support. For several decades that followed, the climate to build rental housing was decidedly unfavourable, which that meant very little purpose-built rental housing was built. As a result, the vast majority of our remaining rental housing stock was built before 1980 and is in need of extensive modernizations that require significant capital investment.
On the new-construction side, lengthy approvals, inadequate zoning, skyrocketing increases in government fees and charges, and construction costs also severely impair rental project viability. Reducing the cost to build rental housing in Canada is an urgent priority. The operating environment for purpose-built rental housing has never been as challenging as it is today. Rising interest rates and inflationary pressures, including double-digit increases in insurance, property taxes, utilities and maintenance costs far exceed what rental housing providers are able to recoup in rents, causing many smaller operators to sell their rental properties and leave the business at a time when we need them most.
We support strong resident protections, but we are concerned that some provisions in the proposed renters' bill of rights will add another cost and administrative burden on top of everything else I have just mentioned. The HUMA committee report from October 2023 recommended “tax measures to incentivize private sector and non-profit investment in the construction of affordable rental housing”, the development of “an acquisition fund [for] non-profit and cooperative housing organizations”, increased capital funding for non-profit and public housing providers and an assessment of “the current suite of federal benefits supporting low-income renters to ensure they have the income supports they need, including through the Canada Housing Benefit”. We support these recommendations.
The announcement by the federal government to eliminate the GST for new purpose-built rental construction is a positive step. Provinces that charge a provincial tax need to follow suit. Increased funding to the apartment construction loan program and the expanded capital cost allowance for purpose-built rental housing are also steps in the right direction.
The CFAA has expressed concerns regarding the proposed increase to the capital gains inclusion rate, and we would encourage a deferral on the condition that any gains are reinvested in rental housing.
The current housing affordability challenge in both rental and ownership is fundamentally a supply problem. The solution is to build enough housing, including purpose-built rentals, to keep up with demand. Canada is in desperate need of decisive leadership from our elected representatives who recognize that housing is not a partisan issue. Housing is a human issue.
We have before us many policy proposals that have the potential to make a meaningful contribution to our housing supply gap. However, if we are to have any chance of success, we need to act quickly and with a sense of urgency. We need to say yes to more housing, including purpose-built rental housing, and push back on those who say no. There will always be more time to debate and study, but the time to act is now. Future generations are counting on us, and for the sakes of my five kids, I don't want to let them down.
Thank you for your time, and I look forward to your questions.