Jon Love: A Simple Solution to Canada’s Housing Crisis

The housing situation in Canada is dire, as demand far exceeds the supply of new homes. This imbalance is causing prices to rise, straining the finances of many Canadians. While governments continue to introduce various programs and subsidies aimed at addressing the crisis, they often miss the root cause. The real issue is excessive taxation and complex regulations that hinder new construction. If we want to solve the housing crisis effectively, we must focus on reducing these barriers.

Historically, taxes and regulations are used to discourage less desirable activities, such as smoking or alcohol consumption. Surprisingly, housing falls into this category, despite being a basic necessity. In the past, obtaining a permit for home additions was a straightforward process that took a day and cost a nominal fee. Today, it requires extensive public hearings, significant investment in professional services, and can stretch out for over a year.

The Numbers Behind the Crisis

The problem is evident when we look at housing starts. In 1976, Canada had 273,000 new homes constructed for a population of 23.5 million. Fast forward to today, with a population of 41.5 million, housing starts are still below that peak. Consequently, Canada currently holds the lowest number of homes per capita among G7 countries, ranking 25th in the OECD.

When demand outstrips supply, prices inevitably climb. Today, in cities like Toronto, nearly one-third of the cost of new housing is attributed to taxes and fees imposed by different government levels. If these charges were lifted, rental rates could potentially decrease by a third, making it feasible for many stalled projects to proceed, thereby increasing supply and also lowering prices for existing rental units.

Addressing Municipal Concerns

One concern regarding the waiving of development fees is the potential strain on municipal finances. However, the long-term income generated from property taxes on newly developed homes is far more beneficial than receiving one-off development charges. A focus on increasing the property tax base through new construction will provide sustained financial benefits to municipalities.

The impact of regulations also cannot be overlooked. Current processes for project approval can take several years, with costs ballooning as a result of delays. These expenses are usually passed on to buyers and renters, exacerbating the affordability crisis.

Shifting Political Perspectives

In light of the ongoing federal election, distinct approaches to the housing crisis have emerged from the Conservative and Liberal parties. The Conservatives propose measures to eliminate taxes and streamline regulations, thereby empowering the private sector—organizations with the scale, expertise, and resources necessary to increase housing supply.

The alternative plan from the Liberals involves the federal government stepping in to build homes. However, historical precedent raises questions about the feasibility of government-run development. The government's past performance in housing initiatives has often been met with criticism and failure.

For tangible improvements, it is essential for voters to advocate for a policy shift that prioritizes the capabilities of the private sector. Thus, we could explore three key steps:

1. Eliminate all taxes, levies, and fees on new housing construction.
2. Revise the regulatory process to ensure permits are issued within six to nine months.
3. Create incentives for builders to foster a more robust property tax base.

Optimistically, Canada’s housing crisis is a direct consequence of flawed public policy. The opportunity for change lies in implementing effective, enlightened regulations that allow the country’s talented development industry to thrive. It’s time for action to ensure affordable housing becomes a reality for Canadians.

housing, crisis, policy