News & Resources

What Does a Liberal Minority Government Mean for Housing Policies?

Oct. 22, 19
4 mins
Young family walking on sidewalk in residential neighbourhood after a day of downtown shopping

The dust has settled from Canada’s 2019 election and a Liberal minority government has emerged.

The Liberals capped off the night with 157 seats, with the Conservatives winning 121, the Bloc Quebecois 32, the NDP 24, three for the Green Party and one independent seat.

While we know what they had promised in terms of housing and mortgage-related policies heading into the election, it’s less clear what they will be able to accomplish given their minority government status.

Here’s a recap of the Liberal party’s housing platform:

  • Relax the First-time Home Buyer Incentive (FTHBI)

The Liberals said they would increase the FTHBI income and leverage limits for first-time buyers in Victoria, Vancouver and Toronto. That means the maximum theoretical purchase price for buyers using the program in those cities would rise from the mid-$500,000s to nearly $800,000.

These tweaks could likely be implemented by the Liberals without a vote in parliament, say sources at Mortgage Professionals Canada.

  • Introduce a Speculation Tax

The Liberals also promised to introduce a one percent annual speculation tax on non-citizen/non-permanent residents who buy a home.

But given the need for the Liberals to rely on the support of another party or parties to get laws passed, it’s not yet clear if the Liberal housing policies will be deemed a high enough priority for consideration in what could be a short term (minority governments typically last for only two or so years).

It’s also not clear which party would be willing to support the above policies.

Mortgage Professionals Canada President and CEO Paul Taylor told RateSpy.com that action on the FTHBI and the speculation tax isn’t guaranteed.

“I expect the promised increases to the FTHBI limits in the GTA/GVA will have a 60 percent chance of becoming a reality,” he said.

In an email to members today, MPC noted: “Our initial expectation is that mortgage rules and related policy will not be a top priority for Justin Trudeau’s 157-seat minority government.”

Affordable Housing Likely to be Part of any Compromise

The NDP appears to be the Liberals’ most likely ally. And you can expect any support they throw towards the Liberals would be negotiated well in advance, likely to have some of their own policies incorporated.

And remember, the NDP had promised:

  • Re-introducing 30-year insured amortizations (which now seems dead in the water)
  • Imposing a national foreign buyer’s tax of 15%
  • Doubling the first-time homebuyers’ tax credit to $1,500
  • Creating 500,000 new affordable housing units

Some are hopeful that the Liberals and NDP will succeed in adopting at least some of the above promises.

“I believe the Liberals will adapt the National Housing Strategy, where they can, to add elements of NDP promises and preferences,” says J.P. Boutros, Director, Government Relations and Regulatory Affairs at MPC. “It makes for smart politics.”

What’s certain is that the Conservatives’ plan to loosen the mortgage stress test, including making uninsured mortgage switches exempt, is virtually off the table, as is the potential of bringing back 30-year amortizations for insured mortgage. That is, unless the NDP can somehow keep that plan alive in its negotiations with the Liberals.

Steve Huebl

Steve Huebl is the operations manager for RateSpy.com and a regular contributor to Rates.ca.

At the age of 15, Steve founded a neighbourhood newsletter that eventually grew to a circulation of hundreds and was supported by over a dozen local advertisers. He later honed his writing and editing talents at The Toronto Star, The Calgary Herald, the Sarnia Observer and Canadian Economic Press. He also worked for several years as a chief English writer of the McGill University Health Centre’s marketing office. Born and raised in Toronto, he now calls Montreal home. When he’s not writing about mortgages, Steve can be found appreciating nature — typically along the shores of the St. Lawrence.

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