CHBA takes swift action to address new ‘unintended’ hindrances for our industry

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By Kevin Lee, CHBA CEO

It’s been a busy beginning to 2023. The new year unfortunately started off with unintended and ill-advised action from the federal government on two fronts, which CHBA swiftly reacted to.

Critical stakeholder review

Just before Christmas 2022, the federal government skipped a critical stakeholder review process and published the Regulations on the Prohibition of Residential Property by Non-Canadians Act, which came into force Jan. 1 for a period of two years. While the Act had previously been touted as a means to prevent the purchase of housing units by non-Canadians, the published Act ill-advisedly also prohibited Canadian companies with more than three-per-cent foreign ownership from buying vacant land or farmland for residential development, or from purchasing properties with less than four units on them (inhibiting assembling parcels of land for multi-unit construction).

CHBA immediately engaged with the office of the federal Housing Minister, the office of the Finance Minister, and the leadership at CMHC to seek a resolution. In the process, we learned that this addition to the Regulations was aimed at preventing foreign buyers from changing from buying homes to buying land to build on. But the reality is that the Act has also directly affected many builders/developers with partial foreign ownership, negatively impacting businesses and their ability to produce much needed new housing supply.

Massive negative impact

During meetings with government officials, CHBA, along with BILD GTA (given the extensive impact this is having in the GTA), impressed the massive negative impact these Regulations are having upon the industry not only from a housing supply perspective but also on the ability of builders and developers to continue doing business. We gave specific examples provided by members from across the country. In the continual meetings we’ve had with government officials since Dec. 21, we’ve also provided specific wording on how the Regulations should be rewritten to exempt the homebuilding and development industry in Canada from the Act.

The meetings with government officials have been productive, with our messages being well received. It is our understanding that the government is planning an accelerated revision of the Regulations through the Treasury Board process. The exact timing cannot be provided at this time, other than to say that the association is aware that there is extensive work going on with government officials on the regulations on the process for revision and of the wording.

Full resolution

CHBA will continue to push for full resolution and continue to provide you updates – hopefully this has already happened by the time this article lands on your desk.
The second significant issue affecting many builders is the tax filing implications that come with the Underused Housing Tax Act. While newly built housing units are not subject to the Underused Housing Tax, all private corporations – therefore all builders and developers that are not publicly owned – are now required to file an Underused Housing Tax return (UT-2900) each year for each completed housing unit that is at least 90-per-cent completed and owned on Dec. 31. The form for this return only came out in February.

Again, CHBA engaged with government immediately, explaining how this will encumber builders and developers with unnecessary red tape and accounting expenses to file tax returns for a tax that does not even need to be paid, since most corporations are exempt from paying the tax. CHBA has asked that the federal government immediately implement an exemption for the newly constructed housing units of which builders and developers still possess title, so that builders and developers will not have to file a tax return. The government is being slow to respond, and it is unlikely that an exemption will be possible in time for this year’s filing deadline. CHBA will continue to pursue that exemption, and in the meantime, it appears CHBA has been successful in securing some changes to the filing requirements that will at least significantly lessen the burden for members.

Extremely disappointing

Given the federal government’s stated priority to increase housing supply, it is extremely disappointing that it has recently placed unnecessary restrictions and/or administrative and financial burdens on Canadian companies that should be spending their efforts on getting more homes built. CHBA is keeping on top of both issues and advocating exhaustively for members – hopefully the changes have already occurred as you read this, and we have had more success for you and your business accordingly.