By Kevin Lee, CHBA CEO
Over the last few years, factory-built construction has increasingly been deemed a key part of the solution to Canada’s homebuilding productivity woes. While it has a lot to offer, the reality is that there are many market barriers to broader adoption. CHBA and our Modular Construction Council have been working hard over recent times to bring the realities of the challenges to government, to help make the potential a reality.
While the conversation around modular construction had been percolating for years prior – after all, factory-built methods are not new – it has gained real momentum as governments have latched on to modular construction as a potential solution to the labour and productivity challenge. CHBA recognized the labour challenge and the potential for factory-built to be part of the solution years ago: We started our Modular Construction Council in 2017, bringing together two previous national modular associations under the CHBA umbrella to lead the charge.
CHBA Sector Transition Strategy
Given that the government was interested in modular construction but lacked understanding of its realities, we released our CHBA Sector Transition Strategy (STS) in February 2024. It garnered expansive media coverage and strong interest from federal officials, leading to the inclusion of many of CHBA’s STS recommendations in the 2024 federal budget. I was subsequently invited to last year’s Liberal Cabinet Retreat and included as an expert on the federal Expert Panel for an Industrial Strategy for Homebuilding. This resulted in government actions not only to support factory-built construction, but also to support more housing construction at large. (CHBA has been explaining that the most important way to get more factory-built construction capacity is to remove the barriers to getting all types of housing built, since getting past barriers to more housing supply in general is critical to making the housing sales that can in turn lead to investment in more factory-built approaches.)
During this spring’s election period and in the 2025 federal budget released in November, factory-built construction was amplified even further with the federal intention to make it a key piece of its new housing entity, Build Canada Homes (BCH). While BCH focuses on non-market affordable/social housing projects, it will focus on factory-built solutions to help create a steadier pipeline for factories. The government has also committed $25 billion in debt financing and $1 billion in equity financing to Canadian prefabricated home builders. Through BCH and other channels, the government is aiming to eliminate duplicative inspections and streamline approvals for factory-built homes. These were direct recommendations from CHBA’s STS, and while they are a great start, CHBA remains adamant that to truly scale up factory-built construction and meet Canada’s housing targets, innovative solutions and support for modular projects must extend to market-rate housing as well. BCH will focus on government-subsidized housing, so while it can be a catalyst for transition in some ways, it is the broader supports for market-rate housing that are needed to fully execute change.
Broader obstacles must be addressed
There is no doubt that factory-built methods can build homes faster. However, as CHBA’s STS outlines, the full potential of factory-built methods can only be unleashed when broader obstacles facing the entire sector are addressed. For example, expanding the GST to all buyers, financial system change that enables Canadians to access homeownership, zoning and development charge reform, addressing building code challenges and working with municipalities to lower development taxes are some key priorities to facilitate more supply and create the conditions for more factory-built investment. Derisking high factory start-up investment costs, ensuring stable demand to keep factories running and improving financial institutions’ understanding of the modular business model to expand access to suitable financing are also critically important.
All in all, there is a real opportunity to seize, but governments need to make regulatory and policy changes for that opportunity to come to fruition. Rest assured, CHBA has our foot on the gas to get more wins for members, including removing barriers preventing a more widespread transition to factory-built methods.
Read CHBA’s full STS at chba.ca/sector-transition or head to page 16 for more information about CHBA action on factory-built construction.
