The Hamilton Spectator

Don’t kill incentives for homebuyers


We have an affordabil­ity crisis across the country, and it is crystal clear how we got here: successive government­s have not invested nearly enough in the fundamenta­l building block of a healthy society — affordable housing for all Canadians.

Our government­s have been prolific in the announceme­nts department but haven’t done nearly as well on implementa­tion.

It wasn’t a surprise last week when Ottawa pulled the plug on the first-time homebuyer incentive program. Underwritt­en with $1.25 billion in 2019, the program parameters were drawn far too tight to work. Rewriting the parameters to recognize differenti­al costs and household incomes across the country would have been easy. Instead, the feds killed the program with over $800 million unspent. It was obvious from the outset that a program offering up to 10 per cent down payment assistance wouldn’t work.

Revolving down payment assistance programs work and have the potential to help a generation of new homeowners break the cycle of poverty. Most importantl­y, these provide a “hand-up” to ownership, not a “handout.” Shared equity second mortgages are registered on title, with the principal repayable on resale, along with a proportion­ate share of the home’s appreciati­on.

For example, let’s assume a tenant buys a condominiu­m for $700,000 with a 50 per cent second mortgage and sells the suite several years later for $800,000. The homeowner repays the second mortgage ($350,000), plus 50 per cent of the capital appreciati­on ($50,000), for a total repayment of $400,000. Both the principal and appreciati­on go back into the revolving fund and can be redeployed to another firsttime buyer.

These second mortgages are a long-term investment in the future of our country, and there is no doubt that tenants who have become homeowners are happy to share appreciati­on with the government. In fact, our firm has implemente­d shared equity programs over the past 18 years, enabling more than 440 households to make the transition from tenant to homeowner. Thousands of tenants across the country would do the same tomorrow morning if adequate funding was available.

A 10 per cent second mortgage made sense in 2006 at our Lakeshore Village community in Etobicoke. Several years later, a program implemente­d in partnershi­p with Toronto Community Housing in Regent Park provided second mortgages of up to 35 per cent of the purchase price.

As the cost of a new home or condominiu­m goes up, the investment required from government also rises. Capping the second mortgage incentive at 10 per cent was a program designed for failure.

Today, a 50 per cent second mortgage will make the program work in Toronto, Vancouver and other urban centres, with a lesser amount required in smaller cities. There is no reason to kill the program. Open up the parameters, deploy the $800 million remaining in the piggy bank and then double that amount in the upcoming federal budget.

And let’s find matching dollars from the provinces and the philanthro­pic sector, each contributi­ng to a revolving fund that lives forever, providing a “hand up” to first-time homeowners across the country.

The affordable housing crisis can be solved. Models exist to create both affordable ownership and affordable rental homes in perpetuity. We know because we’ve implemente­d them and witnessed the positive outcomes. It will take deep, consistent and long-term government investment.

It’s not magic. It’s mathematic­s and with the appropriat­e level of investment, the math works.

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