The market sounding document will structure consultations with home-builders and other industry stakeholders, and offers the first concrete details on what the Liberals are proposing for the new entity, which will act as both an affordable housing developer and financier for other builders.
Editor-in-Chief
The Liberal government has released a proposal for its new housing entity, laying out suggested loan offerings and other details ahead of the planned fall launch.
A market-sounding document released on Monday offers the first concrete details on what the Liberals are proposing for Build Canada Homes (BCH), which will act as both an affordable housing developer and financier for other builders. The document, which will guide consultations with home builders and other industry stakeholders, includes the proposed selection criteria for projects.
BCH was a key plank of the Liberals’ housing platform in this past spring’s federal election, alongside slashing developer fees, removing the GST on homes costing $1 million or less for first-time buyers and offering tax incentives for builders of rental units.
Prime Minister Mark Carney said the plan would lead to Canada building almost 500,000 new homes per year over the next decade, and tame the explosive growth in housing prices seen since the start of the COVID-19 pandemic.
Between 2019 and 2024, Canada’s national benchmark home price surged by 45 per cent, far outstripping more modest gains in wage growth. A report by Rates.ca found the average home was worth 8.4 times the average after-tax salary, compared to 4.9 some 20 years earlier.
Tight supply has been identified as a major culprit for sky-rocketing prices, and the Canada Mortgage and Housing Corporation (CMHC) warns the country needs to essentially double its pace of homebuilding to return to pre-pandemic affordability levels by 2035.
But the CMHC last month slashed its housing start projections from earlier this year, down to 237,500 (from 240,500) for 2025, 227,734 (from 238,600) in 2026 and 220,016 (from 232,900) in 2027.
Carney said BCH would address the country’s housing crisis by getting the federal government back into the business of building affordable housing at scale, including on public lands.
The Liberals said the new entity would develop and manage affordable housing projects and partner with builders for the construction phase, providing $10 billion in low-cost financing and capital to affordable home builders. It would absorb all affordable housing programming — such as the affordable housing fund and the federal lands initiative — from the CMHC and also acquire additional land and offer leases, whenever available.
The BCH would also provide $25 billion in debt financing and $1 billion in equity financing to prefabricated home builders, with the Liberals saying the housing type can reduce construction times by up to 50 per cent and lower costs by up to 20 per cent. The entity would issue bulk orders of units from manufacturers to create sustained demand.
The Liberal platform pegged the cost of the body at over $11 billion over the next four years.
It’s unclear if BCH will become a Crown corporation or operate as something else.
Former Privy Council clerk Michael Wernick said it would “make sense” for it to become a Crown corporation “if it is to have authorities to own property or to borrow or issue bonds or collect revenues.” But he said another possible route would be a special purpose entity, such as Defence Construction Canada and the Museums Construction Corporation. They are stood up for a specific cause and wound up when their work is completed.
A government source said it’s possible that BCH would start life as a special purpose entity before transforming into a Crown corporation further down line. The source isn’t being identified because they aren’t authorized to speak publicly on the matter.
The source said consultations on BCH are moving more aggressively than they would’ve under the former government, and the market-sounding document is sending a clear signal to developers and other housing stakeholders about the sort of projects that would be eligible for financing.
The source added that one of the lessons learned from standing up the Canada Infrastructure Bank was the importance of signalling to industry what projects they should be advancing.
