- What The federal government will no longer pursue a new tax on REITs as part of its strategy to tackle the financialization of housing
- Why The idea received substantial pushback from the real estate industry as it continues to deal with high costs
- What’s next The government will consider other avenues to prevent so-called renovictions and improve affordability
The Trudeau government is hitting pause on a threat to introduce a new tax on multifamily REITs.
After numerous promises to pass legislation tackling the financialization of housing — namely that done by corporate owners of apartment buildings in Canada — the Department of Finance posted a statement on its website on May 8 revealing an apparent halt in plans.
“The government is committed to making housing more affordable for Canadians and recognizes Real Estate Investment Trusts (REITs) own a significant share of Canada’s rental units,” the department said.
“While more needs to be done to ensure that Canadians are not subject to renovictions and that rental units are affordable for Canadians, the government understands that REITs provide a critical channel for new investment in rental units. In this spirit, no changes to the tax treatment of REITs are being considered at this time.”
The tone shift follows pushback from the real estate industry as it continues to deal with lower asset valuations and higher interest rates. Arguments were also made that a new corporate tax would hinder housing development.
The Liberal party promised to “curb excessive profits” of corporate residential property owners during the 2021 election, which would include conducting a review of the existing tax rules. In 2022, following their minority win, the Liberal Party struck a support deal with the New Democratic Party, part of which involved a promise to tackle “the financialization of housing” of corporate apartment owners.
As tenants across Canada continue to deal with evictions linked to renovation plans and unaffordable rent prices, the federal government will now have to explore other avenues to offer some relief.
