Key Issues
Key Issues
ERRATUM
In the OAG Report - Current and Future use of Federal Office Space note, a typographical error has been corrected in the background section:
- "These ongoing activities are slated for completion by April 2027." should read "These ongoing activities are slated for completion by April 2026."
This error has been corrected in the English HTML version of the note.
- OAG report - Current and future use of federal office space
- Federal Lands Initiative
- Development charges
- Build Canada Homes
- Market housing supply gap
- Affordable and non-market housing
OAG report - Current and future use of federal office space
Issue / question
Considerations on Housing, Infrastructure and Communities Canada and Canada Mortgage and Housing Corporation’s Response to the Auditor General Report 3, Current and Future use of Federal Office Space.
Suggested response
- The department welcomes the Auditor General’s report on Current and Future use of Federal Office Space and agrees with its recommendations.
- The Government of Canada is investing over $318 million through the Federal Lands Initiative (FLI) to turn unused public properties into affordable housing. As the report notes, the FLI is on track to hit its target for housing units committed and meet program requirements for energy efficiency and accessibility.
- There is room for improvement by providing greater clarity in program reporting and leveraging the FLI to improve access to affordable housing for those in greatest need.
- The department will work with Canada Mortgage and Housing Corporation (CMHC) to improve quarterly reporting on FLI and review affordability criteria.
Background
- On June 10, 2025, the Office of the Auditor General of Canada (OAG) tabled an audit report titled Current and Future Use of Federal Office Space. The report includes recommendations for Treasury Board Secretariat (TBS), Public Services and Procurement Canada (PSPC), Canada Mortgage and Housing Corporation (CMHC) and Housing, Infrastructure and Communities Canada (HICC).
- The report examined whether 1) TBS and PSPC managed the government’s general-purpose office portfolio to provide adequate space for the public service while minimizing costs to Canadians; and, 2) CMHC, with the support of HICC, managed the Federal Lands Initiative (FLI) in a manner that enables it to achieve its aims under Canada’s National Housing Strategy (NHS).
- The report concluded that while the FLI was on track to meet its target for housing units committed and its program requirements for energy efficiency and accessibility, there were still areas for improvement. To this end, the report recommended HICC and CMHC take action to:
- Accurately report on all stages of housing units, from committed to built and ready to occupy. This includes clarifying projects with joint agreements and those that are delayed or in default; and
- Collaborate to review the FLI's tools and measures to ensure they align with the goal of greater affordability. This includes considering an income-based affordability measure instead of a market-based one, as well as explore new avenues with partners to attract applicants who can provide a greater variety of housing types.
- HICC and CMHC agreed with the recommendations and have committed to develop an action plan, which includes the following actions:
- CMHC will add more clarity to FLI results by including progress on units committed, under development, and built. These actions are targeted for completion by April 2026; and
- HICC and CMHC will explore new policy and operational measures to better meet the FLI's goals and target the remaining uncommitted funding toward communities with the highest needs. These ongoing activities are slated for completion by April 2026.
- The report’s recommendations are being taken into consideration in the development of Build Canada Homes (BCH), as it relates to clearer outcomes reporting and better supporting those in greatest need. For example, BCH has a clear focus on targeting income-based affordability, including deeply affordable housing where costs are less than 30% of a household’s income.
Federal Lands Initiative
Issue / question
How is the Government of Canada’s Federal Lands Initiative leveraging federally owned land and properties to increase the supply of affordable, energy efficient and accessible housing?
Suggested response
- The Government of Canada is investing over $318 million in the Federal Lands Initiative to help turn unused government land and buildings into affordable housing.
- These federal properties can be sold to affordable housing providers at a discounted rate as low as $1, depending on the level of social benefits being delivered.
- As of June 30, 2025, over $142 million in funding has been committed under the Federal Lands Initiative to support the creation of 4,899 new and 208 repaired housing units.
Background
- The Federal Lands Initiative (FLI) is a $318.9 million fund that supports the transfer of surplus federal lands and buildings to eligible proponents. This is available at discounted to no cost to be developed or renovated for use as affordable housing. The discount on the property will depend on the level of social outcomes achieved by the winning proposal. Once transferred, the property will be developed or renovated into affordable, sustainable, accessible, and socially inclusive housing.
- The FLI was launched in 2018 with an initial $200 million over 10 years, and a target of creating 4,000 units by making suitable properties available to selected proponents. Budget 2024 topped up the FLI with $112.6 million over five years with an additional $4.3 million in future years, with the investment expected to unlock a minimum of an additional 1,500 units, bringing the total to 5,500 new units.
- The FLI facilitates subsidies for the transfer of federal lands to housing providers to encourage the development of sustainable, accessible, mixed-income, mixed-use developments, and communities. Surplus federal properties across Canada are made available to partners that repurpose them to provide housing at less-than-market rates. The partners receive the federal properties at a value somewhere between market value and $1. The difference between market value and transfer value represents the government’s contribution towards the provision of affordable housing.
- Each housing project must meet the following National Housing Strategy requirements:
- Affordability: 30% of units must have rents at less than 80% of local median market rents;
- Energy efficiency: a minimum 25% reduction in energy consumption and greenhouse gas emissions compared to either national building codes or past performance; and
- Accessibility: 20% of units must meet accessibility standards.
- In addition, the Government of Canada created the Canada Land Bank, where the government publishes an inventory of federal properties that have been identified as suitable for housing development. There are currently 88 properties listed on the website that can support the construction of thousands of new homes; with work underway to identify additional federal properties.
- Building on the success of FLI, the recent launch of Build Canada Homes will build affordable housing and catalyse a new Canadian housing industry. Build Canada Homes will bring all aspects of housing under one roof to make it simpler and faster to get projects off the ground. This includes streamlining construction on public lands by having access to the government’s land portfolio, including federal properties under the Canada Land Bank that are suitable for housing construction.
Development charges
Issue / question
What is the Government of Canada doing to reduce the burden of development charges?
Suggested response
- The Government of Canada is committed to making the housing market work better. This includes reducing the burden of development charges on homebuilders so that they can get more shovels in the ground – at the same time as ensuring that municipalities are able to build the infrastructure needed to support this growth.
- The federal government is engaging with provinces, territories, municipalities, the development community, and others to solicit views and understand best practices to inform the way forward.
- Federal actions on development charges will complement other measures to support housing supply and affordability, such as Build Canada Homes and eliminating the GST for some first-time homebuyers.
- Recognizing that many municipalities rely on development charges to pay for a wide range of infrastructure, the government is keeping these needs in mind as we work through the best approaches to accelerate homebuilding.
Background
- Development charges are fees levied by municipalities on new development to pay for new and expanded infrastructure needed to support growing communities. The 2025 Speech from the Throne included a commitment to cut municipal development charges in half for multi-unit residential housing.
- The use of development charges varies significantly across the country, with municipalities in Ontario and BC relying most heavily on this revenue tool. Most provinces and territories have legislation that allows municipalities to collect development charges, but not all municipalities do so.
- Provincial and territorial legislation also determines the specific services for which municipalities can collect development charges, which can include drinking water, wastewater, stormwater, solid waste/waste management, transportation, parkland, transit, recreation and community, and emergency services. Some jurisdictions include many more categories of services in their development charge frameworks than others, and, within provinces and territories, municipalities will use development charges for different needs.
- Building infrastructure is essential to provide the services needed for new housing to be built. However, development charges have increased significantly in parts of the country in recent years. According to the Canada Home Builder’s Association Municipal Benchmarking 2024 Study, development charges and related taxes and fees on low-rise housing have increased an average of $27,500 for a unit in a low-rise development and an average $3,000 per unit in a high-rise development since the 2022 Study.
- Beyond taking action to reduce the burden of development charges for housing developers, the Government of Canada is supporting growth-enabling infrastructure through investment in the Canada Housing Infrastructure Fund, which provides federal funding to provinces, territories, and municipalities for drinking water, wastewater, stormwater, and solid waste infrastructure to enable housing development. The Canada Community Building Fund and Canada Permanent Transit Fund also provide funding for infrastructure needed to support growing communities.
Build Canada Homes
Issue / question
What is Build Canada Homes?
Suggested response
- The Government of Canada is stepping up with a bold approach to increase housing supply and has launched Build Canada Homes — a new federal agency that will build affordable housing at scale.
- With an initial capital investment of $13 billion, Build Canada Homes will bring together financing and partnerships to streamline development timelines, leverage public lands, and reduce barriers to build affordable homes for low- and middle-income Canadians.
- This new federal agency will harness public-private collaboration, deploy modern methods of construction, and catalyze the creation of an entirely new Canadian housing industry.
- Build Canada Homes has a mandate to move quickly and will prioritize development on six federal sites to build 4,000 factory-built homes – with additional capacity of up to 45,000 units across its current portfolio.
Background
- Build Canada Homes is a new federal agency that finances and builds large scale affordable housing developments.
- It works primarily with non-market housing providers to deliver affordable housing options that serve a large segment of the working population, as well as students and seniors living on fixed income that are priced out of the market. Build Canada Homes also acts as a developer, building on land, or working with other partners to develop underutilized public land.
- As it conducts these activities, Build Canada Homes will help transform Canada’s housing industry by generating demand for new and innovative methods of construction that reduce build time, cost per unit, or amount of resources (materials/workers) needed to get more homes built faster.
- Build Canada Homes will partner on and lead developments of affordable housing projects, and by using public lands, take land costs out of the equation. Build Canada Homes will leverage sites already listed on the Canada Public Land Bank and other federal sites from across departments.
- In its first six projects on federal land, Build Canada Homes will deploy a “direct-build” approach, overseeing and leading construction projects focused on affordable mixed-income communities. This first tranche of sites will be in Dartmouth, Longueuil, Ottawa, Toronto, Winnipeg, and Edmonton.
- To help protect existing affordable rental housing, the $1.5 billion Canada Rental Protection Fund will be launched under Build Canada Homes. This initiative will support the community housing sector in acquiring at-risk rental apartment buildings, ensuring they remain affordable over the long term. It also aligns with Build Canada Homes’ broader mandate to grow the supply of affordable and non-market housing – not only by building new homes, but also by preserving the ones on which Canadians already rely.
- Build Canada Homes will deploy $1 billion to build transitional and supportive housing for people who are homeless or at risk of homelessness. It will collaborate with key provincial, territorial, municipal, and Indigenous partners to pair these federal investments with employment and health care supports.
- Build Canada Homes will partner with the Nunavut Housing Corporation to build over 700 public, affordable, and supportive housing units. Approximately 30% of the units are expected to be built off-site, using innovative construction methods such as factory-built housing.
- What makes Build Canada Homes different is how it works:
- Unlocking multi-year pipelines of projects through the portfolio approach,
- Leveraging modern methods of construction such as factory-built housing, and
- Building on public lands to deliver more affordable homes faster.
- By combining flexible financing, access to land, and development expertise under one roof, Build Canada Homes will make it simpler and faster to get big projects off the ground. Introducing early federal financing will decrease project risk and incentivize private investment.
- Build Canada Homes will act as a one-stop-shop for proponents at every phase of the development process, working in close partnership with developers, investors, manufacturers, other orders of government and Indigenous partners to get housing financed and built.
Market housing supply gap
Issue / question
What is the Government of Canada doing to address the market housing supply gap?
Suggested response
- This government is committed to using every tool at its disposal to double the rate of homebuilding nationwide.
- This includes, through the creation of Build Canada Homes, building affordable homes, supporting builders with financing, and encouraging better building methods.
- The federal government is taking action to increase the supply of housing by cutting the GST on the construction of rental housing and by building on the success of programs that incentivize communities to reduce barriers, cut red tape, invest in housing enabling infrastructure, and make homebuilding easier.
Background
- Canada is facing a housing supply gap, with the growth in demand for housing exceeding new construction. This scarcity has resulted in housing prices and rents growing far faster than Canadians’ income.
- One of the main drivers of the housing shortage has been the strong growth in housing demand driven by immigration-led population growth. Restrictive and time-consuming planning processes, increasing building costs, and low productivity in the construction sector have also impacted the pace of home construction.
- Various published estimates of the supply gap, based on different methodologies, indicate that millions of new homes need to be built over the next decade to meet the demand for housing.
- In June 2025, Canada Mortgage and Housing Corporation released a Housing Supply Gap report estimating that housing starts would need to increase from approximately 250,000 to 430,000 – 480,000 annually over the next decade to restore affordability to pre-pandemic levels.
- In August 2025, the Parliamentary Budget Office estimated that 690,000 additional housing units, on top of baseline completions, will be needed by 2035 to eliminate the housing gap in Canada.
- The federal government has also introduced a number of initiatives aimed at increasing the supply of market housing, including:
- Removing the Goods and Services Tax on the construction of new rental buildings to bring down the costs of homebuilding;
- Providing a $30 billion top-up to a flagship housing program – the Apartment Construction Loan Program – that provides low-interest loans to builders and developers to boost the construction of rental housing;
- Launching the $4.4 billion Housing Accelerator Fund – a program that incentivizes local government to remove barriers that slow the construction of housing; and,
- Launching a Housing Design Catalogue to help change how homes are built by simplifying the delivery of housing across the country.
- To better match immigration with the capacity to build new homes, the Government of Canada announced, in the fall of 2024, a reduction in permanent resident targets from 500,000 to 395,000 in 2025, with admissions falling to 365,000 in 2027. This decrease was coupled with cuts to temporary immigration to 5% of the total population by the end of 2026.
Affordable and non-market housing
Issue / question
What is the Government of Canada doing to build more affordable housing?
Suggested response
- Helping Canadians access affordable and non-market housing is a key priority for this government.
- Building on the success of previous federal initiatives like the National Housing Strategy and Canada’s Housing Plan, this government will provide strong leadership to scale up affordable housing.
- Through Build Canada Homes, this government will support affordable, non-market housing using modern and sustainable methods of construction, predictable and scalable financing solutions, and collaborative partnerships with all levels of government, Indigenous communities, and both the not-for-profit and private sectors.
Background
- Non-market housing, or community housing, provides affordable homes with below-market rents that grow at a slower pace relative to the market (i.e., generally in line with operating costs, rather than market rental rates). Current supply of non-market housing is not enough to keep up with demand. Given the sector’s growth rate is less than half that of market housing, the share of non-market housing decreases each year.
- In 2021, 47% of renter households in Canada reported experiencing one or more of the following challenges: housing cost over 30% of their income, housing that was not suitable for the size of their household, or housing in need of repairs.
- Nearly half of non-market housing was built before 1980, with 87% built prior to 1996.
- The sector is highly fragmented, with about half of the total units managed by several thousand small providers, each of which typically owns fewer than 100 units. The largest 40 providers, typically provincial housing corporations and larger municipalities, own and manage the other half of the stock.
- Much of the current non-market housing stock relies on ongoing support from all levels of government, through legacy operating agreements and rent subsidies. Current investments have preserved existing non-market housing and helped grow its stock, but not to the scale needed to help restore housing affordability. The Government of Canada’s investments in non-market housing include:
- The Affordable Housing Fund, which is providing $15.9 billion over 11 years in long-term, low-cost repayable and forgivable loans to build new affordable housing and to repair and renew existing affordable and community housing;
- The Co-operative Housing Development Program, which is providing $1.5 billion over seven years in low-cost repayable and forgivable loans to build a new generation of non-profit co-op housing;
- The Federal Community Housing Initiative, a $618 million investment to help preserve 48,000 community housing units;
- The Canada Community Housing Initiative ($4.3 billion in federal funding with an additional $4.3 billion cost-matched by provinces and territories) to preserve and expand community housing; and
- The Canada Rental Protection Fund which is a $1.5 billion investment to help the community housing sector acquire rental apartment buildings and preserve affordability of rents over the long term.
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