This year’s federal budget had some big-ticket items for real estate and, most importantly, some incentives for first-time homebuyers.
But these measures are gimmicks, according to Conservative Deputy Finance Critic Tom Kmiec, member of Parliament for Calgary Shepard.
On a recent episode of CJAD 800 Montreal’s Real Estate Show, Kmiec told host and North East Mortgages president Terry Kilakos that he was hoping to see items more focused on reducing the burdens imposed on home buyers by the stress test. Instead, he was let down.
“I’m kind of disappointed that they actually didn’t address the real issue, which is the stress test. They only have one page and a whole budget to talk about it,” Kmiec said. “Then they have what I think is that an election gimmick which is this first-time homebuyers incentive.”
It’s a point Kilakos agrees with. The stress test is what’s making it difficult for people to enter the market, Kilakos said.
“They’re basically putting the entire weight of the mortgage and real estate industry on people that have never owned real estate before, which is completely and utterly irresponsible,” Kilakos said.
The program will be for buying their first home, who will be eligible for a 5% top up from the from the Canada Mortgage and Housing Corporation (CMHC) on the total cost of the house. People buying a new construction home will qualify for a 10% top up. To qualify, a household has to have a combined income of less than $120,000, and the CMHC will only pick up a maximum of $480,000. The government hasn’t yet said when or how buyers will have to pay back that money, and at what rate of interest.
It’s expected the government will announce in September what the conditions of repayment for the program are. That will make the announcement likely in the middle of the next federal election, scheduled for October. That’s something that didn’t escape Kmiec’s attention.
“It’s an election gimmick that they’ve created in the budget, and they’ll announce all the details closer to [the election] and they’ll make a judgment call on how lucrative should it be, how generous it should be probably based on their polling numbers,” the Calgary-area MP said.
An offer to the Liberal Party to have a spokesperson appear on The Real Estate Show was declined.