Mortgage Blog

The Canadian government has introduced impactful measures to address the growing housing crisis, with a focus on maximizing underutilized properties and empowering homeowners to build secondary suites. These reforms, part of a larger effort to increase the supply of affordable housing, also provide valuable incentives for Montreal property owners and those looking to buy real estate in the city. Let’s explore how these initiatives can benefit homeowners and potential buyers in Montreal.

Key Takeaways for Homeowners and Real Estate Investors

• Secondary Suite Financing: Homeowners can refinance up to 90% of their property’s value to build secondary units, such as basement apartments or laneway homes.
• Vacant Land Tax Consultation: The federal government is seeking feedback on how taxes on unused residentially zoned land could incentivize development.
• Unlocking Government-Owned Properties: Development of 70 federally owned properties will contribute toward building 4 million new homes by 2031.

Build Secondary Suites and Increase Property Value

Starting January 15, 2025, homeowners in Montreal will be able to access new financing options to create additional living spaces, including basement suites or backyard units. With these changes, the government aims to boost housing density while providing more rental opportunities in high-demand areas like Montreal.

How It Works:

• Homeowners can refinance up to 90% of their property’s value to fund the construction of secondary units.
• Secondary suites can include laneway homes, basement apartments, or units above garages. Even unique structures, such as converted pool houses, qualify as long as they are self-contained.
• Once the improvements are complete, lenders will assess the post-renovation property value to determine the loan-to-value ratio (LTV).

This program offers a unique opportunity for Montreal homeowners to increase the value of their property while generating rental income. Additionally, the government will allow amortization periods of up to 30 years to make mortgage payments more manageable.

Eligibility:

• Properties can have up to 4 units, aligning with federal mortgage insurance rules.
• Property values eligible for refinancing are capped at $2 million, ensuring the program benefits the average homeowner without focusing solely on high-end neighborhoods.
• Local zoning rules will apply, ensuring all secondary units comply with municipal regulations.

These changes are a win-win, helping homeowners generate passive income and providing affordable housing options in Montreal.

Taxing Vacant Land to Promote Development in Montreal

The government has also initiated consultations on vacant land taxes to encourage landowners to develop underused residential lots. This strategy aims to combat speculative land holding, which has limited housing availability in cities like Montreal.

Benefits of a Vacant Land Tax:

• Incentivizes Development: Encourages property owners to build homes rather than keeping land vacant.
• Discourages Speculation: Makes holding undeveloped land more expensive, reducing property hoarding.
• Funds Future Housing Initiatives: Generates revenue through taxation, which can be reinvested into housing programs.

This tax policy aligns with Montreal’s urban development goals by motivating landowners to contribute to the city's real estate growth and meet the increasing demand for housing.

A Shift in Montreal's Real Estate Market: From Homeownership to Renting

With rising mortgage rates and inflationary pressures, homeownership is becoming increasingly challenging for Canadians, especially in urban centers like Montreal. Many residents are opting to rent instead of buying, marking a shift in housing trends. The dream of owning a home, particularly among younger buyers, is becoming harder to achieve.

The government’s secondary suite reforms aim to ease housing pressures by encouraging homeowners to add rental units, creating more affordable housing options in cities like Montreal. Whether you're looking to buy real estate or already own property in the area, these changes offer new ways to participate in the evolving housing landscape.

Take Action: Explore Your Refinancing Options Today

These new federal housing reforms provide exciting opportunities for Montreal homeowners. If you’re considering building a secondary suite or are curious about how refinancing can benefit you, now is the time to act.

Get in touch with Yelena Markus, your trusted real estate and mortgage broker in Montreal, to learn more about:

• Refinancing up to 90% of your property’s value.
• Securing the best mortgage rates available.
• Contributing to Canada’s housing solution by adding rental units.

Final Thoughts

The federal government’s housing reforms are a significant step toward tackling Canada’s housing shortage. By making it easier for homeowners to build secondary suites and encouraging development on vacant land, these measures aim to increase housing supply and improve affordability across the country.

If you’re ready to maximize the potential of your property or explore real estate opportunities in Montreal, reach out to Yelena Markus today. Together, we can find the perfect financing solution that works for you—whether you're building a secondary suite, refinancing your mortgage, or looking to buy real estate in Montreal’s dynamic market.