In the wake of the Canadian federal government's fall economic statement, which earmarked $15 billion in new loan funding for the Apartment Construction Loan Program beginning in 2025-26, the CEO of Fitzrovia, Adrian Rocca, expressed disappointment, stating that the measures fall short of addressing the pressing issues faced by developers in the current market.
In an exclusive interview with BNN Bloomberg on Wednesday, Rocca voiced concerns about the increasingly challenging environment for developers, emphasizing that their overall margins are being squeezed. According to Rocca, this squeeze on margins is contributing to a reduction in the supply of rental units coming onto the market, and he believes that the newly announced funding measures are insufficient to alleviate the situation.
"We really need some additional help. I thought we were going to get that through the fall economic statement, but I think it really fell short," Rocca said.
The CEO of Fitzrovia proposed two specific incentives that he believes could substantially boost the supply of rental units. The first suggestion is focused on protecting the existing housing stock, with Rocca noting that there are currently 30,000 units where developers or landlords are actively considering converting them to condominiums. Rocca stressed the importance of preserving this stock for rental purposes.
Additionally, Rocca advocated for extending the HST waiver on new rental builds to include existing housing stock. This, he argued, would provide further motivation for developers to invest in the rental market.
Furthermore, Rocca recommended adopting a property tax abatement strategy, which he claimed has proven highly effective in the United States at incentivizing the creation of new rental supply. This strategy involves governments waiving some property tax dollars, providing what Rocca described as a "disproportionate benefit for developers and a small relative cost for the government."
While Rocca acknowledges the efforts made by the federal government with the Apartment Construction Loan Program, he insists that additional incentives are urgently needed to stimulate the construction of rental units and address the growing demand in the housing market.
"I am hoping there’s going to be some additional incentives brought into the market quickly," Rocca stated.
As the debate over federal measures to boost the rental supply continues, stakeholders in the housing market will be closely watching for any further developments that could shape the future landscape of Canada's rental sector.
