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Freeland Budget: Benefits for The Property Sector

By: Karine Dutemple

Freeland Budget: Benefits for The Property Sector

By: Karine Dutemple

Information and news on the construction sectorFreeland Budget: Benefits for The Property Sector

If you’re paying attention to the Canadian news cycle, you may know about the 2021 Freeland Budget. This is the first budget from Canada’s Deputy Prime Minister and Federal Finance Minister Chrystia Freeland.

The budget outlines billions of dollars aimed at getting the country to manage the rest of the pandemic. Now we're wondering, how does this affect the renovation and construction sector exactly?

This article offers a short breakdown of Canada’s Freeland budget and the benefits that it'll offer in terms of new pledges to expand affordable housing, fund home renovation projects, retrofits and so forth.

Benefits for the renovation and construction sector

paysage canadien_Budget Freeland : subventions pour le secteur de l'immobilier_Soumission Rénovation

Budget overview

As mentioned, the Federal Government has unveiled a brand new budget, $101.4 billion dollars directed towards supporting the country in a Covid-19 relief effort. The budget titled “A Recovery Plan for Jobs, Growth, and Resilience” roughly breaks down to extend pandemic business and health support, $30 billion of that will go to a national childcare plan. Increasing the federal minimum wage is also on the horizon. Plus, there's $17.6 billion towards green investments in various sectors.

Freeland is moving forward with stimulus, a plan to spend around 4.2% of Canada’s GDP to deal with rebounding ourselves out of the current recession the country is facing. The budget is an attempt to “heal the specific wounds of the COVID-19 recession and to permanently strengthen Canada’s economic muscle” Freeland said.  COVID-19 has exposed specifics discrepancies and gaps in the wages of women, low-wage workers, racialized people and young people. The Freeland budget is claiming to directly address these inequalities.

Now that we have a better idea about how the money is going to be allocated, let's take a look at how the budget impacts the renovation and construction sector.

Toronto_Budget Freeland : subventions pour le secteur de l'immobilier_Soumission Rénovation

Benefits for renovations and construction

Before we get started, here are some of our articles about useful grants and programs for your projects:

Freeland’s fiscal program will benefit those who work in the construction sector as well as homeowners taking on new renovations greatly. Not to mention, there is a large portion of the budget allocated to green recovery, which is good news for our home planet. 

As a result of COVID-19, federal support geared towards businesses and individuals is needed for the rest of the year.  Thus, the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and Lockdown Support have been extended to September 25th. The estimated total for this is $12.1 billion. 

Green recovery funding will range around $17.6 billion, which covers a wide range of expanded programs. Currently, Canada is on target to reduce emissions by 36 percent, hoping to reach net-zero emissions by 2050.

Further, the government has agreed to offer $4.4 billion to the Canada Mortgage and Housing Corporation. This is meant to encourage homeowners to complete deep home retrofits through interest-free loans. These can be offered in payments up to $40,000. The loans would be available to landlords and homeowners who intend to complete retrofits as identified through an EnerGuide energy assessment. 

Another very exciting note is that the government has said they’re intending to build, repair and support 35,000 affordable housing units through a $2.5 billion dollars investment, as well as the reallocation of $1.3 billion. Also, acknowledging the work-from-home trend that's so prevalent as a result of our pandemic, the government is willing to relocate $300 million from the Rental Construction Financing Initiative to support the conversion of empty office spaces into housing. A thrilling prospect for those working in this sector with an interest in giving back to the communities that surround them.

paysage canadien_Budget Freeland : subventions pour le secteur de l'immobilier_Soumission Rénovation

Other Freeland Budget initiatives worth mentioning

There are other exciting benefits to the Freeland Budget that are on the periphery of the renovation and construction industry. For starters, the government has discussed the allocation of $1.4 billion to Infrastructure Canada to add to the Disaster and Mitigation Fund. This is important for areas impacted by wildfires, floods and includes the rehabilitation of stormwater systems.

Further, Indigenous infrastructural investments will take place, including $4.3 billion over the course of 4 years being put back into the Indigenous Community Infrastructure Fund, as well as an additional $1.5 billion over the course of 5 years that’ll cover maintenance and operations costs for community infrastructure in First Nations communities and on reserves.

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Last modified 2022-11-30

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The Impact of Inflation on Residential Renovations Source: Canva Inflation anchors down renovation plans Let’s start off by saying that the current state of inflation is hindering homeowners who are looking to undertake renovation work. While numerous homeowners became aware of the importance of improving their residences during the pandemic, labour and material costs are at an all-time high. This is caused by the lack of construction industry-specific labour as well as the rise of raw material costs. This situation renders renovation projects more expensive and deters some homeowners from moving forward with their projects. Contractors are even confiding that, over the past few months, some of their loyal clients have been having cash flow issues. To put some numbers on this global trend, according to the Association des professionnels de la construction et de l’habitation (APCHQ), after reaching record-blowing spending figures of 23.5 billion dollars last year, the renovation industry is expected to see a 15% drop in 2023, meaning 20 billion dollars overall. Therefore, experts are recommending planning renovation projects ahead of time and taking into account any additional costs related to inflation. Inflation alters job types and volume Inflation is curbing the demand for very minor and major renovation projects, and this same trend was confirmed by our company in 2023. This drop stems from several factors. Firstly, the pending state of the economy has led investors to adopt a different, more cautious approach. Furthermore, the COVID-19 pandemic has had a significant impact on the construction industry preventing numerous worksites from being created. In 2023, amongst the projects that are likely to be on the decline, small-scale residential renovations will be hit. Households affected by the health crisis are expected to cut back on home improvement or repair expenses. It’s said that so-called “medium-scale” renovation work will be amongst the most sought-after from contractors (projects ranging between $5,000 and $75,000). Overall, the province of Quebec has had and will continue to experience a rather slow year in regard to extensive construction worksites in 2023 and beyond. Given the precarious economic climate and the pandemic, an industry investment downturn is to be expected. Home Renovations and Higher Interest Rates Source: Canva Here too, the renovation demand was hit In Quebec, interest rates significantly impact the demand for residential renovations. When the interest rates are low, homeowners are more likely to undertake renovation projects, since financing costs are more affordable. Therefore, low-interest rates tend to trigger the demand for residential renovations, which drives the economic state of the industry. On the other hand, higher interest rates can hinder some homeowners from moving forward with their renovation plans, since financing costs also soar. Therefore, they’re likely to postpone or cut down on their intended renovations. In such cases, it can lead to a decline in demands related to residential renovation work, which impacts industry-specific companies. Interest rates: A matter of cost Aside from its impact on demand, interest rates also play a role in determining the cost of residential renovations in the province of Quebec. When interest rates are low, homeowners can apply for loans to finance their projects on more favourable terms. This can lead to a spike in material costs and renovation service fees, since as the demand increases, suppliers are forced to increase their rates to compensate. As a result, homeowners may find themselves spending more on their projects than intended due to soaring material and labour costs. On the other hand, when interest rates are high, financing costs increase, which can motivate suppliers to lower their prices to maintain demand. As a result, homeowners can benefit from increasingly competitive pricing during the course of their renovation projects. However, such a price drop can also affect a renovation company’s profit margin, which may ultimately have an adverse effect on the company’s bottom line. Despite Inflation, the Renovation Craze Lives On Source: Canva Despite inflation, the renovation craze is still well and alive amongst homeowners in Quebec, and the reasons for that are plenty. Improves quality of life Renovations can improve the home’s comfort and functionality, which in turn improves the dwellers’ quality of life. Even though costs can be steeper due to inflation, people are still willing to invest in their happiness and well-being. Increases property value Well-carried-out renovations can increase a property’s market value. As such, homeowners can be motivated to renovate to benefit from a potentially decent long-term return on investment, even if the initial cost is steeper due to inflation. Personal and household needs People have specific needs, like building an additional bedroom to accommodate a new family member, creating a home office as a result of the widespread work-from-home trend, or renovating a bathroom to meet accessibility requirements. These personal or household needs can rightly motivate a homeowner to renovate despite current inflation rates. Renovations over moving Some people prefer renovating their homes rather than moving. They might’ve grown attached to their neighbourhoods, their neighbours, or the memories created in their homes. In such cases, inflation can be seen as a temporary hurdle that’s unmatched by a homeowner’s love for their property. Access to loans and grants The Government of Quebec often makes low-interest rate grant programs available to encourage green or eco-friendly home renovation or improvements accessible. Such financial incentives can mitigate the impact of renovation cost inflation, which can encourage homeowners to move forward with their renovation plans despite inflation. Note that reasons to carry out renovations differ from one person to the next. Some might be more motivated by the financial aspect of it all, while others might be more inclined to do so for personal or practical considerations. How to Cut Renovation Project Costs Source: Canva Focus on small-scale projects Doing everything at once may seem like your best bet, but by focusing on critical repairs, you can cut back on material and labour costs. Don’t overlook the planning stages Don’t overlook the planning stages. While it may seem tedious, establishing a detailed plan prior to undertaking your renovation work will deter any last-minute changes that may end up being quite costly. Use recycled building materials Consider using recycled building materials. Not only will it reduce your environmental impact, but it’ll also end up being cost-effective compared to purchasing all-new materials. To learn more about this: How to Save Money on Building Materials Without Sacrificing Quality The Benefits and Uses of Recycled Concrete Take into account seasonal pricing Consider seasonal pricing. Certain materials and services end up being cheaper during certain periods throughout the year. Therefore, it’s worth planning your renovation project around. A Definite Impact on Renovation Work, but Demands Are Still High In a nutshell, needless to say, inflation significantly affects the renovation industry. Steep material, labour, and related service costs render renovation projects more expensive and, thus less accessible for many homeowners. Moreover, increased interest rates can also dissuade property owners from moving forward with repair work. Despite these challenges, some homeowners are still driven to renovate their homes to increase their property’s market value and improve their quality of life. Furthermore, due to inflation, limited demands make renovation contractors rather readily available. Therefore, it might be just the right time to contemplate carrying out the desired renovation work if you’re looking for a shorter-than-usual timeline.


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