The federal government just released its 2025 Budget titled “Canada Strong”. The government framed this budget as a “generational shift” that was aiming to prepare Canada and Canadians for a rapidly changing world. You have likely already seen the headlines: it’s proposing a $78.3 billion deficit and plans to focus on “spending less to invest more”.

We’ve outlined what we think this budget means for community housing, but we still have a few questions of our own.

 

What does Budget 2025 do for housing?

The federal government is clearly stating that one of their core missions is to “supercharge” homebuilding. They cite the Canada Mortgage and Housing Corporation estimates that to restore affordability to 2019 levels, homebuilding must nearly double between 430,000 and 480,000 homes per year. This is based on the assumption that oversupplying the market with housing will lead to greater affordability.

To do this, the government is proposing a $25 billion housing plan. Confusingly, this $25 billion is not what the government is planning on spending but instead represents the costs of these programs to government. More on that later.

For now, let’s focus on the idea of “supercharging” homebuilding to 430,000-480,000 housing starts per year. We know that to create truly affordable housing, we must double the share of non-market community housing as a portion of our total housing stock in the next 10 years and aim for 20% of the housing stock in the long-term. To get there, at least 25% of all housing starts over the next decade will need to be non-market community housing; by 2035, we must reach at least 107,500 new non-market community housing starts per year. This will require a very bold plan and commitment from this government.

Let’s talk Build Canada Homes

Central to the government’s housing plans is the launch of Build Canada Homes. Importantly, the government reiterated that “Build Canada Homes will focus primarily on non-market housing”. It will do this while is seeks to change how we build housing in Canada by working to deploy and harness “modern methods of construction”, with the goal of building faster and more efficiently.

What will that look like? The details are still being worked out, but the government has outlined an initial spending investment of $13 billion over five years broken down in the following ways:

At this point, you might be saying “but wait, I thought they were saying that they are going to invest $7 billion in Build Canada Homes? Where does $13 billion come from?” As best we can tell, the difference here is how the government is accounting for what they are spending versus what that spending is going to cost government. Stay with me here, because we are going to talk about the fiscal framework.

In some situations, when the government spends money on things like grants, they have to account for every $1 they spend inside the fiscal framework. So, $1 costs them $1. However, when the government does things like issue loans, they don’t have to account for every $1 they are sending out as $1 of cost to them. Instead, they only have to account for things like the administrative fees it costs to issue those loans plus some calculation on the risk of that loan not being repaid. So, it might mean that lending out $1 actually costs the government $0.25.

These ratios are all hypothetical, but they illustrate the difference between the $7 billion Build Canada Homes will cost the Government of Canada versus the $13 billion they are hoping to spend. We are working with officials within the government to confirm our interpretation is correct and to determine what Build Canada Homes spending is loans versus grants. This will have a big impact on how much housing the government can build through this agency and the levels of affordability it will achieve.

Scale matters. If Build Canada Homes were to spend this $13 billion in a way similar to the Affordable Housing Fund, it might mean about 40,000 new homes over the next five years. That is still a long way from the 107,500 annual community housing starts we would need to meet the government’s own goals.

Some clear positives: first, the commitment that Build Canada Homes will be primarily non-market housing is important. Second, the early commitment of $1 billion for supportive and transitional housing is a positive step; to truly address homelessness we need significantly more supportive and transitional housing. Third, the ongoing commitment to the Rental Protection Fund is good to see. The roll out of that program, sector-led and managed by a third party will allow us to grow the share of non-market community housing rapidly and efficiently by supporting the acquisition of existing private market rentals. It’s the fastest and cheapest way to increase the supply of community housing and will provide security of tenure and stable rents for those who live in these buildings.

The most important thing that the Government of Canada and Build Canada Homes needs to do now is to adopt clear outcome-oriented targets for what it hopes to achieve. How many non-market homes will Build Canada Homes produce? At what levels of affordability? And how does this roll-up into the objective of doubling the overall number of housing starts?

 

Indigenous housing promises

Budget 2025 once again recycles promises to support housing for First Nations on reserve, Inuit, and Métis communities, including the $2.8 billion in unallocated funds first announced in Budget 2023 – money that has sat idle in a botched RFP process for nearly two years. The continued failure to move these funds is another example of federal inaction on a crisis that the government acknowledges but has yet to address.

While distinctions-based housing partnerships with First Nations, Métis, and Inuit governments are important, the federal government continues to overlook the urgent housing needs of the more than 80% of Indigenous people who live in urban, rural, and northern areas. Many Indigenous people have been colonially displaced or dispossessed yet remain excluded by policies that restrict funding to distinctions-based governments. Over half (57%) of Indigenous households live in large urban centres, with one in three Indigenous renters facing core housing need—stark evidence of a policy framework that leaves the majority behind.

To address this crisis, the federal government must move beyond distinctions-based funding and commit to a distinctions-blind, service-based approach in urban, rural, and northern (URN) housing communities, whose members are at risk of falling through the cracks. Indigenous led housing and service providers in these regions have proven that they can deliver culturally safe, efficient, and high-impact housing solutions. These organizations stand ready to act, yet they are still waiting for the federal government to release the long-delayed funds that are designated for them.

Government materials continue to conflate For-Indigenous, By-Indigenous (FIBI) organizations with Indigenous governments, implying that URN housing can only be developed and administered by distinctions-based entities (who are also doing meaningful work in URN communities). However, this framing erases the leadership and expertise of friendship centres, NICHI, and Indigenous housing providers who have long delivered effective FIBI solutions in their communities.

If the federal government is serious about tackling housing instability and homelessness, funding must flow directly to urban Indigenous housing providers and not get trapped in bureaucracy or distinctions-based filters. Build Canada Homes should dedicate at least 20% of its resources to For-Indigenous, By-Indigenous (FIBI) housing in urban, rural, and northern contexts and must extend its partnerships beyond Indigenous governments, to include friendship centres, NICHI and Indigenous-led housing providers.

 

What about the money the government is already committed to spending?

As a core part of the government’s $25 billion housing plan, they included $16 billion they have already committed to spending under previous programs. This includes programs such as the Affordable Housing Fund, the Housing Accelerator Fund, and the Apartment Construction and Loan Program. Continuing the commitment to these programs will indeed be critical. In particular, the Affordable Housing Fund, the primary source of federal funding and financing for non-market housing, must remain resourced and active until Build Canada Homes is fully operational.

In September of this year, the federal government announced a $1.5 billion top up for the Affordable Housing Fund, which will help to ensure more projects get delivered. However, this funding might not last through 2026 and so the government must clearly outline a plan for keeping the pipeline of community housing development going through this transitional phase.

 

Other housing related announcements in Budget 2025

What about all the other housing related initiatives that were in this year’s budget? Below is a quick list of each of the announcements, many of which deserve a deep dive of their own.

• There is a commitment to a $51 billion “Build Communities Strong” infrastructure fund that along with many other things can support the development of “housing-enabling” infrastructure.
  • A portion of this fund will be spent through a Provincial and Territorial Stream in which the federal government plans to require, in jurisdictions where appropriate, that there is a reduction of development charges to enable more housing construction.
• The Government of Canada will eliminate GST for first time buyers purchasing new homes valued at or under $1 million and reduce the GST on new homes valued between $1 million and $1.5 million.
• The government will also apply a one-time supplemental Canada Disability Benefit payment of $150 in respect to each Disability Tax Credit certification, or re-certification. This will help assist with the costs of applying for this benefit and hopefully will allow more people to access the benefit in the first place.
• Budget 2025 also commits the government to raising the Canada Mortgage Bond (CMB) annual issuance limit from $60 billion to $80 billion. The increase will apply exclusively to multi-unit housing and may increase access to cost-effective mortgage funding for lenders.
• The government has also announced its intention to eliminate the Underused Housing Tax as of the 2025 calendar year.

 

What was missing?

Most notably what was not clearly identified within this budget was how the government plans to address federal rent subsidies and crucial programs like Reaching Home.

Federal rent subsidies such as the Canada Housing Benefit and the Federal Community Housing Initiative Phase 2 provide direct housing subsidies to over 300,000 households. These programs will sunset in 2028; the government must commit to extending them to protect these households.

Finally, Reaching Home is an important piece in our fight against homelessness in Canada. Like the federal rent subsidies, this program is set to end in 2028; the government must soon make its intentions clear about how it plans to extend this funding.

 

We are continuing to work with the federal government to receive answers on the questions above and to ensure that Build Canada Homes works for and with community housing providers. Keep an eye on our social media channels and make sure you’re subscribed to our Flash newsletter to stay updated.