Tax Breaks & Towers: Exploring Canada's MURB Program
In today’s episode, your hosts Daniel Foch and Nick Hill look at story of Canada's MURB program. From its lofty beginnings to its tumultuous end, they explore how this initiative transformed the housing landscape, benefitted some, and left others wondering what went wrong.
They look at the historical background of MURBS, how the program worked, the good things that came from it and the bad things that may have shut the program down as well as what we can learn from that program to tackle todays housing crisis.
Key Takeaways:
The MURB program in Canada provided significant tax benefits, including depreciation and cost deductions, encouraging high-income individuals to invest in apartment buildings.
Despite its initial aim to address housing shortages, the program faced criticisms due to abuses like overvaluing projects and speculative behaviour, leading to its eventual phase-out in 1982.
Housing policies has evolved over time, with increased government involvement in the housing sector. Various programs, including the MURB program and the limited dividend program, aimed to increase the supply of affordable housing and address housing needs for low-income individuals.
There is a push for an increasing affordability component in housing programs. This includes concessions such as increasing amortizations from 50 to 55 and regular CMHC from 40 to 50.
Generous tax incentives in the past led to a surge in construction of residential buildings, resulting in overbuilding and excess supply. This created vacancies and lower-quality housing due to the focus on tax benefits rather than market demand.
Investors exploited tax shelter programs primarily for personal gain rather than genuine investment in rental housing. This led to the construction of lower-quality buildings and maintenance issues, as the focus was on producing taxable income rather than sustainable housing.
In response to market distortions and abuses, the government phased out tax shelter programs and launched incentive programs to stimulate rental housing supply. Public-private cooperation was essential in bridging financial gaps and enticing developers back into the market.
Parallels between past and present housing issues include economic factors like inflation, interest rates, and population growth. Today's housing crisis is exacerbated by increasing demand, especially in major cities like Vancouver, Calgary, and Toronto.
A chronology of affordable housing programs in Canada reveals a shift in government involvement over the decades. From the height of affordable housing investments in the 1970s to devolution of funding responsibilities to municipalities in the 2000s, the conversation reflects on the changing landscape of housing policies.
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