A revived rental investment incentive is among the recommendations
A Canadian policy research group has called on the federal government to set a firm deadline of 2035 to resolve the country’s middle-class housing crisis, outlining 10 recommendations in a pre-budget submission that span both long-term planning and immediate policy reforms.
The Missing Middle Initiative (MMI), based at the University of Ottawa’s Institute of the Environment, submitted its brief to the House of Commons Standing Committee on Finance last week. The submission was authored by MMI’s Mike Moffatt and comes as the Canada Mortgage and Housing Corporation (CMHC) projects housing starts will decline in each of the next three years.
A goal, not just a target
At the heart of the submission is a distinction MMI draws between a housing target and a housing goal. The federal government has committed to reaching 500,000 annual housing starts by 2035, but the group argues that figure alone falls short of what families actually need.
“A young family in search of a home does not care how many housing starts there were last year; they care about finding a home they can afford in their community that meets their needs,” the submission states.
MMI proposes that the government adopt measurable objectives – for example, that “every middle-class, dual-earner couple in their 30s should be able to afford to purchase or rent a new, entry-level home, in any community in the country, suitable for a household of five, by 2035.” The group also calls for annual key performance indicators (KPIs) tied to that goal, including rent-to-income and price-to-income ratios, rather than raw construction numbers alone.
Planning for families
MMI’s third recommendation asks that future housing plans formally recognize the demand for family-sized homes and the option of homeownership. The group says current data collection is inadequate for tracking these needs, noting that the CMHC does not record a housing start until a foundation reaches grade – a lag of one to three years from when investment decisions are made.
The submission also asks the government to draw a clearer distinction between policies affecting new construction and those affecting resale homes. It cites Canada’s foreign buyer ban as an example of a policy that, by failing to distinguish between the two, may reduce the supply of new homes rather than protect existing housing stock.
Cutting costs
Among its immediate reform proposals, MMI urges the government to extend the enhanced HST rebate on new owner-occupied homes – currently set to expire on March 31, 2027 – and expand it beyond Ontario to all provinces.
Another recommendation would restructure how development charges are collected. Under the current system, developers carry those charges on construction loans, with interest costs ultimately passed on to buyers, who then pay GST on top of those embedded charges. MMI says shifting to a direct-to-buyer, line-item model at closing could save new homebuyers tens of thousands of dollars by eliminating that tax-on-tax effect.
Gentle density and rental supply
The submission also calls on Ottawa to implement the Multi-Unit Rental Building (MURB) tax provision promised by the Liberals during the 2025 election campaign, which is intended to channel private investment into new rental construction rather than existing single-family homes. The group recommends pairing it with a temporary capital gains incentive for investors who sell non-purpose-built rental units and reinvest in eligible new developments.
Finally, MMI recommends tying federal housing and infrastructure funding to provinces and municipalities that adopt pro-gentle-density reforms, while expanding the CMHC’s Housing Design Catalogue, which currently offers only seven designs for Ontario, including just one four-bedroom option.
The committee is expected to review submissions as it prepares recommendations for the next federal budget.
