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A benefit to all Canadians
May 08, 2008

This year is the 23rd year REALTORS® from across the country have converged on Ottawa to meet with their MPs about issues that are important to the Canadian Real Estate Association’s 94,000 strong membership.  The issues, advocated by REALTORS® during PAC Days, are also designed to benefit all Canadians.   

The Home Buyers Plan (HBP) provides an excellent example of how REALTORS® lobbying politicians can help Canadians. In 1989, CREA published its Public Policy and Housing Affordability paper, proposing that RRSP holders be allowed to borrow from their plans for a down payment on their first home. The proposal was refined over a three-year period. In its 1992 budget, the federal government unveiled the Home Buyers’ Plan. In 1994, it was made into a long-term plan to help first-time buyers.  

Before the plan became a reality, many young people had to choose between saving for retirement or saving to purchase a home. Under the plan, saving for retirement has been realized through homeownership building equity rather than debt.

The requirement to repay the RRSP back over 15 years to avoid taxation is a powerful incentive so home buyers are repaying their loans, protecting the integrity of the RRSP program.

However, a current issue is that the HBP has not been indexed to inflation or increases. The limit for individual RRSP withdrawals remains $20,000 or $40,000 per couple. CREA has been advocating changes to the plan to account for inflation and increased home values.

MP John Cummins (Delta-Richmond East) introduced a private members bill in April 2008 calling for the raising of the borrowing limits under the HBP to $25,000. Thereafter, the bill recommends the plan be indexed to reflect annual Consumer Price Index increases. 

In Ottawa at a PAC luncheon, he told 300 REALTORS®:

“Let me begin by saying what a pleasure it is to be in a room full of sales people. After all, as a politician I too am a salesman.We are all salesmen in this room (if I may use the word salesman in an all-inclusive way).

“But there is a difference.

“As real estate salesmen, you always sell something needed and something of real value. As a politician, some of us …. well…

“Bill C-520 will increase from $20,000 to $25,000 the amount of money first-time home buyers can borrow from ... their RRSP. It will be the first adjustment ... since the Home Buyers’ Plan was created in 1992 ...

“As one of my first statements in the House of Commons, I rose on January 31, 1994, to ask the newly-elected Chretien government to extend the HBP. While I do not claim any credit, the Liberal government made the plan permanent a short time later in its 1994 budget.

“Canadian home buyers liked the plan from the moment it was enacted. Canadians have used the plan more than 1.8 million times since 1992. Clearly home buyers prefer to borrow from their own savings rather than borrow from banks and pay interest to bankers.

“The HBP and Bill C-520 help Canadians realize one of their most fundamental desires — to own a home. A home is more than just a roof over your head or a place to hang your hat. It’s a symbol of permanence, an investment in something bigger than your own property. It’s your connection with the community ... perhaps the strongest keystone in the building blocks of community and the strong shared values that flow from being part of a community. As real estate agents, you probably think of yourselves as business people rather than as community builders. But, the reality is that in assisting Canadians to buy homes you are playing a vital role in building strong families and strong communities ...

“For many young Canadians, purchasing their first home is extremely difficult — particularly accumulating a down payment. The challenges faced by first-time home buyers are not clearly understood by many housing analysts and policy makers but are clearly understood by real estate professionals — the sales people, the front line of the industry.

“By emphasizing the down payment, the HBP helps the first-time home buyer to minimize their level of indebtedness over time. While most people wish to own a home, homeownership has become less viable for a large proportion of young Canadians. Bill C-520 will help young Canadians meet the challenge of coming up with a down payment ... It addresses directly two important Canadian desires that strengthen the economic health of our nation by strengthening the economic health of individual Canadians. 

“Buying a home and putting away savings — these are worthy financial goals for ordinary Canadians and worthy goals for a nation that believes in homeownership and believes people are most able to care for themselves when they have cared for their long-term financial success.

“But the program is only of value if it reflects the realities of the market place. This bill does just that. It raises the borrowing limit for RRSP holders to a level that is close to its real value when it was introduced in 1992 when we compare it to the rate of inflation identified by the CPI ...

The increase proposed .. is a very modest (and) builds upon ... the reduction in the GST ... to five per cent and creation of the new Tax-Free Savings Accounts ...  On a $300,000 home the reduction ... means a savings of $3,840.

Perhaps the most exciting innovation... is the Tax-Free Savings Accounts ... every Canadian will be able to save $5,000 every year. They will be able to use funds from the account to purchase a home or cottage without suffering a tax penalty ...  the money does not have to be paid back. New home buyers will in future years have the advantage of the cut to the GST, the increased borrowing limits for the Home Buyers Plan in addition to the new Tax Free Savings Accounts.

All of these changes will make the purchase of that all important first home easier for Canadians in every region of the country.