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High costs of land acquisition pose significant obstacles that Ottawa seeks to overcome through long-term leases
Published on 08 July 2024 • Last updated 5 hours ago • 4 minutes reading time
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A rental apartment complex under construction can be seen in a new residential area in Langford, BC Photo by Darryl Dyck /THE CANADIAN PRESS
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In a groundbreaking move outlined in the 2024 federal budget, the Canadian government plans to lease public land to developers to reduce capital costs and speed up construction across the country. The measure would be a critical step toward broader access to housing for Canadians. The Financial Post's Shantaé Campbell examines how the move could help boost affordable housing projects.
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How does the government plan to convert public land into affordable housing?
At a press conference in April, Prime Minister Justin Trudeau announced plans to address housing affordability in the upcoming federal budget, saying releasing surplus government land could ease pressure on the housing market.
“We have a lot of public land in Canada that is underused or undeveloped. With Budget 2024, we are opening up this land for construction and building thousands of new homes – so you can have a good home at an affordable price. We are reducing red tape, building more homes and making the housing market fairer for every generation,” Trudeau said.
The plan to lease public land to developers is a bold departure from Canada's traditional housing strategy. Historically, the high cost of acquiring land has been a significant barrier to building affordable housing. By offering public land at reduced prices through long-term leases, the government hopes to encourage developers to start projects that prioritize affordable housing.
This initiative is a so-called leased infrastructure delivery model, which is particularly suitable for large-scale housing and other development projects.
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EllisDon, a major player in infrastructure development, sees the leasehold infrastructure delivery model as critical to maximising land potential for residential use.
Nicholas Gefucia, senior vice president of EllisDon Community Builders, explained the importance of this approach. “Our perspective focuses on the effective use of underutilized land, especially those owned by federal agencies,” he said.
The government will initially open five federal properties for leasing and build over 800 new homes there, including about 100 in Montreal, 500 in Ottawa, 100 each in Toronto and Calgary, and at least 40 in Edmonton.
How quickly can Canadians expect to have affordable housing thanks to this initiative?
According to the government, the first task is to review the entire inventory of federally owned land and properties and find sites for the construction of new housing.
“It might take some time,” Gefucia said, acknowledging that this will be a gradual process that requires patience and perseverance. In anticipation of the release of the lands in question, EllisDon has begun modeling scalable and replicable building solutions for residential development on government land.
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How does the leasing model contribute to housing affordability?
The long-term leases provide developers with the stability and predictability that are critical to planning and implementing large-scale residential projects. By eliminating the need to purchase land outright, developers can allocate more resources to construction, allowing them to build more housing units at a faster pace, with higher quality materials and sustainable design features.
What other financial support does the state offer?
To address the housing crisis, funding was allocated for several initiatives in the 2024 budget.
A $500 million Public Lands Acquisition Fund will purchase land from other government agencies and make it available for the construction of affordable middle-class housing.
The Federal Lands Initiative will receive an additional $117 million to release additional public lands for the construction of at least 1,500 new affordable homes.
A $20 million investment in the Centre of Expertise on Disposals aims to streamline administrative processes to reduce delays and speed up the construction of new homes.
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The government will invest $15 million to develop a comprehensive public land bank, including an interactive mapping tool to improve planning and decision-making. This will enable more efficient use of public assets for housing needs.
Finally, a $5 million investment will expand the Canada Lands Company's capacity to create housing on public lands.
What types of land does the government provide for affordable housing?
According to the government website, Canada Post has more than 1,700 post offices across the country, many of them single-storey buildings that can be converted to make room for new housing while maintaining postal service.
National Defense Lands are also considered valuable housing land. The Department of Defense owns unused land in every province and territory. Redeveloping these lands for military and civilian purposes and disposing of surplus land not needed for defense operations can support new housing projects.
In addition, half of the federal government-owned office buildings are either underused or vacant. Reducing federal government office space and repurposing these buildings, particularly in urban areas, can create new, affordable, student-friendly housing.
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What challenges must Canada overcome to increase its housing goals?
Canada faces the daunting task of building 3.87 million new homes by 2031 to meet the goals of its housing strategy. Gefucia highlights the role of innovative delivery models in achieving this scale, stating: “Our goal is to demonstrate through pilot projects that the rental infrastructure model can effectively help increase housing construction.”
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However, achieving this level requires a larger number of skilled tradespeople. The federal government has recognized this need and is launching new initiatives to attract and train more college graduates for careers in the trades. These efforts include targeted recruitment campaigns, improved apprenticeship programs, and partnerships with educational institutions to ensure students are informed about opportunities and career paths in the trades.
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