Charting the Course for National Housing Strategy 2.0

Dear Minister Robertson,

The launch of the first National Housing Strategy (NHS) in 2017 was a watershed moment in Canadian housing policy, signalling the federal government's renewed leadership in this area and its commitment to the progressive realization of the human right to housing.

At its September 18-19, 2025 meeting, the National Housing Council (the Council) identified the need to examine what should follow the current National Housing Strategy as a key priority. Under section 5 (2) of the National Housing Strategy Act (NHS Act), "The Minister must develop and maintain a national housing strategy to further the housing policy, taking into account key principles of a human rights-based approach to housing."

Today, Canada's housing challenges, ranging from homelessness, to affordability, to supply, are even more severe than in 2017. A renewed NHS, that learns the lessons of the past 10 years, is essential to strengthen the Government of Canada's housing policy and is an opportunity to build the housing ecosystem Canada needs to restore affordability and tirelessly pursue the progressive realization of the right to housing.

The Council has previously assessed the 2017 National Housing Strategy, publishing a mid-point review in 2023. In its report, Renewing Canada's National Housing Strategy, the Council issued five key recommendations to strengthen the NHS:

• Align the NHS more closely with the NHS Act and its commitment to realizing the right to housing.
• Establish new targets and redirect funding to increase the share of non-market housing stock in Canada.
• Enhance and scale-up Canada Housing Benefit for households in Core Housing Need or at risk of or experiencing homelessness.
• Establish a separate funding stream for by-Indigenous, for-Indigenous Urban, Rural and Northern housing programs.
• Improve accountability and coordination among and within all orders of government.

Building on these recommendations, we aim to explore how NHS 2.0 can respond to today's housing realities and provide the leadership needed to integrate different programs into a coherent, collaborative national housing policy.

NHS 2.0 Outline

In a shift from our previous approach of providing advice through comprehensive reports, we plan to deliver our recommendations for NHS 2.0 as a series of focused letters. Each letter will address a specific policy area relevant to the next phase of the NHS. Given the government's clear commitment to act swiftly in addressing the housing crisis, our goal is to provide timely, targeted advice that aligns with this accelerated pace.

This initial letter will focus on the first recommendation made in Renewing Canada's National Housing Strategy; to align the NHS more closely with the NHS Act. In it, we will propose that the development of NHS 2.0 should begin by establishing clear, outcomes-focused objectives that will serve as the foundation for subsequent policies and programs. We will also review progress on the fourth recommendation made in Renewing Canada's National Housing Strategy and underscore the urgency of fully delivering on the commitment to fund by-Indigenous, for-Indigenous Urban, Rural, and Northern housing. A summary of the recommendations made in this letter is provided as an annex.

Subsequent letters will address four key themes that were identified by Council members as our main area of focus:

• Canada Housing Benefit: Responding to the recommendation to enhance and scale up this benefit, we will outline how income supports can effectively reduce housing need and keep people housed in the context of a housing system with a limited non-market sector and declining levels of naturally-occurring affordable housing.
• Increasing housing supply: Exploring how NHS 2.0 can help deliver "the right homes, for the people who need them, at a price they can afford," we will provide advice on addressing cost-of-delivery challenges, such as construction costs, zoning, tax, fees and development charges, explore non-inflationary capital sources, and examine the future role of supply-based programs like the ACLP and HAF.
• Sustainable funding for non-market housing: Addressing the recommendation to set new targets and redirect funding to expand non-market housing, we will provide advice on the urgent need to support existing units beyond the expiry of current agreements and on creating a long-term, sustainable funding and financing ecosystem to scale-up the non-market housing sector, including the role of BCH.
• A new National Housing Agreement: Building on the recommendation to strengthen accountability and coordination across all orders of government, we will provide advice on aligning governments around shared goals and principles for NHS 2.0.

Bringing the NHS into greater alignment with the NHS Act

The Council's first recommendation in Renewing Canada's National Housing Strategy was to align the NHS more closely with the NHS Act. The NHS Act sets out clear objectives for the NHS: improving housing outcomes for Canadians and advancing the progressive realization of the right to adequate housing, with a focus on those in the greatest need.

Both the Council's report and the recent Neha Review Panel concluded that the current NHS falls short of the obligations set out in the NHS Act: Canada is not yet meeting the conditions needed to realize the right to housing. As the existing NHS comes to a close, this government has an opportunity to shape an NHS 2.0 that finally delivers on the Act's promise and ambition. That begins with clear, measurable, outcomes-driven objectives. More than a set of programs, NHS 2.0 must offer strategic direction for housing policy in Canada for the next ten years and beyond, aligning all partners and all orders of government around shared principles and common goals through renewed federal-provincial-territorial collaboration. The Council's forthcoming letter on a new National Housing Agreement will build on this direction by outlining a framework for that collaboration.

As the Council noted in Measuring What Matters: Proposing an Outcomes Framework for Federal Housing Policy, the NHS did set objectives, but they were too often focused on inputs and outputs rather than outcomes. Where outcome-focused objectives did exist, they were rarely supported by the programs intended to deliver them. For example, although the NHS aimed to reduce the number of Canadians in core housing need, this target was undermined by the failure to adopt a consistent definition of affordability within NHS programs. As a result, billions were invested in homes priced beyond the reach of those in need. Units were built and funds were spent, yet demonstrable improvements in outcomes were hard to substantiate.

Homelessness and housing affordability, Canada's most urgent housing challenges, have deepened into a crisis over the lifespan of the first NHS. In Measuring What Matters, we showed that only the highest-income quintile of renters can realistically afford to purchase a first owned-home, and only the top two quintiles of renters can afford average asking rents. The rest are increasingly squeezed between rising housing costs and a rising cost of living. These pressures predate the NHS; they stem from policy choices made over a generation, during which the federal government steadily withdrew from its historical role in the housing system. Addressing both the current crisis and the longstanding policy deficit that enabled it will require the next NHS to be genuinely transformational.

In this section of the letter we will offer recommendations for a guiding rationale for NHS 2.0 and five core objectives drawn from the NHS Act to address the current housing crisis. We will also offer two complementary and mutually-reinforcing recommended elements of the strategy: a focus on data-driven, evidence-backed, outcomes-orientated policy; and a systemic approach to affordability and other housing issues.

Rationale for NHS 2.0

NHS Act 4 (c) It is declared to be the housing policy of the Government of Canada to support improved housing outcomes for the people of Canada

For a transformational NHS 2.0 to succeed, it must communicate a coherent and compelling vision, articulating how it will fix a housing system that Canadians increasingly feel is working against them and rebuild the housing foundation that underpins Canada's economic security.

We believe that vision, put simply, is: when housing works, everything else gets better. Adequate housing is itself a foundational element of a good life. Beyond that, it is a key social determinant of health, it drives educational and employment outcomes and is a foundation of economic success. In From promises to practice: Designing and implementing meaningful responses to Canada's persisting housing affordability challenges, Steve Pomeroy, Jim Dunn and Duncan MacLennan underline that poor housing outcomes are, "reinforcing social injustice and immobility, needlessly enhancing residential carbon emissions, and reducing growth and productivity whilst continually rewarding property ownership ahead of effort and entrepreneurship."

In line with Budget 2025's call for an economy by Canadians, for Canadians, investing in housing will create Canadian jobs and strengthen demand for Canadian raw materials. When more Canadians are securely and affordably housed, they will be better positioned to withstand volatility in the global economic and political environment. Just as the government has embraced nation-building infrastructure projects, tackling the housing crisis through a transformational NHS 2.0 is a pragmatic national priority - one that will deliver broad economic and social benefits for all Canadians.

The Core Objectives

NHS Act 5 (2) (b) The NHS is to establish national goals relating to housing and homelessness and identify related priorities, initiatives, timelines and desired outcomes

The NHS Act provides the objective for NHS 2.0: improving housing outcomes for Canadians. In Measuring What Matters, the Council translated this principle into practice by grounding it in the right to adequate housing and defining outcomes in terms of affordability, habitability, security of tenure, access to services, location, accessibility and cultural adequacy.

Given competing priorities and the government's goal of spending less to invest more, NHS 2.0 must target investments where they will deliver the greatest improvement in outcomes for the greatest number of households. Structuring the strategy around those most in need offers a clear way to do this, ensuring limited budgets achieve maximum impact and shift the trajectory of housing outcomes. The Council therefore recommends that NHS 2.0 focus on five core objectives:

• Reduce homelessness: Reduce to functional zero, the number of Canadians experiencing or at risk of homelessness. Any experiences of homelessness are rare, brief and non-recurring.
• Reduce core housing need: Reduce the number of households in unaffordable, unsuitable or inadequate housing, focussing on the minority of households experiencing long-term need (Of households in core housing need in 2011, only 36.6% were still experiencing it by 2016).
• Restore affordability: Ensure housing costs are affordable for Canadians across the housing system and for each income quintile.
• Restore the affordability of housing transitions: Beyond their current home, ensure households can afford to transition to the housing type and size that best meets their changing needs.
• Ensure all Canadians have an adequate home: improving habitability, security of tenure, access to services, location, accessibility and cultural adequacy.

Data-Driven, Evidence-Backed, Outcomes-Orientated Policy

NHSA 5 (2) (a) The NHS is to set out a long-term vision for housing in Canada that recognizes the importance of housing in achieving social, economic, health and environmental goals;

If NHS 2.0 is to achieve these five core objectives, then a modern, integrated data and forecasting system must sit at the heart of the strategy. Canada cannot solve today's housing crisis, or prevent tomorrow's, without the ability to measure current need, anticipate future pressures, and evaluate whether investments are delivering the intended results. NHS 2.0 must therefore embed robust reporting, forecasting, and evaluation processes before new programs and funding commitments are launched.

1) Measure current need and anticipate future pressures

A durable strategy begins with anchoring NHS 2.0 in standardized, equity-focused Housing Needs Assessments. These assessments enable governments to set clear, measurable targets tied to actual need, and provide decision-makers with the evidence required ensure the system delivers the right homes, for the people who need them, at prices they can afford. Recent turmoil in the Toronto and Vancouver condo markets illustrates the cost of ignoring this approach: years of building small, investor-oriented units have produced a mismatch where first-time buyers cannot use them, renters cannot afford them, and thousands of units sit empty in the provinces facing the most acute shortages. Misaligned supply is not an accident, it is the predictable outcome of planning without data.

A data-driven NHS 2.0 would ensure that new supply matches both current and future needs, preventing new gaps from opening. One example of a likely future pressure is Canada's aging population. As the share of Canadians over 65 rises sharply in the coming decades, the housing system must shift toward accessible, well-located options that meet older adults' needs. Investing in such housing early will not only improve outcomes for seniors, but will free up family-sized homes for growing households, and ensure that new supply is built with accessibility and universal design in mind. A forward looking, evidence-based approach can ensure the housing system is ready to meet these needs as they arise.

Canada must also plan now for accelerating environmental pressures. Coastal erosion, sea ice loss, permafrost thaw, and more frequent wildfires and flooding are already affecting communities across the country. By integrating climate-risk modelling into planning, NHS 2.0 can target support at the regions most at risk, strengthen the climate resilience of public housing, and ensure that every program incorporates climate adaptation into its design and delivery. Deep energy retrofits can reduce operational emissions by up to 99% and energy use by 90%. This offers a major opportunity to upgrade existing homes while lowering long term costs. With more than 12 million low rise buildings requiring retrofits before 2050, now is the moment to scale up Natural Resources Canada's Deep Retrofit Accelerator Initiative and Greener Neighbourhoods Pilot and embed climate resilience in NHS 2.0.

2) Track outcomes to measure success against the core objectives

To ensure that data-backed investments are delivering the anticipated results, NHS 2.0 must adopt a national measurement framework capable of linking program-level investments to household-level outcomes. In Measuring What Matters, the Council outlined what such a national measurement framework could entail. The report also proposed a model for assessing the outcomes of individual programs by linking the addresses of all federally funded housing units with household housing-cost data. This approach would enable detailed, program-level evaluations, revealing each initiative's ability to target different levels of need and the extent to which outcomes improve for beneficiary households. Collecting this information would enable investments to be strategically reallocated toward the interventions that deliver the greatest improvements in outcomes and ensure that limited public resources are used to maximum effect. Similarly, real-time, person-specific data on everyone experiencing homelessness is essential to achieving coordinated, system-level reductions. Such data enables early identification of risk, supports prevention during high-risk transitions, and allows communities to rapidly rehouse people.

3) Lead a national housing data transformation

In Renewing the National Housing Strategy, the Council found that although the NHS had created an opportunity for improved reporting and monitoring through the bilateral agreements, the usefulness of the data collected was limited by reporting differences between provinces and territories. The report recommended a centralized system for the collection of consistent, nation-wide data to improve reporting and monitoring and enable more effective targeting of resources.

In Measuring What Matters, the Council drew on a comparison made by Jim Dunn to call for Canadian housing data to undergo a transformation similar to that seen in the health sector in the 1990s. Established in 1994, the Canadian Institute for Health Information (CIHI) integrated previously fragmented datasets into a person-centred information system capable of supporting modern approaches to disease management and prevention.

NHS 2.0 should pursue an equivalent transformation, integrating federal, provincial, territorial, municipal, private, and non-profit datasets to produce meaningful housing and homelessness intelligence. This would enable progress to be tracked for specific populations through more disaggregated and intersectional data, as well as provide better information on transitions and systemic barriers that prevent improvements for some Canadians.

A modern, integrated data system is essential to delivering the strategy's core objectives and to building a housing system capable of meeting Canadians' needs today and in the decades ahead. Coupling this with continuous measurement and evaluation embedded within NHS 2.0 will ensure that evidence, not political cycles, drives decisions.

4) Strengthen research, data, and innovation

A core part of the transformational impact of the first NHS has been through its data, innovation, and research programs, which have closed critical information gaps and strengthened evidence-based decision-making. Initiatives such as the National Housing Survey, the Collaborative Housing Research Network, and CMHC's Solutions Labs have deepened our understanding of complex housing issues and guided policy toward more effective responses.

If NHS 2.0 is to be both transformational and fiscally responsible, continued investment in publicly available research that supports the development of high-impact, evidence-driven policy will be essential. Strengthening this foundation in NHS 2.0 will require continued investment in publicly available research, supported by improved, consistent housing and homelessness data, enabled through a national housing and homelessness data agreement.

Equally important are the elements of the NHS that ensure marginalised voices are heard in the policymaking process. These engagement mechanisms are critical complements to improved data and research, playing a vital role in improving outcomes for those with the greatest needs, and providing a conduit between the households most affected by the housing crisis and the policymakers responsible for addressing it.

A Systemic Approach to Affordability

NHS Act 5 (2) (c) The National Housing Strategy is to focus on improving housing outcomes for persons in greatest need

The strategic approach of NHS 2.0 must have an understanding of housing as an interconnected system. At the heart of the Council's Measuring What Matters report is the idea that when one part of the housing system falters, the effects ripple throughout. Rather than think of the distinct components of the housing system as being in competition, we should recognise that they are complementary parts of a whole. Sustainable progress depends on meeting needs across the entire system and ensuring it works equitably for all Canadians. This requires changing the underlying incentives and structures of the housing system, so that achieving its core objectives - reduced homelessness and improved affordability - becomes the natural outcome of how the system works. As Pomeroy, Dunn and MacLennan argue, we must shift, "from a narrow focus on market supply to a comprehensive, collaborative, and segmented response to Canada's persistent housing unaffordability issues that breaks the daunting system challenge into separate, but related, major policy strands."

1) Prevent homelessness

NHS 2.0 must include a federal strategy to prevent and reduce homelessness, delivered in partnership with the provinces and municipalities that are central to prevention efforts. This strategy should be anchored in a new federal-provincial-territorial agreement that sets out shared homelessness reduction objectives and supports an NHS 2.0 that prioritizes those most in need. Achieving this requires moving beyond homelessness programs and toward a system that treats homelessness as what it is: a housing problem. The most effective prevention strategies help people keep their homes, afford their homes, and avoid falling into homelessness during high-risk life-course transitions such as youth aging out of care, people leaving incarceration, or women escaping violence. A reimagined Canada Housing Benefit can function as a true housing safety net, while programs like Reaching Home can strengthen coordination across the community services that deliver housing-focused supports.

A homelessness strategy grounded in a new federal-provincial-territorial agreement would enable all levels of government to play their part and would transform how Canada addresses homelessness. Local governments would lead with community-level, homelessness response systems, using person-level data to identify risk early, coordinate local responses, and provide diversion and rapid rehousing. Provinces and territories would provide essential supports while the federal government provides funding and capacity. Sustained investment in supportive housing, and in Urban, Rural, and Northern Indigenous housing with culturally appropriate wrap-around services, is essential to ensuring stable, long-term housing outcomes for those most at risk.

2) Stop the loss of affordable housing

Under the first NHS, Canada lost nine affordable homes for every one created. Preventing further loss of naturally occurring affordable housing (NOAH) is essential to slowing inflows into homelessness and preventing the crisis from deepening. The Canada Rental Protection Fund will play a critical role by enabling non-profit acquisition and long-term stewardship of NOAH as properties come onto the market. Measures to reduce tenant turnover can also help stabilize the NOAH that is not for sale, as vacancies often trigger substantial rent increases. A transparent review of federal finance and tax policies affecting rental housing could further strengthen preservation efforts at lower cost. With the right supports, NOAH can remain an important source of affordable housing as well as a pillar for scaling Canada's non-market housing sector.

3) Scale affordable and deeply affordable housing

Achieving the core objectives of reducing housing need and restoring affordability will require a sustained focus on increasing the supply of homes affordable to low and moderate-income households. This, in practice, demands significant and predictable investment in the non-market housing sector. In its 2025 report, Scaling-up the non-market housing sector in Canada, the Council recommended immediate efforts to double the size of the non-market sector to reach the OECD average of 7% of the housing system. NHS 2.0 should adopt this target and ensure that the policies, financing tools, and institutional supports required to meet it are firmly in place.

Funding certainty and predictability will be central to scaling up the non-market housing sector, enabling providers to plan effectively, invest in their assets, and deliver new homes. NHS 2.0 should therefore establish a long-term, strategic, and depoliticised investment framework for the sector. Funding should also be used to encourage greater scale, amalgamation, and aggregation among non-market providers. Initial proposals for Build Canada Homes (BCH) to fund portfolios rather than individual projects represent one way of achieving this. Establishing a land bank of public sites dedicated to non-market housing is another, while strategic deployment of the Canada Rental Protection Fund (CRPF) offers a third. The CRPF should be used not only to stem the loss of naturally occurring affordable housing but also to build mechanisms that enhance resilience and continuous growth across the non-market housing sector.

Progress will also depend on a coherent and consistent approach to defining affordability. As Carolyn Whitzman has shown, the absence of a shared definition across federal programs has limited their effectiveness in reducing housing need. The income-based standard used by Build Canada Homes, linking affordability to household income and size, is a positive step. NHS 2.0 must now include the structural reforms needed to enable new units to be delivered at these levels of affordability and to stabilise existing deeply affordable homes. Allowing current supports provided by the Federal and Canadian Community Housing Initiatives, as well as through federal-provincial Social Housing Agreements, to expire without a clear successor framework would place hundreds of thousands of non-market homes at risk, undermining providers ability to maintain deeply affordable rents and risking the displacement of hundreds of thousands of low-income Canadians.

4) Lower the cost and time to build

The market sector will remain the primary provider of housing in Canada. Yet in many regions, high construction and land costs, combined with government fees, taxes, and lengthy approval processes, often rooted in discretionary zoning, have pushed the cost of new housing beyond what people can afford, stopping projects before they begin. NHS 2.0 will need to deploy levers that promote innovation in construction and work with provinces and municipalities to align zoning, permitting, and building code processes to reduce delays and lower costs and allow Canada to meet its ambitious home construction targets. Canada should use the Housing Accelerator Fund to support a transformation of the approval system and a shift away from development charge frameworks that significantly inflate prices. There will be a need for all levels of government to explore alternative municipal financing models that better balance costs while integrating housing, infrastructure, and transit.

Reducing the cost of new units is an important way to improve affordability. The price of new construction sets a benchmark for comparable existing stock, meaning affordability improves when new units become less expensive to build. Builders will therefore need support to redesign their products and strategies so they can deliver homes that people can afford, in the communities they love, and at the sizes households actually need. Restoring affordability will require coordinated action across all orders of government and industry, with incentives designed to create genuine affordability rather than subsidize margins.

5) Channel capital to productive objectives, deter speculation and ensure balanced tax-treatment

Canada invests 7.7% of GDP in housing, more than any G7 country, yet despite the U.S. investing only 4.1%, the two countries have nearly identical numbers of homes per capita (427 vs. 425 per 1,000 people). This reflects the degree to which capital in Canada is directed toward purchasing existing properties rather than building new ones.

As Steve Pomeroy highlights, private capital funds increasingly buy older affordable buildings to raise rents and generate returns, and as Nick Falvo observes, Canada makes it, 'very easy and attractive' to acquire additional housing units for investment. Redirecting capital away from speculative acquisition and toward new construction would restore housing's primary purpose as a place to live, moderate housing cost pressures, and free capital for more productive sectors. There would also be benefits for the wider economy. Driven partly by the volume of capital tied up in housing assets, at present Canada invests only 3.3% of GDP in intellectual property, less than half the U.S. rate of 6.8%. Rebalancing investment incentives and tax policy could both support innovation and growth while improving housing affordability.

Currently, when wealth competes with income, wealth wins due to favourable tax treatment of equity-based purchases. The dramatic loss of affordability in Vancouver and Toronto over the last decade was not only driven by population growth and low supply, but by the increasing use of accumulated wealth to purchase properties, pushing prices far beyond what local incomes can support. Without changes to the tax treatment of equity driven acquisitions, similar patterns will spread to other Canadian cities.-driven acquisitions, similar patterns will spread to other Canadian cities. Ensuring balanced tax treatment between equity- and income-based purchases could also improve the affordability of homes for purchase.

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Taken together, these policy strands form the foundation of an NHS 2.0 that is capable of addressing Canada's housing crisis at its structural roots. By preventing homelessness, preserving naturally occurring affordable housing, scaling a resilient non-market housing sector, lowering the time and cost to build and ensuring capital is directed towards productive, people-centered outcomes, Canada can begin to restore balance to its housing system. This will require sustained leadership, collaboration across governments, and a clear commitment to aligning every policy lever with the core objectives of reducing homelessness and improving affordability. Homes must be accessible across income levels, with price points and security of tenure that allow people to move between renting and ownership as their circumstances change. Housing must also be available in forms that meet Canadians' evolving needs, whether accommodating growing families or enabling downsizing later in life. An NHS 2.0 rooted in systems thinking can help ensure that housing once again fulfills its essential purpose: providing secure, affordable homes in communities where Canadians can build their lives.

Urban, Rural and Northern Indigenous Housing

One area where clear right-to-housing objectives and an outcomes-focused, evidence-driven approach already exists is Urban, Rural, and Northern (URN) Indigenous housing. In this case, the foundations for successful implementation are already in place, and neither substantial new policy design nor a new delivery mechanism is required.

In Renewing the National Housing Strategy, the Council previously recommended establishing a separate funding stream for by-Indigenous, for-Indigenous Urban, Rural and Northern housing programs. This reiterated advice from our 2022 report on URN Indigenous housing, which found that the existing distinctions-based approaches did not adequately address the needs of Indigenous people living in URN areas, which is the reality for a majority of Indigenous people in Canada. Under the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), Indigenous Peoples, including those living in URN areas, must be included in the development and administration of housing policies and programs that affect them. Yet, despite signing UNDRIP into law in 2021, the federal government has failed to act.

Although the recommendation to fund by-Indigenous, for-Indigenous URN housing programs has been partially implemented through the URN Indigenous Housing Strategy, fulfilling the associated funding commitments remains urgent. As noted above, Indigenous people are more likely to experience homelessness than the non-Indigenous population. The same is true for core housing need, with 13.2% of Indigenous households experiencing core need, against 7.4% of the non-Indigenous population (Statistics Canada, 2021). The recent Neha Review Panel also concluded that upholding and expanding funding for URN Indigenous housing was a necessary step towards transforming Canada's housing system, one that would provide permanent, Indigenous and community-led housing, reduce reliance on costly institutional systems, and address many of the recommendations of the Missing and Murdered Indigenous Women and Girls Inquiry (MMIWGI).

Releasing the promised $2.8 billion for URN housing would provide the government with a rapid and highly effective way to improve housing outcomes. While Indigenous housing providers are ready to act, rising construction costs mean that every delay reduces the number of homes this investment can deliver. Acting now would allow housing providers to take full advantage of the 2026 construction season, maximizing both value for money and the impact of this long-awaited funding.

We would also make two supporting recommendations, both in allocating the $2.8 billion promised for URN funding and as Indigenous Services Canada develops a new Indigenous housing strategy. First, the URN funding must be directed specifically to URN approaches and these approaches must continue to be clearly represented and funded within the new strategy. URN initiatives complement distinctions-based approaches. Both address critical housing needs, but from different perspectives, and both are needed to improve housing outcomes for Indigenous people across Canada. URN organizations play a vital role in tackling place-based challenges such as urban homelessness and northern construction constraints, while reaching populations historically overlooked by policymakers and excluded from traditional housing programs. These organizations require stable and adequate support to continue this work.

Second, the $2.8 billion should be delivered through an organization that has demonstrated a history of delivering housing and supports to Indigenous people, regardless of status, that has done the important work of building relationships and bringing together housing providers from coast to coast to coast, and that, in-line with UNDRIP, supports Indigenous Peoples' right to self-determination and the creation of their own housing strategies.

Acting now to release funding for URN Indigenous housing, ensuring the funding is delivered through an organisation deeply integrated in the URN housing space, and ensuring the funding can support people across every Indigenous identity and circumstance, will deliver rapid and impactful improvement in housing outcomes. Furthermore, funding and expanding URN would demonstrate a commitment to outcomes-driven, evidence-based policy, capable of delivering transformational change for those most affected by homelessness and housing need. As Canada prepares for the next NHS, this would be a decisive way to establish its foundation and direction.

We hope you find this first letter and the subsequent letters we propose valuable in informing your work. We would welcome your comments on how we can focus or deliver this advice to be of most use to you, and if ever we can be of any further support or assistance, please do not hesitate to reach out.

Kind regards,

Tim Richter
Co-chair, National Housing Council
CEO of the Canadian Alliance to End Homelessness (CAEH)

Annex: Summary of Recommendations for NHS 2.0

A Renewed National Housing Strategy (NHS 2.0)

As the first National Housing Strategy nears completion, the National Housing Council recommends an outcomes-driven NHS 2.0, explicitly aligned with the National Housing Strategy Act and focused on improving housing outcomes for those in greatest need, restoring affordability, and preventing future crises.

1. Anchor NHS 2.0 in the NHS Act and Clear Outcomes

NHS 2.0 must begin with clear, measurable, outcomes-focused objectives grounded in the right to adequate housing.

Recommended core objectives:

• End homelessness by reducing, and ultimately eliminating, the number of Canadians experiencing or at risk of homelessness.
• Reduce core housing need, focussing on the minority of households experiencing long-term need.
• Restore affordability across the housing system, for each income quintile.
• Restore the affordability of housing transitions, enabling households to move as needs change.
• Ensure housing adequacy, including habitability, security of tenure, access to services, location, accessibility and cultural adequacy.

2. Strategic Approaches for NHS 2.0

Housing operates as a system; failure in one part drives failure in others. NHS 2.0 should address affordability through the following integrated priorities:

Data-Driven, Evidence-Backed, Outcomes-Orientated Policy:

• Align housing supply with actual and predicted population needs through strengthened housing needs assessments (family-sized, rental, accessible, supportive, and seniors housing).
• Increase climate resilience of Canada's housing stock and vulnerable communities.
• Adopt a national outcomes measurement framework before launching new programs.
• Integrate federal, provincial, territorial, municipal, non-profit, and private datasets to build person-centred housing and homelessness intelligence, with the ability to disaggregate data, and assess equity impacts and systemic barriers.
• Continue investing in research, innovation, and mechanisms that ensure marginalized voices shape policy.

A Systemic Approach to Affordability:

• Prevent homelessness: Align a federal homelessness strategy with NHS outcomes; strengthen coordinated local response systems; prioritize prevention at high-risk transitions; and position the Canada Housing Benefit as a housing safety net.
• Stop the loss of affordable housing: Preserve naturally occurring affordable housing through acquisition tools, tax and financial levers, and measures that reduce turnover-driven rent escalation.
• Scale the non-market housing sector: Focus on outcomes, reducing persistent need and deep affordability gaps, supported by predictable funding, income-based affordability definitions, and sector-scaling mechanisms.
• Lower the cost and time to build: Reduce cost-of-delivery pressures through construction innovation, zoning and permitting reform, development-charge reform, and better integration of housing and infrastructure.
• Restore market function and affordability: Channel capital toward productive housing outcomes, deter speculative acquisition of existing stock, and support affordability across rental and ownership pathways.

3. Deliver on the Commitment to Urban, Rural, and Northern Indigenous Housing

The Council urges immediate action on the long-delayed federal commitment to $2.8 billion for URN Indigenous housing.

Recommendations:

• Release the funding urgently to avoid further erosion of purchasing power.
• Maintain dedicated URN funding streams within broader Indigenous housing strategies.
• Deliver the funding through Indigenous-led organizations aligned with UNDRIP and self-determination.
• Support community-led, culturally grounded, by-Indigenous, for-Indigenous solutions.

4. Conclusion

NHS 2.0 must be transformational: anchored in outcomes, grounded in the right to housing, capable of reducing homelessness, restoring affordability, and rebuilding a housing system that works for Canadians - now and in the future.

Dear Minister Robertson,

This is the second of a series of focused letters that the National Housing Council (the Council) is preparing with recommendations on National Housing Strategy (NHS) 2.0. In our first letter, the Council underscored the importance of grounding the next NHS in clear, outcomes-focused objectives aligned with the National Housing Strategy Act's direction to advance the progressive realization of the right to adequate housing, with a focus on those in the greatest need.

This second letter seeks to build on that advice by addressing one of the most urgent and persistent challenges identified in the Council's report titled Renewing Canada's National Housing Strategy: the need for long-term, sustainable funding and financing for non-market housing. In this report, the Council recommended establishing new targets and redirecting funding to increase the share of non-market housing in Canada. Doing so would directly contribute to the objectives the Council has recommended for NHS 2.0; reducing homelessness, reducing core housing need, restoring affordability, restoring the affordability of transitions through the housing system as life situations change, and ensuring all Canadians have access to an adequate home.

Since the publication of the Council's report, the federal government has taken important steps through Canada's Housing Plan and Build Canada Homes (BCH), signalling a renewed commitment to expanding non-market housing supply. The Council welcomes this direction, while noting that if Canada intends to grow the non-market sector to the OECD average of 7% of the housing system, a target that would involve adding around 576,625 homes to the sector, substantial additional support and investment will still be required.

In this letter, we outline how NHS 2.0 can build on the momentum created by BCH while addressing the structural gaps that continue to limit the non-market housing sector's capacity. We make three further recommendations aimed at creating a sustainable funding and financing system, that would support the sector to scale up, ensure that existing units remain affordable beyond the lifetime of current programs, and position non-market housing as a growing and resilient pillar of Canada's housing system. Those recommendations, which we will detail in the rest of this letter, are:

• Reinforce funding and support for non-market housing, and ensure the federal government's investments and land are focused on creating a growing and self-sustaining non-market housing sector
• Explore non-governmental models to provide capital for non-market housing while protecting non-market ownership and security of tenure
• Provide ongoing financial supports to stabilize existing deeply affordable homes and to ensure that providers can continue to offer new deeply affordable housing

A summary of the recommendations made in this letter is also provided as Annex 1.

1) Reinforce funding and support for non-market housing, and ensure the federal government's investments and land are focused on creating a growing and self-sustaining non-market housing sector

Context: Barriers to scaling-up

In its Scaling-up the non-market housing sector in Canada report, the Council recommended growing the non-market sector to at least the OECD average of 7% of the housing system - an essential benchmark for restoring long-term affordability. While programs under the first NHS, including the Affordable Housing Fund and the Rapid Housing Initiative, supported the creation of new units, research by Carolyn Whitzman in Human Rights Based Housing Targets and Mechanisms for Canada shows that these additions amount to only 2-3% of annual housing completions. This level of delivery may sustain the sector, but will not meaningfully expand it. Achieving a 7% share will require NHS 2.0 to move beyond episodic, time-limited funding and instead establish a durable system that aligns long-tenor capital, stable operating supports, and access to low-cost public land, thereby creating the conditions for non-market providers to deliver housing at scale.

In Scaling-up the non-market housing sector in Canada, the Council found that the short funding cycles, changing program criteria and political unpredictability inherent in government funding programs make long-term planning and investment extremely difficult for non-market housing providers. The report also found that funding projects rather than portfolios limited sector growth, leading to the duplication of effort and slowing the rate at which qualified providers could move projects from concept to construction. The limited availability of funding for pre-development work was also highlighted as increasing the risk of early-stage projects, forcing providers to choose between committing scarce resources to scoping work that has no guarantee of delivering new units, or passing up development opportunities altogether. At the same time, disaggregation between the sector's many small providers also limits its ability to scale, weakening governance capacity, development expertise, asset management and access to capital.

Recommendation: Offer stable, predictable funding

The Council therefore recommends reinforcing the federal government's role as a systems-builder and using its investments as a catalyst for wider change. This requires federal housing funding, particularly the investments that will be delivered through BCH, to move beyond program-based, time-limited funding models and instead provide stable, predictable, long-term capital that enables providers to plan, invest, and grow with confidence. Clarifying the full funding envelope for BCH, beyond the initial $13 billion capitalization, would in turn allow BCH to offer more certainty to the sector. Establishing a revolving fund would further enable the provision of long-term, reliable financing, by channeling a proportion of the rents or loan repayments from completed projects into new developments. Revolving funds are a proven tool in many countries with large non-market housing sectors (one example, from Denmark, is explored below), with the OECD recently working with national governments to establish new funds.

Recommendation: Remove funding barriers

A sustainable funding ecosystem must also address the early stage barriers that occur before a project is ready for financing. Many providers lack the resources to undertake essential early stage tasks, such as site assessment, due diligence, and concept development, at a point in the lifecycle of the project when financial returns are still uncertain. Without support at this stage, promising opportunities stall long before they reach construction readiness, particularly for emerging non market providers. Dedicated pre development funding would bridge this gap and unlock a broader pipeline of viable projects.

BCH could further strengthen the funding system by simplifying how providers assemble a capital stack. Promoting greater alignment across federal, provincial/territorial, and municipal programs, ideally through harmonized eligibility criteria or mutual recognition of due diligence, would significantly reduce administrative burden and shorten delivery timelines. When a provider qualifies for one program, they should be well positioned to qualify for others, enabling them to focus on building housing rather than navigating fragmented funding processes.

Recommendation: Catalyse growth through scale, amalgamation, and aggregation

BCH should use its funding to encourage scale, amalgamation, and aggregation across non-market providers. Initial proposals for BCH to fund portfolios, rather than individual projects, is one way this can be achieved. While the early focus on shovel-ready projects is understandable, over time BCH should prioritize investments that not only deliver units but also strengthen providers' long-term capacity - whether through partnerships, expanded development expertise, or the creation of asset bases that can leverage additional capital. A similar approach should guide the deployment of the Canada Rental Protection Fund. Its capital should be used not only to stem the loss of naturally occurring affordable housing, but also to build mechanisms that support resilience and continuous growth within the non-market sector.

While amalgamation, partnership development, and portfolio approaches can strengthen the non market sector, they also involve real transition costs, from governance changes to systems integration and staff capacity. BCH should therefore structure its funding in ways that recognize and support these costs, ensuring that efforts to build scale do not place additional strain on already stretched providers.

Recommendation: Ensure public land is used for the public good

Finally, land availability and affordability remain among the most significant constraints facing non-market housing providers. The consolidation of the Canada Lands Company into BCH is therefore a welcome development, as it creates a single federal entity with the mandate and capacity to assemble, steward, and deploy land for non market housing. This role could be further strengthened through the creation of a dedicated federal land bank that acquires and holds land for non market housing and redevelopment. Such a land bank could purchase municipal and provincial/territorial land at fair market value, allowing those governments to reinvest the proceeds into new non market housing while ensuring that strategically located sites remain in public and community hands over the long term.

The Council also recommends that public land be used for public good, with a strong emphasis on supporting non-market and affordable housing. Both long-term leases and land transfers have advantages: the former allows the federal government to retain ownership and maintain control over land use, while the latter offers providers assets they can leverage to finance future growth. Transferring land to Indigenous non-market housing providers can also play an important role in advancing reconciliation.

2) Explore non-governmental models to provide capital for non-market housing while protecting non-market ownership and security of tenure

Context: Government funding is finite

The level of funding that will be required to bring the non-market sector up to 7% of Canada's housing system cannot be underestimated. At the same time, government funding is finite, especially in the context of competing policy priorities and the government's goal of spending less to invest more. Bringing in non-governmental sources of capital can provide the non-market housing sector with the resources it needs to grow. Done correctly, it can retain affordability and non-market sector ownership and control of homes, while the involvement of arms-length and non-governmental partners can provide funding predictability and improve the sector's insulation from short-term political cycles.

Recommendation: Explore non-governmental capital

Our second recommendation therefore advises the government to explore models to provide non-governmental capital for non-market housing. Other jurisdictions have successfully adopted financing models that provide stable, apolitical, non-governmental capital for the non-market housing sector. While the methods vary, the models work as they offer capital at a low enough cost and over a long enough period to make the math work for affordable housing providers. Instead of providing capital directly, government interventions and support are deployed to ensure that providing this low-cost, long-tenor capital becomes an attractive and secure investment for non-governmental actors. The government should investigate which elements of these proven models could be applied in the Canadian context. We

briefly explore three models below; France's Livret A, the USA's Low Income Housing Tax Credit and Denmark's use of its central bank and mortgage finance system.

Case study: France - Livret A savings accounts

French non-market housing is financed primarily through loans backed by Livret A tax-free savings accounts. Savers deposit funds into their Livret A accounts at commercial banks. Deposits are centralized at the Caisse des dépôts et consignations, a state-owned, long-term investment institution, mandated to finance non-market housing and other public-interest projects. Loans are issued at interest rates indexed to the saver rate plus modest spreads and are repaid over 40 years or more through rental income. Rents are set on a cost-recovery basis to cover loan repayments, maintenance, administrative costs, and tax obligations.

• Modest interest rates make loans financially viable for non-market providers, while Livret A's tax advantages and security keep the product attractive to savers.
• Counter-cyclical performance ensures deposits rise during downturns, supporting steady investment that stabilizes both the construction sector and the broader economy.
• High annual output is sustained: France adds roughly 70,000 non-market homes each year, with Livret A loans covering about 78% of development costs.
• Long-term stability is built into the system: financing non-market housing has been part of the Caisse des dépôts et consignations' mandate since 1905.

Case study: USA - Low Income Housing Tax Credit (LIHTC)

In the United States, the federal government's primary tool for encouraging the development of affordable rental housing has been the Low-Income Housing Tax Credit (LIHTC). Under the program, housing providers receive annual federal tax credits of up to 9% of construction costs for 10 years. In exchange, they reserve a percentage of units at a reduced rent for lower-income households. As most housing providers lack sufficient tax liability to use the credits, they are typically sold to financial institutions in exchange for equity financing. As the tax credits are sold at a discount and do not cover land costs, LIHTCs typically cover 50-70% of total development costs, with the remainder filled through government grants and low-interest loans, limited commercial financing, and deferred developer fees.

• Long standing, stable capital has supported the sector since 1986, channeling private investment into affordable housing while reducing the need for in year federal spending or borrowing.
• Costs are spread over time, with the federal government ultimately covering up to 90% of construction costs but distributing that expenditure over a 10 year period.
• The US model has limitations in terms of affordability requirements and security of tenure. However, these may be overcome by changes to program criteria - for example by requiring permanent affordability covenants, as has successfully been implemented in Vermont.

Case study: Denmark - Central bank operations and a maturing revolving fund

Danish non-market housing is financed primarily through private loans issued by Mortgage Credit Institutions (MCIs). MCIs raise capital by issuing government guaranteed mortgage bonds. The bonds are purchased in their entirety by the central bank, which issues its own securities to generate the required liquidity. The government also caps the profit MCIs can earn on non-market housing loans at near-cost levels. Crucially, lending to non-market housing providers is excluded from MCI credit-requirement calculations, ensuring they are incentivized to offer these low-cost, low-profit loans. The remaining project financing comes from interest-free municipal 'bullet loans' with 30-50 year terms, which are repaid only after the primary mortgage is repaid. Once the municipal loan is also repaid, a portion of rental income is directed to the National Building Fund, a revolving fund established in 1967 that can support non-market housing providers with renovations and, as it reaches maturity, new construction.

• Independent financial institutions ensure stability, as the central bank and MCIs operate at arm's length from political cycles, providing predictable long term financing.
• Capitalizing MCIs has no net fiscal impact, since the central bank's issuance of securities is offset by the acquisition of MCI bonds, leaving the public balance sheet neutral.
• Credit requirement exemptions lower borrowing costs, enabling MCIs to offer low interest loans to non market providers without crowding out their commercial lending activity.
• The National Building Fund stabilizes the sector, acting as a countercyclical safety net that recirculates capital, supports renovations, and sustains construction activity during economic downturns.

Recommendation: Deliver greater affordability through the ACLP

A further opportunity to deliver greater affordability is to strengthen the affordability requirements of the Apartment Construction Loan Program (ACLP). As the largest NHS program, the ACLP has supported significant rental construction over the past decade. However, its affordability standards are limited: the default requirement is that only 20% of units be rented at or below 30% of the local median income for just 10 years.

Because this calculation includes all local households, including homeowners with higher incomes, the resulting affordable rents are often still out of reach for renters. As of June 2025, the average monthly rent for units meeting ACLP affordability criteria was projected at $1,546, higher than the median market rent of $1,491 (CMHC Rental Market Survey, October 2024). The short 10 year affordability period also exposes lower income households to steep rent increases once restrictions expire, while limiting affordability to only 20% of units may not maximize the program's potential impact.

We encourage the government to assess the implications for project viability of strengthening the ACLP's standard affordability requirements by:

• Extending the duration of affordability, ensuring long term stability for lower income households.
• Deepening affordability levels, aligning them more closely with the BCH affordability framework.
• Increasing the share of affordable units, with up to 30% of units meeting strengthened affordability criteria.

3) Provide ongoing financial supports to stabilize existing deeply affordable homes and to ensure providers can continue to offer new deeply affordable housing

Context: Housing providers face an operating funding cliff-edge

There will always be a role for government in supporting deep affordability for the lowest-income households. In Canada, this role has historically been fulfilled through rent geared to income (RGI) housing, supported either by operating agreements between providers and CMHC or by rent supplements under federal provincial Social Housing Agreements. When these operating agreements began to expire, Maytree warned in 2017 "Without this operating subsidy, most of these projects cannot manage their operating costs with only the very low rental income that their tenants can afford to pay. Failing to address this pressure could result in the loss of valuable publicly funded assets and the displacement of hundreds of thousands of low-income Canadians."

The first NHS responded by creating the Federal Community Housing Initiative (FCHI) and the Canadian Community Housing Initiative (CCHI) to stabilize providers and preserve deeply affordable homes. A decade later, the same challenge has re emerged. Both FCHI and CCHI are set to expire in 2027-28, creating a new funding cliff edge for many non market housing providers. At the same time, the

federal provincial Social Housing Agreements signed in the 1990s are also approaching expiry, removing another layer of operating support.

This gap affects new construction as well. Under the most affordable tier of the BCH investment framework, rents must be no more than 30% of before-tax income of households earning 0-25% of area median income. Illustrative rents of $293 for a studio or $377 for a 1-bedroom unit are proposed. Capital funding alone cannot sustainably deliver units at these rent levels. If BCH is to produce deeply affordable homes at scale, providers will require new, ongoing operating supports alongside construction financing.

Recommendation: Ensure a stable operating-funding framework

NHS 2.0 must include the structural reforms needed to stabilize the existing deeply affordable homes supported through expiring federal and federal-provincial programs. Allowing FCHI, CCHI and Social Housing Agreement supports to lapse without a successor framework would place hundreds of thousands of non-market homes at risk, undermine providers' ability to maintain deeply affordable rents and increase the likelihood of displacement for low-income households.

Operating funding should be available on a long-term basis. Just as the stability and predictability of capital funding enables providers to invest and grow, the same is true for operating funding. Reliable revenue streams also improve access to financing, as providers have predictable income to borrow against. Certainty benefits residents as well: as FCHI and CCHI have approached expiry, many providers have become more hesitant to house tenants requiring deep affordability, knowing that supports may end within the lifetime of the tenancy.

Two options could provide the operating funding stability the sector requires:

• Renewing or replacing government-to-provider supports by continuing FCHI, CCHI, and Social Housing Agreement funding for a sufficiently long period to allow providers to plan, invest, and grow.
• Adopt a direct-to-tenant affordability model, similar to those used in several European housing systems, where lower-income households receive an entitlement to housing benefit. This approach, which could be done through Canada Housing Benefit and that we will explore in a subsequent letter, separates income supports for tenants from the asset management and growth functions of non-market housing providers, offering a clearer and more sustainable division of funding responsibilities.

Concluding remarks

To achieve the objectives of reducing homelessness and core housing need and restoring affordability, NHS 2.0 should prioritize the expansion of the non-market housing sector to 7% of homes, in line with the OECD average. Above all, scaling the non-market sector depends on certainty and predictability, both in the capital funding needed to build new homes and in the operating supports required to sustain deep affordability over time.

BCH should be used to bring permanence and stability to federal housing investments through long-term funding commitments, consistent investment criteria, and the gradual development of a revolving fund. BCH should also adopt a strategic approach that favours scale, amalgamation, and aggregation, enabling its investments to have a system-wide impact rather than supporting isolated projects.

Given that government resources are finite, NHS 2.0 should also explore how to mobilize non-governmental capital to support the non-market sector - drawing on international examples where investment has been successfully leveraged, while still maintaining affordability and security of tenure for low-income households and preserving non-market ownership and control.

We hope you find our recommendations useful in informing your plans to develop Canada's non-market housing sector through NHS 2.0 and Build Canada Homes. We would welcome the opportunity to provide further support or advice as your work progresses.

Kind regards,

Tim Richter
Co-chair, National Housing Council

Annex 1: Summary of Recommendations for NHS 2.0

Sustainable funding and financing for Canada's non-market housing sector

Increasing the share of Canada's housing provided in the non-market sector would directly contribute to our proposed objectives for NHS 2.0 and improving outcomes for Canadians.

However, scaling-up the non-market sector to the OECD average of 7% of the housing system will require substantial additional support and investment.

1) Reinforce funding and support for non-market housing, and ensure the federal government's investments and land are focused on creating a growing and self-sustaining non-market housing sector

• Provide stable, predictable funding by clarifying BCH's full funding envelope, shifting away from program-based, time-limited funding and establishing a revolving fund
• Remove funding barriers by supporting pre-development work and aligning funding across different levels of government
• Promote scale, amalgamation and aggregation with strategic funding decisions and supports, thereby encouraging larger, stronger providers who can deliver more units
• Use public land for the public good, by establishing a federal land bank and using either long-term leases and agreements to retain public control, or transferring land to non-market providers to enable them to access capital

2) Explore non-governmental models to provide capital for non-market housing while protecting non-market ownership and security of tenure

• Augment finite government funding by exploring models to leverage private capital, while still prioritising affordability, security of tenure and non-market ownership and control of homes
• Explore models such as France's Livret A which use government interventions to make low-cost, long-tenor lending to non-market housing providers attractive to non-governmental investors
• Strengthen the affordability requirements of the ACLP by extending the required duration, depth and/or proportion of affordability to ensure this program supports the objectives of NHS 2.0

3) Provide ongoing financial supports to stabilize existing deeply affordable homes and to ensure providers can continue to offer new deeply affordable housing

• Non-market housing faces a funding cliff-edge as NHS operating supports (FCHI and CCHI) expire and as federal-provincial Social Housing Agreements also near their end
• Deeply affordable housing is at risk if projects are left unable to cover their operating costs, risking the loss of valuable public assets and the displacement of low-income Canadians
• NHS 2.0 must stabilise operating funding to safeguard tenants and homes, and embed funding on a long-term basis to give providers the stability needed to plan ahead, invest and grow. This could be done by:
• Renewing or replacing government-to-provider supports, reflecting the funding arrangements currently in place with FCHI, CCHI and the Social Housing Agreements
• Adopting a direct-to-tenant affordability model, using Canada Housing Benefit to provide affordability supports to low-income households in non-market housing

4) Conclusion

Scaling-up the non-market housing sector strongly supports better outcomes for Canadians, by reducing homelessness and core housing need and by improving affordability. Sustainable funding and financing will be required to grow Canada's stock of non-market homes. Stability and predictability are essential, both in terms of the capital funding needed to build new homes and in the operating supports required to sustain deep affordability over time. Canada should also explore how to mobilize non-governmental capital to support non-market housing, to augment finite government funding and to insulate the sector from political cycles.

Dear Minister Robertson,

This letter is the third in a series of focused letters that the National Housing Council (the Council) is preparing with recommendations on National Housing Strategy (NHS) 2.0. In our first letter, the Council recommended that NHS 2.0 be grounded in clear, outcomes-focused objectives and a data-driven approach to policy. In our second letter, the National Housing Council identified the structural gaps that limit Canada’s non-market housing sector and made recommendations on creating a sustainable funding and financing system that would support the housing sector to scale and restore affordability.

Both letters built on the Council's Renewing Canada's National Housing Strategy report, which identified a core tension: federal investment in housing was being undermined by the rules, costs, and timelines governing how homes actually get built. The high cost of delivery, driven by land costs, taxes, fees, financing and permitting delays, translates directly into higher rents and greater grant requirements in the non-market sector.

In this letter, the Council recommends how NHS 2.0 can build on the momentum of recent policy changes, such as the Canada-Ontario partnership to lower development charges, by using federal funding to drive meaningful policy reform through all levels of government. The Council makes two recommendations aimed at increasing the rate of housing supply, which would support industrialized construction uptake and reduce the cost of building homes through a reduction in approval timelines, government charges and zoning reform. These recommendations, discussed later in this letter, are:

• Use federal housing funding (e.g., the Housing Accelerator Fund (HAF)) to unlock municipal approvals, reduce development charges and accelerate permitting times; and
• Use federal funding and demonstration projects to create continuous, predictable demand and scale existing industrialized construction.

A summary of the recommendations made in the letter is also provided in the Annex.

***

1. Use federal housing funding (e.g., HAF) to unlock municipal approvals, reduce development charges and accelerate permitting times

Context: Addressing the cost-of-delivery crisis

Canada’s housing crisis is no longer only a question of whether enough capital is available to support new supply - It’s also a question of whether the rules, timelines and charges that govern housing delivery allow that capital to translate into adequate and affordable homes. As the Council noted in Renewing Canada’s National Housing Strategy, differences in priorities and processes across orders of government reduce the effectiveness of federal housing policy and add unnecessary complexity for providers, builders and partners trying to contribute to housing outcomes.

Across much of Canada, municipal approval systems have become a major source of housing cost escalation and uncertainty. The 2024 CHBA Municipal Benchmarking Study found that, across 23 municipalities, the average development application took 11.2 months to complete in the 2022-2024 study period, with timelines ranging from 2 months in Saskatoon to 31 months in Hamilton. The same study found that the lowest-performing municipalities consistently combined lengthy approval processes with high municipal charges. These delays and charges are not costless: they increase carrying costs, extend the period land sits idle, expose projects to construction-cost escalation, and can ultimately determine whether housing proceeds at all.

The picture varies across provinces. British Columbia's legislative reforms since 2023 have materially changed municipal approval dynamics: single-family zoning has been eliminated across major urban centres, Official Community Plans (OCP) must now pre-zone sufficient capacity for 20 years of projected growth, and once an OCP is approved, conforming development applications cannot be subject to public hearings. In these jurisdictions, procedural barriers have been substantially addressed. The deeper constraint is not procedural discretion but the municipal fiscal gap - the inability of municipalities to fund the infrastructure and community services that new housing requires, given their limited revenue tools. In jurisdictions that have completed approval reform, NHS 2.0's lever should not be further regulatory pressure but helping municipalities access alternative financing mechanisms to support growth.

For NHS 2.0 to improve housing outcomes, the federal government must coordinate and not merely fund but be the entity responsible for aligning all orders of government around shared priorities, standards, and accountability. Federal funding relationships (e.g., Housing Accelerator Fund, Canada Housing Infrastructure Fund, Build Canada Strong Fund) should be used strategically to reduce approval timelines, lower avoidable costs, and reward reforms that make housing delivery faster and more affordable. This conditionality framework should be anchored in stable, ongoing funding streams rather than time-limited programs like HAF, which supplements but cannot provide the reliable revenue municipalities need to plan at scale. These reforms are not ends in themselves - their value lies in unlocking the pace and volume of delivery needed to reach the completion thresholds at which affordability meaningfully stabilizes.

Recommendation: Apply housing-enabling conditions across all major federal funding streams that affect housing supply

The Council recommends that the federal government apply a single, consistent set of housing-enabling conditions across all major federal funding streams that affect housing supply. Municipalities and provinces should not be able to avoid meaningful reform by turning from one federal program to another with more negotiable requirements. If federal dollars are supporting growth, infrastructure, transit, or housing, they should all reinforce the same objective: enabling faster, lower-cost, more certain housing delivery. Programs and streams such as the Housing Accelerator Fund, infrastructure funding, and transit funding should not impose different or competing expectations on municipalities. They should require the same core reforms and send the same signal: federal support for growth will be tied to concrete action to reduce approval delays, lower unnecessary costs, and remove barriers to housing supply. NHS 2.0 should establish a coherent and durable framework for conditionality that applies across all relevant federal programs, rather than relying on one-off or program-specific requirements.

At a minimum, access to these funding streams should be contingent on meeting clear baseline conditions, such as demonstrated action to shorten approval timelines, publish transparent fee schedules, streamline and digitize permitting, and reduce duplication across approval stages. The point is not to impose a single planning model on every municipality. It is to ensure that federal funding is not undermined by local systems that continue to delay, encumber, or discourage housing development.

This approach would correct a longstanding weakness in the housing system: the federal government invests in housing supply, while other orders of government often maintain rules, charges, or processes that erode the impact of that investment. If NHS 2.0 is to deliver homes at a price people can afford, federal funding must speak with one voice and be used consistently to drive housing-enabling reform.

This view is widely shared. The Senate Standing Committee on Banking, Commerce and the Economy's report, Out of Reach, similarly recommends that the federal government require equivalent reductions in municipal fees as a condition of providing infrastructure funding, and that financial incentives are used to ensure provinces and municipalities adopt best practices for housing approvals. That the same conclusion has been reached independently by the Senate Committee and the Council underscores the urgency of a coordinated, cross-program approach.

Recommendation: Require clear, measurable housing-delivery KPIs

Conditionality will only be effective if it is linked to outcomes that can be clearly measured and tracked over time. The Council therefore recommends that the federal government require participating municipalities to report against a core set of housing-delivery indicators tied directly to project feasibility, speed of delivery and human rights-based outcomes.

These indicators should include approval timelines, reductions in the number of approval layers or duplicative processes, and progress in moving projects from application to permit issuance. The CHBA benchmarking work demonstrates that these dimensions are measurable and vary substantially across municipalities, making them suitable candidates for ongoing accountability. Consistent with the Council's Measuring What Matters framework, these indicators should also be disaggregated where possible by income level, unit size, proximity to transit, accessibility characteristics, and other relevant factors. Doing so would help ensure that housing delivery is assessed not only by the number of homes produced, but also by whether housing outcomes are improving for different households and communities.

A stronger performance framework would also help create a more evidence-based culture of housing policy. As the Council argued in its first NHS 2.0 letter, federal housing policy should be increasingly data-driven and outcomes-oriented. Applying this principle to municipal approvals would allow the federal government to identify which reforms are working, where bottlenecks remain, and how funding can be better targeted over time. The Senate Committee on Banking, Commerce and the Economy has similarly recommended a national housing data and accountability framework to track approvals, development charges, construction timelines and affordability targets - signalling broad cross-institutional support for this kind of performance measurement.

Recommendation: Use funding agreements to reduce avoidable approval layers and duplication

The Council further recommends that federal funding agreements explicitly support reforms aimed at reducing unnecessary procedural complexity. In many jurisdictions, projects must move through multiple approval stages, each with its own studies, consultations and review requirements, even where the underlying planning issues have already been addressed. The result is duplication, delay and higher soft costs, with little evidence that these additional layers improve housing outcomes.

NHS 2.0 should encourage provinces and municipalities to simplify these pathways. This could include reducing the number of approvals required for projects that conform with adopted plans, limiting repeated technical review requirements, expanding as-of-right permissions in appropriate areas, and standardizing submission and review processes where possible. The Canadian Alliance to End Homelessness, Missing Middle Initiative, Canadian Housing and Renewal Association, Canadian Real Estate Association and Habitat for Humanity’s Housing Canada plan and other housing organizations similarly call for automated permit reviews, as-of-right density permissions, and streamlined approvals as critical components of housing delivery reform.

Recommendation: Incentivize reductions in development charges and other government-imposed costs & Support alternative municipal financing mechanisms for growth-related infrastructure

The Council recommends that federal housing policy support municipalities and provinces in reducing the local charges that materially undermine housing feasibility, particularly where those charges are front-loaded onto new housing and function as a barrier to supply. The recent Canada-Ontario action on development charges signals a useful direction of travel; NHS 2.0 should build on this at a national level.

This does not require the federal government to dictate municipal revenue tools. It does require recognizing that, in many high-cost markets, development charges and related fees now form a significant part of the total project cost. When combined with long timelines and approval uncertainty, these charges can delay projects, reduce the number of units delivered, or prevent new supply from proceeding altogether. Encouraging appropriate density through the zoning and regulatory reforms recommended above can also help spread these costs across more units, reducing the per-unit burden without requiring municipalities to forgo revenue entirely.

Federal support should recognize and reinforce action by municipalities and provinces that adopt approaches which lower avoidable upfront charges, phase them more appropriately, or otherwise reduce their impact on project viability while maintaining fiscal sustainability.

The Council recognizes that development charges do not exist in a vacuum. In many municipalities, they represent one of the few tools available to fund growth-related infrastructure - sewers, roads, parks, transit connections. Municipal governments across Canada are responsible for more than 60 per cent of all public infrastructure, at an average cost of $107,000 per new housing unit, yet their revenue tools remain largely confined to property taxes and user fees (Federation of Canadian Municipalities). Any federal effort to reduce charges must therefore be paired with a serious examination of how municipalities fund growth-related infrastructure when those charges are reduced.

NHS 2.0 should encourage governments to explore alternative financing approaches that do not place as much pressure on the cost of each new home. Quebec's model where municipalities can take on debt to finance major infrastructure, with repayments spread across the broader tax base rather than front-loaded onto new development illustrates that viable alternatives exist. This is not only a housing affordability issue but a fiscal one: well-designed supply-enabling interventions can generate recurring tax inflows that offset their upfront cost over time.

2. Use federal funding and demonstration projects to create continuous, predictable demand and scale existing industrialized construction

Context: Building a national housing delivery system

Canada's challenge is not whether industrialized construction exists; it does, in forms ranging from volumetric modular buildings to panelized systems and prefabricated components. The challenge is whether the housing system is creating the conditions for it to scale into a durable national delivery model. Industrialized construction is, at its core, a production approach that applies manufacturing logic - standardization , repeatability, coordinated supply chains - to transform how housing is delivered at scale.

The opportunity now is not to pilot new methods. It is to build a housing delivery system that is durable, scalable, coordinated, and capable of sustained national output. That requires integrating policy, financing, approvals, procurement, and construction systems into a coherent delivery architecture - one that treats industrialized construction not as a project-by-project innovation, but as the operational backbone of a higher-performing housing system.

The federal government's comparative advantage in this space is unique and underutilized. Through national building codes, federal-provincial alignment, and its convening role across jurisdictions, the federal government can harmonize the inconsistent standards that currently fragment industrialized construction markets and prevent firms from achieving the economies of scale available through national operations. This coordinating role can also help advance consistent accessible and adaptable housing standards across jurisdictions, ensuring that new housing better meets the needs of persons with disabilities and an aging population. No other order of government can play this role. NHS 2.0 should therefore focus not on promoting industrialized construction in the abstract, but on creating the national market conditions (consistent regulation, aggregated demand, reduced financing risk) that allow proven systems to expand from regional pilots into national capacity.

Demonstration projects are one important part of this approach. Well-designed demonstration projects can do more than deliver individual units: they can prove viability, build confidence among lenders, insurers and public authorities, support the diffusion of lessons learned, and help retain institutional knowledge across the sector. But demonstration alone will not be enough. If the federal government wants industrialized construction to become a meaningful contributor to housing supply, it must pair learning-oriented projects with a broader strategy to support factory utilization, reduce project risk, and create a more dependable pipeline of demand.

Recommendation: Launch large-scale demonstration projects as anchors of a national housing delivery strategy

The Council recommends that the federal government use large-scale demonstration projects not as one-off pilots, but as deliberate anchors of a National Housing Delivery Capacity Strategy - a coordinated, multi-year effort to build the institutional knowledge, supply chain depth, and repeatable delivery models that industrialized construction requires to operate at national scale.

These projects should be selected for their potential to generate transferable lessons across five dimensions that define a mature delivery system:

• Multi-year commitment: projects structured over sufficient time horizons for factories to invest in capacity and workforce
• Repeatable designs: standardized unit types that can be procured, approved, and built consistently across jurisdictions while incorporating accessible-ready and adaptable design features that allow homes to respond to changing household needs over time
• Standardized procurement: coordinated purchasing frameworks that aggregate demand and reduce per-project transaction costs
• Workforce and supply-chain development: requirements to build training pipelines and domestic supply capacity alongside physical delivery
• Evidence capture and reuse: mandatory documentation of cost, timeline, and process data, with systematic sharing across public and private partners

A recurring pattern in Canada's housing system is that promising innovations are piloted once but never translated into a sustained delivery model. The Strategy would correct this: using demonstration projects not as showcases, but as the foundational infrastructure for a housing delivery system built to last.

Recommendation: Use federal procurement to aggregate demand and support factory utilization

The Council further recommends that the federal government use procurement to create more continuous demand for industrialized construction. One of the sector’s central challenges is the absence of a predictable pipeline. Without confidence in future orders, manufacturers cannot justify major investments in plant, equipment, training, or process improvement. This contributes to underused factory capacity and reinforces the stop-start cycles that limit productivity.

Federal procurement can help address this by aggregating demand across housing and public-building streams - shifting from project-by-project funding toward programmatic purchasing approaches that give manufacturers the forward visibility needed to justify capital investment. This could include standardized designs, repeat procurement models, and coordinated purchasing across programs with similar unit types and delivery requirements. The goal is not coordination for its own sake, but factory utilization: ensuring that Canadian industrialized construction firms can operate at the sustained throughput levels at which costs fall, quality rises, and the workforce deepens.

Recommendation: Implement risk-sharing mechanisms to de-risk projects and crowd in investment

The Council recommends that NHS 2.0 include mechanisms to reduce financing risk for industrialized construction projects. While these approaches can improve productivity and shorten on-site construction time, they often face difficulty accessing conventional financing and insurance products, especially where lenders or insurers are unfamiliar with the delivery model or perceive greater execution risk.

Recent Canadian work on modern methods of construction emphasizes that policy, procurement, finance and insurance are among the central barriers to wider adoption. A more standardized and better understood industrialized construction ecosystem would help address this over time, but NHS 2.0 can act now by reducing the risks associated with early and scaling-stage projects. This could include targeted guarantees, credit enhancements, or other risk-sharing tools that make it easier for projects using proven industrialized construction systems to reach financial close. The aim should not be to subsidize weak projects, but to reduce friction for viable projects that are being penalized because financing and underwriting practices have not kept pace with changes in delivery methods.

Recommendation: Pre-qualify proven firms and systems to accelerate delivery

The Council recommends that the federal government explore pre-qualification approaches for firms and systems with demonstrated capacity, regulatory compliance, and delivery experience. Presently, industrialized construction projects can face repeated verification, duplicated due diligence, and inconsistent treatment across projects, even where firms, products or systems have already been proven.

Pre-qualification would help reduce this friction. By establishing clearer pathways for proven suppliers and delivery partners, the federal government could shorten procurement and mobilization timelines, reduce administrative burden, and increase confidence among public and non-profit housing providers seeking to use industrialized construction methods. CMHC's Frequent Builder framework, launched in 2024, offers a useful analogue: by fast-tracking experienced housing providers through the Affordable Housing Fund and Apartment Construction Loan Program, it demonstrates the productivity gains available when proven actors are recognized rather than re-evaluated from scratch.

Recommendation: Align skills and training funding with housing supply and industrialized construction needs

Finally, the Council recommends that federal skills and training funding be aligned more directly with housing supply objectives and the needs of industrialized construction. A more productive housing system will require not only more workers, but different deployments of skills across design, manufacturing, assembly, logistics, and digital coordination. This recommendation is echoed in Housing Canada, which identifies a dedicated housing skills agenda - including re-skilling displaced workers and training in modular construction - as one of ten national priorities.

Industrialized construction can support more efficient use of labour, but only if training systems evolve alongside delivery models. The urgency of this investment is compounded by an impending demographic shift in the construction workforce: according to BuildForce Canada, nearly 269,000 construction workers (21% of the 2024 labour force) are projected to retire by 2034. Replacing this capacity while simultaneously shifting toward more industrialized methods will require a skills agenda that is both larger in scale and different in focus than current training systems provide. Federal programs should therefore support workforce development in areas connected to off-site manufacturing, design for manufacturing and assembly, factory production, on-site installation, and related digital and technical skills.

Concluding remarks

The federal government must align all orders of government around housing as a national priority using funding, standards, and accountability to ensure housing delivery is treated as essential infrastructure for Canadians. Increasing housing supply requires more than additional funding alone.

Federal funding can play a stronger strategic role in both respects. Applied consistently across programs, it can create a united front for housing-enabling reform and encourage provinces and municipalities to reduce approval delays, unnecessary costs and procedural duplication. Used more deliberately, it can also help create the stable pipeline, lower-risk environment and institutional confidence needed for industrialized construction to become a more reliable contributor to housing supply.

Some recommendations in this letter are not advanced by the Council alone. The Senate Standing Committee on Banking, Commerce and the Economy and the Canadian Home Builders' Association have independently reached many of the same conclusions on approval reform, development charges, and industrialized construction. This convergence across government, industry and the Council strengthens the case for action and signals that NHS 2.0 has a genuine opportunity to build on a broad consensus.

The Council also notes that supply gains alone will not deliver affordable housing for those most in need. In most markets, providers cannot realistically build and operate housing at rents affordable to modest-income households without additional support. An expanded Canada Housing Benefit - addressed in a subsequent letter - can help close this gap, making affordable housing more viable and attainable.

Taken together, these measures reflect a single imperative: the federal government must align all orders of government around housing as a national priority - using funding, standards, and accountability to ensure housing delivery is treated as essential infrastructure for Canadians. We hope you find our recommendations useful in informing your plans to increase housing supply through NHS 2.0. We would welcome the opportunity to provide further support or advice as your work progresses.

Kind regards,

Tim Richter
Co-chair, National Housing Council