You know first-hand the critical importance of the Home Buyers’ Plan (HBP) to helping first-time buyers afford a home. Your clients are likely some of the over 2.6 million Canadians who have withdrawn up to $25,000 from their Registered Retirement Savings Plan (RRSP) under the HBP to put towards their first home purchase.
Unfortunately inflation causes the HBP to effectively lose value each year. Today’s homebuyer receives over $1,500 less value from the program than a homebuyer in 2009. By 2020, this gap will widen to $5,000.
CREA’s Proposal
We believe the HBP must keep pace with inflation (as measured by the Consumer Price Index (CPI)). We advocate the HBP be adjusted incrementally by $2,500 to preserve its purchasing power so that it continues to help make homeownership affordable for first-time homebuyers.
The Benefits of Our Proposal
1. Economic Spin-offs
The HBP creates spin-off economic benefits. In 2012, HBP purchases resulted in over $2.5 billion in spin-off spending and more than 20,200 jobs.
2. Follows Established Practice
A number of other government programs are indexed to ensure they do not lose their intended value, including retirement benefits, Registered Retirement Savings Plans, and Tax Free Savings Accounts. Tax Free Savings Accounts are indexed to the Consumer Price Index and rounded to the nearest $500. The HBP should be indexed in a similar way.
3. Zero Cost until 2016
Using Budget 2009 as a starting point, indexing the HBP in $2,500 increments would enable the government to meet its deficit reduction targets and other planning objectives. This approach would cost nothing until 2016, at which time the plan would adjust by $2,500 at a cost of $7.5 million. A further $2,500 increase would occur in 2020 at an additional cost of $7.5 million. This costing is based on estimates contained in Budget 2009 and 2010.
This fall, it’s time for REALTORS® to take a stand and ask the government to stop the erosion of the HBP by adjusting its withdrawal limit to inflation in Budget 2015.
With 109,000 REALTORS® across Canada, our message can be heard loud and clear. We need you to take action by sending a letter to your Member of Parliament. It’s quick, easy and takes only a minute or two. Your letter will be delivered to your Member of Parliament by The Canadian Real Estate Association during the fall.
Visit www.REALTORActionNetwork.ca, and click on “Take Action”. Or visit: https://www.votervoice.net/RAN/1/Campaigns/37034/Respond