Carney defends condo-buying plan panned by critics as bailout

Opponents of the policy have highlighted the prospect of using taxpayer cash to underwrite business risk and socialize private losses, and the troubling incentive that may create. Photo by Jason Payne/Postmedia

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Carney and British Columbia Premier David Eby revealed on June 18 a plan for the federal and provincial governments to acquire and convert more than 2,200 vacant apartment units using government financing, without further details.

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It was immediately attacked by industry observers, as well as Carney’s main political rival, Conservative Leader Pierre Poilievre, as an unfair special favour for developers and banks.

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At a news conference Thursday, Carney said he and the federal government had done a poor job of announcing and explaining the idea, and emphasized that the policy is still in an early phase.

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“There’s no specific contemplated transaction at this stage,” he said, adding that “if and when there are transactions, then judge those transactions on the basis of the economics of that, not on the concept.”

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Both Vancouver and Toronto are awash with unsold condos after a pandemic-era building boom was followed by rising interest rates and a cap on immigration. Weaker demand has forced developers to cancel projects, offer incentives or cut prices, and in some cases, see towers go into receivership.

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Carney said the overall dollar value of transactions contemplated by the condo conversion program is around $1.45 billion, and the federal government would provide “about 10 per cent of the financing.” The federal and BC governments would acquire distressed condos and buy “at a discount.”

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“We don’t care about the developer, but we care about the person, the family that can potentially move into the home,” Carney argued. The program would focus on rent-to-own, a model that allows people to build home equity or a down-payment folded into rental payments.

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Carney also said the idea was brought to the federal government by the BC government. Gregor Robertson, Carney’s housing minister and former Vancouver mayor, said on Wednesday that media had misreported the financial commitment, but only said he’d share more details “in the coming months.”

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Opponents of the policy have highlighted the prospect of using taxpayer cash to underwrite business risk and socialize private losses, and the troubling incentive that may create.

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“Carney’s condo bailout is the latest example of Liberals taking care of themselves and their friends, with your money,” a Conservative fundraising email said, painting it as a helping hand to B.C.’s influential real estate community.

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Critics have pointed to a February fundraiser Carney held in Vancouver that was attended by top B.C. developers.

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“No developer asked for this from me directly,” Carney said Thursday.

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The Urban Development Institute, which represents BC developers, came out against the plan on Wednesday, arguing instead for “long-term affordability requires policies that support the delivery of substantially more homes” such as a sales-tax rebate on new home purchases.

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