Home Buyers' Plan (HBP)

The Following message was sent to Pierre Lemieux M.P. in my ward. In support of increasing the Home Buyer's Plan. (HBP) 

Dear Mr. Lemieux,

As a REALTOR® who lives and works in your riding, I ask for your support to index the Home Buyers' Plan (HBP) to inflation in Budget 2015.

Homeownership is a cornerstone of our community and first-time buyers are the lynchpin of our local housing market. They allow existing homeowners to move to homes that better suit their life circumstances, creating a virtuous circle that sustains a stable and balanced market. 

One of the most important government initiatives for first-time buyers is the HBP. It helps them make a healthy down payment, reduces the cost of mortgage default insurance and builds home equity faster. By allowing up to $25,000 to be borrowed from an RRSP to be used as a down payment towards a home purchase, the HBP has provided a gateway to homeownership for over 2.6 million Canadians. 

Since the HBP was last adjusted in Budget 2009, inflation has eroded its purchasing power. This means a homebuyer today receives $1,500 less value from the Plan. If left unadjusted, this gap will widen to $5000 by 2020.

As you know, indexation is an established practice to preserve the value of important government programs, such as Tax Free Savings Accounts, retirement benefits, and the Lifetime Capital Gains Exemption on small business shares. This same measure should be applied to the HBP, indexing it in $2,500 increments. Using Budget 2009 as a starting point, the first adjustment would occur in 2016 at a cost of $7.5 million. A further $2,500 adjustment would occur in 2020.

This type of action is supported by Canadians. According to Nanos Research, 76% of Canadians support or somewhat support adjusting the maximum withdrawal amount of the HBP to keep pace with rising consumer prices.

The economy would benefit from indexing the HBP. In 2012, HBP purchases resulted in over $2.5 billion in spin-off spending and more than 20,200 jobs.

As the Minister of Finance looks for input on important measures to include in Budget 2015, I am asking that you write in support of indexing the Home Buyers' Plan and raise this issue in pre-budget discussions you have with him. 

Thank you for your consideration.



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