Part II How Build Canada Homes Works: 
Investment Framework, Eligibility and Partnerships

This is the second installment of a three-part series dedicated to understanding how the commercial real estate sector can leverage Build Canada Homes (BCH). In Part II, we examine BCH's Investment Policy Framework, its eligibility criteria and partnership models, and explain what "project readiness," affordability and scale mean for proponents seeking to participate.

Read Part 1 of the series: A Three-Part Series on the New Federal Approach to Housing: Build Canada Homes.

The Investment Policy Framework 

The Framework outlines BCH's key priorities, investment principles and eligibility criteria for BCH investment and partnership. BCH's goal is to invest wisely, partner strategically and deliver results. The Framework translates BCH's broad mandate into three distinct branches:

1. Finance: deploy public capital and attract investment from public and private sources to support affordable housing projects proposed by public, non-profit, Indigenous and private proponents;
2. Build: accelerate development on federal lands and structure transactions to reduce construction costs and shorten delivery timelines through direct development activities and public-private partnerships; and
3. Industrialize: adopt modern methods of construction (MMC), including modular housing, factory-built housing, standard designs, mass timber, building information modelling, low-carbon materials and rapid assembly.

BCH Priorities

BCH is prioritizing fully planned projects that are: (1) ready to begin construction within 12 months, (2) affordable and meet the local needs for non-profit housing, (3) leveraging MMC to cut costs and accelerate delivery, (4) collaborative projects that leverage capital and bundle submissions for regional impact and (5) using Canadian materials to strengthen domestic supply chains and support local manufacturing. These five priorities are designed to streamline MMC, with the goal of cutting building timelines by up to 50%, reducing costs by 20% and lowering construction emissions by 20%.

Eligible Housing Projects

The following types of projects are eligible for BCH partnerships:

1. mixed-use developments with up to 30% ground-floor commercial or retail;
2. mixed-income housing in rural, remote, northern and Indigenous communities;
3. student rental housing;
4. seniors' independent living housing;
5. supportive and transitional housing;
6. affordable ownership models (such as shared-equity, rent-to-own or deed-restricted programs designated to maintain purchase prices below market rates); and
7. co-operative housing solutions (member-based, collectively governed housing where residents share decision-making and the co-operative retains ownership of the housing).

Long-term care facilities, emergency shelters, commercial properties and individual homeownership are not currently eligible.

BCH is focusing on housing projects for people experiencing, or at imminent risk of homelessness, by investing C$1 billion. Developers are encouraged to participate in supportive and transitional housing by creating long-term partnerships with non-profit or public proponents, such as:

1. Non-market, non-profit and co-operative housing providers. BCH works with non-market housing proponents with equity (for example, cash contributions, donated land or in-kind support) and shovel-ready sites.
2. Factory-built housing manufacturers. BCH collaborates with factory-built housing manufacturers to build their order book and manage financial risks associated with scaling their production.
3. Financial institutions and philanthropic funds. BCH engages with financial institutions and philanthropic funds by de-risking early-stage projects and catalyzing long-term investment aligned with social impact goals.
4. Indigenous housing providers and organizations. BCH works directly with Indigenous housing providers and organizations to deliver culturally appropriate housing models.  
5. Provincial, territorial and municipal governments. BCH expects government partners to contribute land, expedite approvals, waive applicable fees and streamline permitting and construction processes.

Eligibility Considerations and Proposal Assessment

BCH uses the following markers to assess proposals:

1. the potential to deliver meaningful increases in housing supply with scalability;
2. depth, breadth and duration of affordability;
3. strengthening capacity in the non-market housing sector;
4. financial and construction readiness;
5. use of MMC;
6. sustainable design and lower-carbon materials;
7. strengthening Canadian supply chains;
8. demonstrating a clear need for BCH support; and
9. increasing accessible housing stock for persons with disabilities and aging populations.

The considerations above are intended to guide project assessment and do not constitute mandatory criteria for funding eligibility.

BCH also supports portfolio approaches, allowing one or more partners to submit multiple projects together, allowing governments, Indigenous and non-governmental organizations to act as aggregators to help small providers access funding.

The Affordability Definition

BCH defines housing as affordable when a household spends less than 30% of its before-tax income on housing costs, measured against the median household income in the project area. Rents are assessed contextually to reflect regional income and housing-cost differences. For example, a one-bedroom unit is considered affordable for low-income Canadians if rent is C$838 per month in Vancouver, C$803 per month in Toronto and C$683 per month in Montreal.

Key Takeaways

• The Framework operationalizes BCH's mandate through three distinct functions: finance, build and industrialize, giving proponents a clear picture of the tools and transaction structures BCH can deploy.
• Incorporating MMC, such as modular housing, cuts costs and accelerates housing delivery to Canadians.
• Shovel-ready projects are the near-term priority.
• The partnership architecture is broad and deliberately multi-sectoral but reflects a clear preference for linking private capital to mission-driven housing delivery.
• The dedicated C$1 billion capital allocation for supportive and transitional housing, and the requirement for non-profit partnerships on such projects, is an opportunity for developers to get involved with BCH.

Part III of this series will examine BCH's use of the Buy Canadian policy and government lands, and the critiques and challenges that lie ahead for BCH and the commercial real estate sector.