Affordable housing for who? Federal dollars are funding more unaffordable rentals
Posted September 2, 2021
Posted on August 30, 2021
In this election an issue that’s getting attention (for obvious reasons) is housing. In fact, if anything has been learned from the pandemic, it is that the government has the primary responsibility of housing everyone. Housing is health!
After years of campaigning and advocacy, human rights groups across the country celebrated the ratification of housing as a human right with the passage of the National Housing Strategy Act (NHSA). CMHC — the federal housing agency — is delivering a range of National Housing Strategy (NHS) initiatives to provide “affordable housing.”
NHS is touted as a $70-billion plan out of which CMHC itself plans to spend $3.7 billion over the 10 years from 2018-19 to 2027-2028. However, the latest Parliamentary Budget Office report infers that funding for CMHC’s support for programs addressing housing needs of low-income households has declined by 15 per cent. This when the affordability gap will increase by 24 per cent and households in need of housing will increase to 1.8 million in the next five years.
Financing for housing programs have now become the centrepiece of NHS funding with the Rental Construction Financing Initiative (RCFI) alone accounting for 60 per cent of the programs aimed at increasing housing supply. Fair enough but what kind of housing?
RCFI provides low-cost loans to developers with the minimum loan of a million to a maximum of 100 per cent of the loan cost. Housing loans given to developers from coast to coast to coast show that billions of dollars are going into developers’ pockets to build totally unaffordable rentals!
In Halifax, $115.5 million was given to BANC Investments where 76 out of 324 units are supposed to be “affordable” with rents from $1455-1844 per month! In B.C., $349 million for Wesgroup to build three new rental projects — two in New Westminster and one in Vancouver.
Basing rents on household income will never make rentals affordable, in fact, it will do just the opposite. Rentals based on 30 per cent, or 70 per cent of 30 per cent of median household income (21 per cent) — as Steve Pomeroy’s research shows, is resulting in 31 per cent and 41 per cent higher than median market rents in cities such as Vancouver and Toronto.
CMHC defines affordable housing as households not paying more than 30 per cent of household income on rent but using median household income itself as the basis are two completely different things! This will only target middle income people, leaving out low-to-moderate income who need affordable housing the most.
Even the period for which affordability is to be kept is extremely minimal — in most cases 21 years. New Westminster development requires rents to be kept “affordable” for 10 years.
Overall program guidelines themselves mention “at least 10 years.”
All public money funding creation of “affordable housing” must support tenants who are in core housing need. Most people in core housing need below $30,000/year.
Going by CMHC’s own definition, for anyone who earns less than $30,000, rent should be no more than $750/month.
Developments that get support must be required to guarantee affordability in perpetuity. This is not a short-term crisis. Letting the development community flip these units back to full market price after 10 or 21 years is reprehensible.
CMHC needs to develop a non-profit acquisition strategy. Acquisition of rental buildings by investors and real estate investment trusts is destroying affordable housing at a much faster pace than its creation. Affordable housing needs real solutions and resources need to target people who are in need!
Authored by Marva Burnett is National President of ACORN Canada