Ottawa urged to address the erosion of affordable housing units across Canada

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Non-profit groups, philanthropic foundations and housing researchers are pushing the federal government to invest in a national program to save the country’s dwindling supply of affordable rental units for Canadian families struggling to cover rising costs in the private market.

After months of lobbying at high-level government meetings, housing advocates are hoping for an announcement in Tuesday’s fall economic statement to help non-profits purchase older buildings to keep their rents low.

The programs in the $70-billion federal housing strategy focus predominantly on new construction, which critics say increases the supply of more expensive housing but does little to preserve existing affordable rental stock.

Meanwhile, Canada has been losing affordable rentals far faster than new ones are being built, according to a recent analysis of the latest census data by a Carleton University researcher.

“There is a hole in the bucket of the national housing strategy,” says Ray Sullivan, executive director of the Canadian Housing and Renewal Association.

Plugging the leak, Mr. Sullivan says, is essential to achieving affordability for low- and moderate-income Canadians who are increasingly being shut out of rising rental markets.

Canada is already short 1.7 million homes affordable to households earning below the median income, according to a 2023 report by University of British Columbia housing researchers that studied how to safeguard existing low-rent units. The 2017 federal housing strategy aims to build 160,000 affordable homes in 10 years. Even if that’s achieved, the authors noted, new supply will not come close to meeting the need and improving affordability.

Steve Pomeroy, a senior research fellow for the Centre for Urban Research and Education at Carleton University, used census data to track the loss of homes with rents below $750, an amount considered affordable for families earning less than $30,000. Between 2011 and 2021, he says, for every new affordable unit built in Canada, 11 affordable rental units were lost.

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Some cities had much higher losses – in Winnipeg, the rate was 29 to one. In other cities, the losses of $750 apartments looked low, but only, Dr. Pomeroy says, because those housing markets had fewer to lose. But in many of those municipalities, he found the same erosion of apartments rented for up to $1,000 a month. In the last decade, for example, Ottawa lost 31 of those units for every one that was built. For Toronto and Vancouver, Dr. Pomeroy says, the losses were 18 and 10 to one, respectively.

Existing affordable units have been lost, he explains, to rent increases that follow renovations and tenant turnovers, conversions to condos, or when older properties are demolished to make way for newer, more expensive housing.

Preserving affordable rentals that already exist “is a big missing part of the national housing strategy,” says Stéphan Corriveau, executive director of the Community Housing Transformation Centre, a Montreal-based organization that advocates for community housing across the country.

While Canada also needs more homes, Mr. Corriveau says, buying and upgrading an older building typically costs a fraction of the price of buying land and building new. Construction projects take years and don’t help tenants who find themselves homeless today. “It’s cheaper and more efficient to protect what we have,” he says.

Tyler Meredith, who until last year served as economic adviser to Prime Minister Justin Trudeau and helped co-author the housing strategy in 2017, says that an acquisition program for affordable housing wasn’t explored “the way it probably should have been” at that time. “Today in 2023, we need to rethink the scale of the tools, and how we are using them, and the toolbox,” said Mr. Meredith, now a fellow at the Maytree Foundation, an anti-poverty organization.

Government-funded acquisition programs to preserve existing affordable housing are common in many other countries, including France, Denmark and Australia. In the United States, low-income housing tax credits can be used to acquire housing.

In Canada, a number of cities and provinces have created their own acquisition programs to take affordable units out of the private market and turn them into community housing. Toronto now has an $21.5-million acquisition program to help non-profits, co-operatives and community land trusts acquire multiunit buildings with the guarantee of affordability for 99 years. Montreal has a new program giving the city right of first refusal to purchase buildings that go up for sale in designated neighbourhoods.

In January, British Columbia created the $500-million Rental Protection Fund that pre-approves community housing groups for down payments and capital support so they can quickly buy private properties with affordable rents when they come on the market. Katie Maslechko, the CEO of the fund, says 22 non-profit organizations have been pre-approved, with a total of 1,400 units currently being considered for purchase.

When the buildings are sold to non-profits, Ms. Maslechko says, “there is no need to jack up the rents, or completely revalue the property and displace people in the process.” Ideally, she says, non-profits will also be able to leverage properties over time to expand their presence in the housing market.

A national acquisition program could work in a number of different ways. The national housing strategy could add the option of purchasing existing properties to current funding. Mr. Meredith suggests that the government could also maintain ownership of land or buildings and then lease them to community groups to build and operate affordable housing.

Another proposal pitched to Finance Minister Chrystia Freeland’s office by a group of housing advocates and community foundations would see a pilot project combine equity from private and philanthropic sources with government loans to kickstart a national fund that would help approved housing charities buy properties.

An August report involving housing advocates, researchers and industry representatives, and co-authored by Michael Brooks, the CEO of REALPAC, a national trade association representing Canada’s real estate and development companies, also recommended a property acquisition strategy. In addition to capital grants and debt financing to help community groups make purchases, the report proposed a capital-gains tax break to owners who sell their buildings to non-profit groups.

Any new acquisition program needs to work quickly so non-profits can compete as buyers in an active private market, says Sarah Button, executive director of the Centretown Citizens Ottawa Corporation. The CCOC, she says, has the capacity to expand but not the cash at the ready to buy new properties when they come up for sale.

The last time the group purchased a private building was in 2010. Today, the average monthly rent in the 29 studio apartments in that building is $824, says Ms. Button, well below the average rate for studio apartments in the area.

What’s more, she says, private developers, who receive loans through the housing strategy for purpose-built rentals, are only bound to keep a certain percentage of rents affordable for a limited period of time.

“We are in this for the long haul,” she says. “We protect housing outside of market forces in perpetuity.”

The longer the government waits to act, experts point out, the more the country’s affordable housing stock shrinks. Renters are already significantly more likely than homeowners to be paying unsustainable housing costs, and living in overcrowded, unsafe or tenuous circumstances.

“Rents have been going up at fantastic rates over the last six years, and people are getting evicted into homelessness,” says Carolyn Whitzman, an expert adviser with the Housing Assessment Resource Tools project at UBC. “An acquisition program is a way to stem the tide of homelessness.”