Canadian Prime Minister Justin Trudeau speaks at an event hosted by the Hellenic community in Toronto on March 25.ARLYN MCADOREY/Getty Images
Prime Minister Justin Trudeau announced a handful of measures aimed at helping renters that will be part of next month’s 2024 budget, including a $15-million tenant protection fund and a Canadian renters’ bill of rights.
Mr. Trudeau and Finance Minister Chrystia Freeland made the announcement Wednesday in Vancouver.
The dollar amounts involved are relatively small, but government officials say this will be the first of several announcements over the coming weeks that will unveil specific elements of the April 16 budget.
“We’re bringing forward a number of measures today to focus on renters, but over the next weeks, we’re going to be talking about all the different things we’re doing to bring in fairness for young people and for all Canadians,” Mr. Trudeau said.
The communications plan was described to The Globe and Mail by two senior government officials. The Globe is not identifying them as they were not authorized to comment on the record about the plan.
The government’s hope is that by dropping budget details in advance it will be able to garner more attention for the measures being rolled out, rather than have them all released in a crush of stories on budget day.
Budget contents were once considered such closely guarded secrets that Global TV’s Doug Small faced criminal charges in 1989, later thrown out, for reporting on a budget leak.
In the years since, it has become increasingly common for federal governments to hint at broad themes in upcoming budgets or to leak specific items to the media.
Wednesday’s announcement says the $15-million tenant protection fund would provide money for provincial legal aid organizations “to better protect tenants against unfairly rising rent payments, renovictions or bad landlords.”
The renters’ bill of rights, which Ottawa is pledging to develop with provinces and territories, would require landlords to disclose a clear history of apartment pricing and create a countrywide standard lease agreement.
The third part of Wednesday’s announcement is to amend the Canadian Mortgage Charter, a collection of guidelines first announced in the fall economic update, so that it calls on landlords, banks, credit bureaus and fintech companies to take rental history into account when assessing credit worthiness.
The government’s rhetoric included a clear effort to appeal to younger Canadians, with specific references to millennials and Gen Z.
Mr. Trudeau said some financial institutions already take rent payment history into account while assessing a customer’s credit, but the goal is to broaden its use as a way of helping renters who want to enter the housing market.
He acknowledged the policies will require negotiation with the provinces and that there are technical challenges given that some rental payments can be exchanges between family members or housemates.
“Maybe the recordkeeping and the documentation isn’t quite there in a way that would make this easy. So, there is going to be an implementation period,” he said. “We want to create a systematic approach that will cover the entire country that will allow people to get credit for the monthly rent payments so that they can build their credit score and have an easier path toward eventually getting a mortgage, owning a home and continuing to build a more prosperous life.”
The Canadian Bankers Association said in a statement that the banking industry will assess the impact of the new policy as more details are revealed.
The move to get rent payments included in credit ratings was applauded by groups like Generation Squeeze and Credit Canada.
UBC associate professor Paul Kershaw, the founder of Generation Squeeze, presented to the federal cabinet retreat last summer. While he didn’t propose this particular policy change, he said he urged cabinet to develop policies to address long-standing problems in the economy and in government policies that have resulted in the deck being “stacked against younger generations.”
He said the change in credit rating calculations is one of many needed to ensure Canada works for all generations, and not just those, largely older cohorts, who are already homeowners.
Bruce Selley, CEO of Credit Canada, said he doesn’t see downsides to the policy change although there may be some logistical hurdles in implementing it.
He said homeowners have had a “leg-up over renters” in their credit scores even though renters have similar rigour in paying their rent and the result has been that renters are paying much higher interest rates on any loans they have.
“We provide counselling to almost 10,000 Canadians a year and it is devastating to see how much interest they have to pay to carry debt, compared to someone with a strong score,” he said.