The federal government is planning to launch a nearly $1.5-billion rental protection fund, aimed at providing loans and grants to non-profit organizations to buy rental units in a effort to keep prices affordable.
Prime Minister Justin Trudeau made the announcement in Winnipeg on Thursday morning alongside NDP Premier Wab Kinew.
Meanwhile, the Conservatives are calling for the House of Commons housing committee to be recalled to discuss worsening affordability of homeownership and a stark prediction from the Canada Mortgage and Housing Corporation (CMHC).
The loan portion of the fund is valued at $1 billion, while $470 million is set aside for contributions to non-profit organizations.
The government’s goal is to use the loans and funding to help non-profits and other like-minded groups purchase apartment buildings that go up for sale in order to protect lower rental rates for vulnerable renters.
Last month, federal NDP Leader Jagmeet Singh called for the creation of such a fund as part of what he called his “budget demands.” These demands included a national school lunch program, which the Liberals also plan on including in the April 16 budget.
British Columbia introduced a similar program to what is being planned at the federal level last year, with a budget of $500 million.
In February, B.C. used $125 million to purchase 290 rental units at a Coquitlam, B.C., housing co-op that will be owned and managed by a land trust. The trust said rents would need to increase, but on an income-tested basis.
This is the latest housing related budget announcement Trudeau has made in the government’s cross-country pre-budget tour.
Other announcements include $15-billion increase to the apartment loan construction program, $400 million more to the $4.4-billion Housing Accelerator Fund, and a new $6-billion infrastructure fund to help build things like water and sewage hook-ups for new housing builds.
This last item has become a source of tension with several provinces due to the requirement to mandate pre-approved zoning for fourplexes and other small multi-unit dwellings in residential areas.
Conservative Committee Call
Conservative housing critic Scott Aitchison, along with three of his caucus mates, Michelle Ferrari, Tracy Gray and Rosemarie Falk, are calling for a meeting of the housing committee to talk about RBC’s recent report on housing affordability.
The report says that interest rates pushed home ownership to its most unaffordable levels ever.
According to the report, a household with an average income needs to spend 63.5 per cent of its income to cover the cost of owning an average home.
“They’re spending record amounts of money and getting terrible results. If we graded them based on how much they spent versus how much they actually get built, well they’d be doing well, but instead they get an F for home construction,” Ontario Conservative MP Michael Barrett told Global News.
The CMHC expects a lower level of housing starts in 2024, with a slight improvement expected over the next two years. The CMHC attributes the slowdown in new builds to interest rates, and they do not expect construction from 2025-2026 to reach 2021-2023 levels.
This leads the CMHC to project that home costs could reach peak levels seen in 2022 next year, potentially surpassing those prices in 2026.
The CMHC also expects rental construction improvements to meet demand, as the high cost of owning a home means more people are renting for longer.
RBC economists estimate that Canada needs to build 315,000 homes annually up until 2030 to keep up with population growth and housing demand. Their report says that in recent years, Canada has completed 220,000 to 240,000 homes in recent years.
The Conservative housing pitch is to tie federal-municipal funding transfers to getting homes built. Essentially, a municipality that surpasses housing targets would get more money from Ottawa, and would receive less federal cash if targets are missed.
“Our plan to end the NIMBY [not in my backyard] policies of municipalities and cities, to create an environment where, lower taxes and lower inflation allows for builders to build again, is very different from Justin Trudeau’s, insistence on giving hundreds of millions of dollars in cash to cities that refuse to build any homes,” Barrett said.
— with files from Global News’ Darrian Matassa-Fung