Rental-protection funds could help to improve the supply of affordability units
Colleen Frank was 72 years old when she was evicted from the two-bedroom condo she had rented in Chilliwack, B.C., for more than two decades.
Ms. Frank knew everyone in the 37-unit building. For years, she had served as the unofficial superintendent, earning $800 a month for cleaning public spaces and handling maintenance calls.
Together with her government pension benefits, she’d been getting by. Now she was being told that the condo’s owner’s son urgently needed her apartment.
By the summer of 2022, she’d lost her caretaker job and her home, at a time when rent was rising quickly in almost every Canadian city.
“I had nowhere to go,” Ms. Frank said, “And no money to go with.”
One way to rapidly increase the stock of affordable housing needed for low-income Canadians such as Ms. Frank would be to buy up and preserve what already exists, before those homes are lost to an escalating housing market.
After years of lobbying by housing advocates, Canada is now following the lead of other countries that have used this strategy to balance their housing supplies.
On Thursday, Prime Minister Justin Trudeau announced the creation of a $1.5-billion rental protection fund that will provide a combination of loans and grants to help non-profits buy affordable rental apartments when they go up for sale.
That fund is long overdue, affordable housing groups say, because the country is losing lower-cost rental properties – to renovictions, tenant turnover and demolitions – far faster than it can build them.
“It’s a lot more attractive to cut ribbons at new buildings,” said Terry Cooke, the chief executive officer of the Hamilton Community Foundation, one of the groups involved in the lobby effort. “But it’s the classic hole in the bottom of the bucket problem. And if you don’t patch that hole all the new money and new development in the world will not make a material difference.”
According to U.S. research, preserving affordable housing in expensive urban markets can be between 50 and 70 per cent cheaper than the cost of new construction, and non-profit housing operators keep rents lower for the long term. But private real estate sales often move too quickly, and require too much financing, for non-profits to jump in with competitive bids.
The new federal program will deliver $1-billion in loans and $470-million in grants. It is similar to British Columbia’s Rental Protection Fund, which, since it opened applications last summer, has been flooded with interest from both sellers looking to off-load their rental buildings and housing groups wanting to buy.
“We already have 2,000 units in the pipeline,” said Katie Maslechko, chief executive of the fund, which received $500-million from the province and has already provided grants to help non-profits purchase three properties this winter. “It has just blown us away.”
Canada needs 1.7 million more homes that are affordable to households earning below the median income, according to a 2023 report by University of British Columbia housing researchers. And the country is far behind peer nations, such as the Netherlands and Britain, in its supply of subsidized and supportive housing.
Meanwhile, the country’s supply of existing housing available at deeply affordable rents – that is, the $750 a month considered sustainable for families earning $30,000 annually – is vanishing quickly. According to an analysis of census data by housing consultant Steve Pomeroy, a senior research fellow for the Centre for Urban Research and Education at Carleton University, the country has been losing these units at a rate of 11 for every one that was built between 2011 and 2021.
The situation is even more dire in cities such as Winnipeg, where the ratio was 29 deeply affordable rental units lost for every one built in that time. In Hamilton, the ratio was 20 to 1.
The B.C. fund must work quickly, Ms. Maslechko said: there are hundreds of apartment buildings in the province, with thousands of affordable rentals, at risk of being lost because non-profits don’t have the capital to move fast enough to purchase the properties.
Average rents have risen beyond what many low-income – and even moderate income – Canadians can afford, driven in part by real estate investing, gentrification and a surge in demand from a growing population. Even as the federal government adds billions of new dollars to the country’s $82-billion national housing strategy in advance of the spring budget, it is facing criticism for increasing immigration when affordable housing is in such short supply.
A 2019 Canadian Centre for Policy Alternatives study of 795 neighbourhoods across Canada found that only 9 per cent had average one-bedroom apartment rents that were affordable to minimum-wage workers, meaning the costs were no more than 30 per cent of their incomes. The analysis was conducted before the pandemic spiked rents.
With low vacancy rates creating stiff competition for apartments, long-time tenants, such as Ms. Frank, often find themselves with few options when they face eviction. Their low rents simply no longer exist, and wait-lists for subsidized units are now so long that some non-profit housing providers say they have stopped taking names.
“We’re so fixated on adding new supply that we’re blind to existing affordable housing that is lost right before our eyes,” said Brian Doucet, the Canada Research Chair in urban change and social inclusion at the University of Waterloo.
To enable purchases, countries such as France and Finland have long turned to acquisition programs. A New York acquisition fund created 16 years ago has preserved more than 15,000 affordable units in the city, by offering housing providers a total of US$645-million in bridge financing.
In Canada, some cities and provinces have already created their own acquisition strategies. Montreal, for example, has given the right of first refusal to affordable housing providers when apartment buildings go up for sale, though the providers must match the prices of private real estate deals. Toronto has a $21.5-million acquisition program to help non-profits, co-operatives and community land trusts buy rental buildings, on the condition they guarantee affordability for 99 years. And there is also the acquisition fund started by the provincial government in B.C.
An acquisition fund helps non-profits purchase housing units and offer them at rents that are often less than half the going market rate. Those rents then rise more slowly than rents in the private market and become more affordable over time, said Jill Atkey, chief executive officer of the BC Non Profit Housing Association.
When non-profit housing organizations purchase private buildings, the tenants of those buildings get stable housing and are spared the worry of sudden evictions beyond their control, Ms. Atkey added. Two-thirds of evictions in Canada are motivated by landlords who want to sell, use properties for themselves, or perform renovations or repairs, according to an analysis by UBC researchers using Statistics Canada data.
More acquisitions would also help non-profits build capacity, so they have the equity to purchase even more properties and redevelop buildings that have reached the ends of their useful lives, increasing Canada’s depleted low-rent housing stock for the long term.
“Collectively, we need to come to an understanding that we had almost zero housing investments in this country for 25 years,” Ms. Atkey said. “And that bill is now due.”
In another example, in Kitchener, Ont., a co-operative of community groups, investors and local government collaborated to buy a 58-unit apartment building that had gone up for sale in the private market. Sean Campbell, the executive director of Union Co-operative, one of the groups involved, said the co-operative committed to maintaining the existing rents in the building, which were already about $500 lower than the city’s going market rent. When tenants do leave, rents can be raised in only 40 per cent of the units.
Many of the tenants have lived there for decades, according to Mr. Campbell. “By preserving these units, we are allowing people to stay in their neighbourhoods,” he said.
In addition to the federal fund, Mr. Campbell said there is a role for cities to play. “Municipalities have a long history of buying land to be ready so that when Amazon or Toyota comes knocking, they have the land to do a major employment project,” he said. “What we haven’t seen is acquisition at scale for affordable housing.”
After Ms. Frank was evicted, she lived in a windowless room in her son’s basement before she finally found a secondary suite in a renovated garage. A few months later, her new landlord said his daughter might need the space, possibly requiring Ms. Frank to move for a third time in a year.
“I put on the happy face, but it’s hard,” she said. Living with uncertainty is exhausting. “It’s on your mind all the time. You don’t get a break from it, you know.”
She can’t return to her old building in Chilliwack, even if a place opens up. She hears the units there are now renting for close to $1,800 a month.
Housing has become one of Canada’s most vexing and all-consuming quandaries. This article is part of a Globe and Mail series that examines the country’s affordability crisis, its myriad causes and prospective solutions.
This article was first reported by The Globe and Mail
