Affordable housing for whom? Federal dollars finance more unaffordable rentals
In this election a problem that commands attention (for obvious reasons) is lodging. In fact, if anything has been learned from the pandemic, it is that the government has primary responsibility for 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 – implements a range of National Housing Strategy (NHS) initiatives to provide âaffordable housingâ.
The NHS is billed as a $ 70 billion plan on which CMHC itself plans to spend $ 3.7 billion over 10 years, from 2018-19 to 2027-2028. However, the latest report from the Parliamentary Budget Officer suggests that funding for CMHC’s support for programs addressing the housing needs of low-income households has declined by 15%. This as the affordability gap will increase by 24% and households in need of housing will rise to 1.8 million over the next five years.
Funding for housing programs has now become the centerpiece of NHS funding, with the Rental Construction Funding Initiative (RCFI) alone accounting for 60% of programs aimed at increasing housing supply. Fairly good, but what type of accommodation?
RCFI provides low cost loans to developers with a minimum loan of one million to a maximum of 100 percent of the cost of the loan. Home loans to developers from coast to coast show that billions of dollars are going into the pockets of developers to build totally unaffordable homes!
In Halifax, $ 115.5 million went to BANC Investments where 76 of the 324 units are said to be âaffordableâ with rents ranging from $ 1,455 to $ 1,844 per month! In British Columbia, $ 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 the opposite. Rents based on 30 percent, or 70 percent of 30 percent of median household income (21 percent) – as Steve Pomeroy’s research shows, translates to rents 31% and 41% above median market rents in cities like Vancouver and Toronto.
CMHC defines affordable housing as households that pay no more than 30 percent of household income in rent, but use the median household income itself as a basis – two completely different things! This will only target middle-income people, leaving out those low to moderate incomes who need affordable housing the most.
Even the period during which affordability must be maintained is extremely minimal – in most cases 21 years. The development of New Westminster requires that rents remain âaffordableâ for 10 years.
The general guidelines of the program themselves mention âat least 10 yearsâ.
All public funds that finance the creation of âaffordable housingâ must support tenants in core housing need. Most people living in core housing need less than $ 30,000 a year.
By CMHC’s own definition, for anyone earning less than $ 30,000, the rent should not exceed $ 750 / month.
Developments that are supported must be required to ensure affordability in perpetuity. This is not a short-term crisis. It is reprehensible to let the development community reduce these units to market price after 10 or 21 years.
CMHC needs to develop a not-for-profit acquisition strategy. Acquisition of rental properties by investors and property investment funds is destroying affordable housing at a much faster rate than its creation. Affordable housing needs real solutions and resources must target those in need!