Facing criticism, Ottawa to reform affordable housing programs worth billions

The federal government is making changes to two of its biggest housing programs in the hope the move will speed up the construction and repair of badly needed affordable rental units. 

Last year, a CBC News investigation found many of the "affordable" housing projects under one of those programs had projected rents that were higher than the average in the local area. And critics called for a revamp of the other flagship, multi-billion-dollar initiative.

Now, housing advocates who have criticized the two programs in the past are taking a wait-and-see approach to the changes.

"I think that they're hearing from the public that the general public are very concerned, very upset about the lack of affordable housing across the country, no matter where you are, no matter where you fit on the housing spectrum," said Jeff Morrison, executive director of the non-profit Canadian Housing and Renewal Association.

The 2022 federal budget announced changes to the rental construction financing initiative and national housing co-investment fund programs, which together account for more than half of the money in the $72-billion National Housing Strategy.

The rental construction financing initiative, which provides low-cost construction loans to qualifying projects, was widely criticized for using a definition of affordability based on median incomes in the local area.

That ended up creating many rental units priced higher than the average rents in the area. Some units cost $1,500 per month or more, including at one apartment building in Moncton, N.B., a city where average rents last year were just $800.

The budget announced an "intent to reform" the program, including a goal to have "at least 40 per cent of the units it supports provide rent equal to or lower than 80 per cent of the average market rent in their local community."

Housing Minister Ahmed Hussen declined interview requests.

Asked at an unrelated announcement in St. John's last week about what the government was trying to achieve with the reform, Hussen said "it's some changes to make the program even more affordable."

National housing consultant Steve Pomeroy of the Canadian Housing Evidence Collaborative said the adjustment is more in line with other affordable housing programs offered by the Canada Mortgage and Housing Corporation. 

He thinks the government may be trying to wind down the program entirely, or change its focus from developers to non-profits. He said the rental construction initiative was needed when it was originally designed, but that "times changed."

Pomeroy said before 2015, few developers were building much-needed rental housing. According to his analysis, construction starts took off after that, but only about five per cent used the rental construction initiative.

"So if 95 per cent of the rental developers who are massively increasing their levels of participation didn't need it, OK, well why do we need the program anymore?" he said. "It was a good time to rethink and reset."

The federal budget also announced changes to the national housing co-investment fund, a $13.8-billion program for construction loans to mostly non-profit and municipal bodies trying to build affordable housing. 

The program has been criticized for being too hard to access and too slow to distribute funds, and the Parliamentary Budget Office identified it as spending only half its budget in its first three years. 

The budget promises to make the fund "more flexible and easier to access, including with more generous contributions and faster approvals." It also committed to spending all remaining funds by 2025-2026 to accelerate the creation of up to 4,300 new units. 

"We can deploy those dollars, get them out the door faster," Hussen said when asked about the changes to the fund. 

Morrison, of the Canadian Housing and Renewal Association, said Ottawa hasn't been able to do that so far, but his group is cautiously optimistic

"I think time will tell whether what the budget announced will match what the expectations are in terms of greater accessibility, a quicker rollout of the actual funds," Morrison said. 

Morrison said he thinks there's still a lot more to do. 

As of the end of 2021, the CMHC reported it had committed loans toward 22,300 new affordable units under the rental construction initiative, and 12,700 new affordable units under the national housing co-investment fund. The units are at various stages of planning or construction.

Renters need more options

Meanwhile, renters say there is an urgent need for more low-cost options. 

Cameron Towner, 22, recently decided to move out of an older flat he shares with three other people and into a better quality apartment in Halifax. 

After searching for months, he was able to sign a sublet. It will cost him less: he now pays $650 per month for a room in a four-person flat, and soon he will pay $600 per month for a room in a three-person apartment.

But during Towner's search for a new place he lost out on one potential apartment after someone else outbid him. Another apartment was given to someone in greater need. He's facing a vacancy rate of one per cent in Halifax. 

"The prices of rent for the quality of homes that I was seeing didn't match up to what I was familiar with," he said. 

Towner is a recent university grad and works a number of jobs, including gig work. He doesn't feel he has a lot of job security and he's disheartened at the price of rent, which eats up half his income.

"It's really hard to plan for the future," he said. "But also, where I'm going to live when I don't even know where my next paycheque is coming from."