Newsworthy Industry Hot Topics

Industry Hot Topics

Inside Canada’s one-time renter payment plan

The federal government has proposed several new measures to help make life more affordable for Canadians, including providing a one-time renter payment of $500 to an estimated 1.8 million people struggling to pay rent. According to an update in midSeptember from the Department of Finance Canada, the new plan will double the federal government’s Budget 2022 commitment and reach twice as many Canadians as initially promised.

This benefit is in addition to the Canada Housing Benefit currently co-funded and delivered by the individual provinces and territories. If passed, the payment will be available to applicants with an adjusted net income below $35,000 for families, or below $20,000 for individuals who pay at least 30 per cent of their income on rent.

Representatives of the rental housing industry have reacted favourably to the announcement so far, with advocacy groups such as the Federation of Rental Housing Providers of Ontario (FRPO) and the Canadian Federation of Apartment Associations (CFAA) having long advocated for a plan that links housing benefits directly with people rather than units.

“As the housing crisis continues and inflation makes life more unaffordable for many, we need solutions [like this] that work for all,” said Tony Irwin, FRPO President and CEO. “Let’s continue to work together to make sure that everyone can find a safe, affordable home in our community.”

If approved, the program will consist of a single tax-free payment of $500 that would be paid by the end of the year directly to low-income renters—those most exposed to inflation and experiencing housing affordability challenges. The payment will be available to renters with adjusted net incomes below $35,000 for families, or $20,000 for individuals. The Canada Revenue Agency (CRA) would deliver the money through an attestation-based application process. To determine eligibility, the CRA would require verification of the applicant’s income, age, and residency for tax purposes, and applicants would need to have filed their 2021 tax return, attesting that they: • are paying at least 30 per cent of their adjusted net income on shelter; • are paying rent for their own primary residence in Canada, which would include • the address of the rental property, the amount of the rent paid in 2022, and the landlord’s contact information; and • consent to the Canada Revenue Agency verifying their information to confirm eligibility.

Additionally, the one-time top-up would not reduce other federal income-tested benefits, such as the Canada Workers Benefit, the Canada Child Benefit, the Goods and Services Tax Credit, and the Guaranteed Income Supplement.

Report identifies inequities in Ontario rental process

The majority of consumers and realtors in Ontario believe the rental process suffers from discrimination, according to new research from the Ontario Real Estate Association (OREA) in partnership with Ipsos. Looking at diversity, equity, and inclusion in housing, the Fighting for Fair Housing report found that 93 per cent of Black realtors and 60 per cent of all consumers surveyed believe that discrimination exists in the rental process, while four in 10 realtors said they’ve seen a rental deal fall through due to discrimination.

“There is a saying in real estate: today’s renters are tomorrow’s homeowners. For disadvantaged communities who have a hard enough time finding a great rental in a thriving community because of all the obstacles they face along the way, the dream of home ownership is just that – a dream,” said 2022 OREA President Stacey Evoy. “We cannot hope to solve Ontario’s housing affordability crisis without addressing the systemic racism that undermines fair and equitable access to homes across the housing spectrum.”

Through research and consultations with brokerages, REALTORS®, government officials, regulators, consumers, sector-related organizations, and Ontarians, the Fighting for Fair Housing report makes 19 recommendations to eliminate racism and inequality in real estate and the rental process. These recommendations include: • Advocating for a review of Ontario Residential Tenancies Act (2006), with the goal of improving access to affordable homes for disadvantaged communities • Reducing government-imposed costs on new rental projects, including duplexes, triplexes, and walk-ups • Building 99,000 community housing units over the next decade, to clear the current backlog and accommodate future growth • Encouraging expansion of affordable homeownership programs for disadvantaged communities, including rent-to-own programs

“As the rising cost of housing and lack of supply continue to push prospective buyers out of the market, homeownership remains out of reach for many – and disadvantaged communities are at risk of falling even further behind. Building more homes alone isn’t going to improve accessibility to housing for BIPOC and LGBTQ2S+ communities,” said Davelle Morrison, Broker at Bosley Real Estate Ltd. and Chair of OREA’s Presidential Advisory Group on Diversity, Equity, and Inclusion. “As professionals in the industry, we have a unique opportunity to help more people in our province find a place to call home. The Ontario Government also has a key legislative role to play, especially when it comes to increasing equity and reducing discrimination in Ontario’s rental market or offering new, affordable ownership programs.”

In 2020, OREA struck the Presidential Advisory Group (PAG) on Diversity, Equity, and Inclusion (DEI) to better understand, address, and dismantle systemic racism in Ontario’s real estate and housing sectors. Through this work, the PAG identified three areas for action that seek to change policy, perceptions and attitudes around sector systemic racism through education, advocacy, and research. One early achievement to emerge from this work was the addition of a discrimination provision within the new Trust In Real Estate Services Act (TRESA) Code of Ethics, which explicitly requires compliance with the Ontario Human Rights Code. This change is a direct result of the PAG’s work and recommendations. OREA will also be taking steps to review internal governance structures, board selection processes, policies, and more in order to increase BIPOC in leadership positions within real estate associations.

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Alberta set to divest social housing portfolio

The Alberta government is reaffirming plans to divest much of the provincially owned social housing portfolio through transfers to municipal or community-based operators and the sell-off of up to 200 units. A newly released asset management framework also hints the government will facilitate new supply either through intensification of some of its existing holdings or underwriting more affordable units in new mixed-income and mixed-use developments, but few details have been revealed ahead of the launch of an Affordable Housing Partnership Program, which if promised for this fall.

The asset management framework sets out the criteria for transferring, selling or retaining the Alberta Social Housing Corporation’s approximately 3,000 units. It follows from the provincial government’s announced intention in its 2021 affordable housing strategy to transition from “significant owner and operator of housing stock” to a more indirect role as a “regulator and funder, enabling and facilitating partnerships and collaboration”.

Under the criteria, transfers would be contingent on: assets being in “fair or good condition”; new owners possessing “the capacity to own, manage and leverage the equity in the property”; and the building continuing to operate as affordable housing for at least 20 years. Assets would have to be “vacant, significantly underused or no longer functional for affordable housing” and located in an area of high supply or low demand for affordable housing before they could be sold.

It’s projected that fewer than five properties will be sold in 202223. However, the 2022 provincial budget forecasts $90 million will be realized from sales over the next three years. This is earmarked to be reinvested in social housing.“Every decision about our assets will focus on how to best serve the housing needs of Albertans with low income,” declared Josephine Pon, Alberta’s Minister of Seniors and Housing. “We will protect vulnerable Albertans, get the best value for taxpayer dollars and strengthen the long-term sustainability of the housing system.”

Average rent eclipses peak in September 2019

The national average rent in Canada reached $1,959 in August, topping the September 2019 peak by a few dollars according to the Rentals.ca and Bullpen Research & Consulting latest National Rent Report.

“On a national level, average rents in August topped the pre-pandemic record high from the fall of 2019, with prospective tenants looking at properties that are $200 more expensive on average than a year earlier,” said Ben Myers, president of Bullpen Research & Consulting. “With several economists calling for an extended ownership housing market correction, demand has shifted dramatically to the rental market, which is significantly undersupplied in many major Canadian municipalities. Rentals.ca pageview data suggests rental demand is up by nearly 40 per cent from last August nationwide, and 70 per cent from the locked-down August 2020 marketplace.”

In addition to interest rate hikes from the Bank of Canada dissuading Canadians from buying houses, the rental market has been further crowded by booming immigration, students returning to university, and workers moving back to city centres. Since last August, the national average rent has increased by 11 per cent overall, while rents have gone up by more than 20 per cent in the following five cities: London, up 26.5 per cent to $1,979; Calgary, up 24.7 per cent to $1,751; Vancouver, up 24.4 per cent to $3,184; Toronto, up 24.2 per cent to $2,694 and Hamilton, up 21 per cent to $1,961.

Toronto finished second on the list of 35 cities for average monthly rent in August for a onebedroom at $2,329 and second for average monthly rent for a two-bedroom at $3,266. Year over year, average monthly rent in August for a one-bedroom in Toronto was up 17.1 per cent and up 24.3 per cent for a two-bedroom.

At the provincial level, British Columbia had the highest average rents for all property types at $2,578 per month in August, an annual increase of almost 24 per cent. Nova Scotia had the second highest average rents at $2,380 in August with a year-over-year increase of over 43 per cent. Ontario was close behind with August average rents at $2,367, an annual increase of almost 16 per cent. Quebec average rents were $1,732 in August, up 6.3 annually, while Alberta average rents rose almost 12 per cent year over year in August to $1,349. Saskatchewan average annual rents also rose almost 12 per cent in August to $1,01. Manitoba average rents were virtually unchanged in August, up 0.8 per cent to $1,396.

Other key takeaways:

• The total number of listings on Rentals.ca is higher than one year ago, with the average listing getting 38 per cent more pageviews, suggesting there is significantly more demand. • The average rent for condo rentals increased dramatically this August in

Vancouver, up $1,319 a month to $3,651 and up from $2,332 in August 2021 • In Toronto condo rents have gone up $892 a month to $2,945 from $2,053. • The national average rent for single-family

homes in August was $3,061 per month, up 13 per cent over August 2021. • Rents for the largest units in the market continue to see higher annual appreciation than smaller suites. It is possible more upper-middle class renters are in the market than in previous years because so many Canadians have been shut out of home ownership with higher interest rates. • Ontario experienced strong rent growth in 2019, but during the pandemic, rents in the province plummeted, Rents for two-bedroom apartments in Ontario declined by 8 per cent from August 2019 to August 2020. Fast forward to this August, two-bedroom apartments in Ontario have increased by 13 per cent annually, while one-bedroom apartments have increased by 8 per cent. One-bedroom rental apartments have a lower rent in Ontario in August ($1,956 per month), in comparison to three year earlier ($2,052 per month).