We Need Better Protections for Renters in Budget 2024

The Finance Minister has signaled that the next Federal budget will be released on April 16th. She has indicated that the topline focus of the budget will primarily be on affordability issues, which should come as little surprise to anyone, but as always, the devil will be in the details.

Amid the current affordability crisis, it is clear that far too many Canadians are feeling the pinch, especially so among people who do not currently own their home. The Canada Mortgage and Housing Corporation (CMHC) has indicated that Canada has the lowest national vacancy rate since they began tracking this data in 1988, with only 1.5 percent of rental units sitting vacant. CMHC data shows that the average rent for a two-bedroom purpose-built apartment rose by 5.6 percent in 2022 and eight percent in 2023. These are exceptional numbers when compared to the average year-over-year increase of 2.8 percent between 1990 and 2022.

We are clearly in a position where the demand of housing is outstripping the supply. There’s a lot of issues that have compounded this problem. Sky-high housing costs themselves drive more people to stay in rental housing longer. High interest rates are making potential new homeowners second-guess when they should considerer buying. Immigration levels are high, and retirees are looking to downsize. All of which are compounding an already-tight market further. A study from the Centre for Urban Research and Education at Carleton University concluded that for every new affordable rental unit built between 2011 and 2021, 11 affordable rental units were lost. One-third of Canadians are renters, and that demographic is growing twice as fast as homeowners.

Another driver of rental costs has been the financialization of rental units. A significant portion of rental units are being bought up by real estate investment trusts (REITs). REITs now account for somewhere between 20 and 30 percent of all rental units in Canada, and they are driving up rental costs. Short-term rental units, popularized by companies like AirBNB and Vrbo, are also having a significant effect on housing availability and rental costs. A recent report from Desjardins shows that for every one percent increase in the share of short-term rentals, there was an associated 2.3 per cent increase in rent costs.

We clearly need to do more to stop the financialization of rental markets that are pushing far too many Canadians to the breaking point. A good starting point would be to re-establish the co-op housing program that was axed by the Harper Conservatives and eliminated 800,000 affordable homes. While plenty of blame can be tossed towards the current Liberal government for its inability to get more homes built, the Harper government’s elimination of the federal co-op housing program has clearly had a significant impact on where we are today.

Further to this, the next Federal budget should establish a fund to protect renters to help not-for-profit organizations buy affordable housing when it’s on the market. The B.C. government recently established the Rental Protection Fund. The concept is to provide one-time capital grants for not-for-profit housing organizations to buy existing housing stock, which allow those organizations to provide renters housing at below-market rates. This would alleviate some of the pressures of the costs associated with the overheated market for those with more modest incomes. The program, while still in its infancy, has the goal of securing up to 2,000 units.

Clearly large developers, REITs and short-term rental housing do not have the best interests of renters in mind. In Toronto, eviction notices for renters increased by 77 per cent last year. Our country is in desperate need to both rebalance housing stock and build more. We’ll see if the government recognizes this dire need and does enough to help renters in the upcoming budget.