Hits and misses on affordability for renters in the 2023 federal Fall Economic Statement

November 23, 2023

Image of apartment block

On November 21, 2023, the federal government released its 2023 Fall Economic Statement (FES), which included announcements of several new housing initiatives. Of particular note were the announcements of new funding for affordable housing, and measures to support the enforcement of commercial short-term rental regulation. These initiatives are welcome, but a lot more is needed to address the housing crisis and realize the right to housing for everyone in Canada. Here we highlight what the major housing announcements in the government’s 2023 FES means for affordable rental housing. 

New funding for affordable housing

Canada is in an escalating housing affordability crisis.  A recent study shows that to meet current and projected housing needs, over the next decade Canada needs to build:

  • 1 million new public, non-profit, and co-operative rental homes.
  • 3 million other new homes that are affordable to very low and low income households.
  • 2 million new homes that are affordable to moderate and median income households.

We are pleased that the government has announced new funding in its FES to build 7,000 more public, non-profit, and co-operative homes over the next five years.  These are the types of housing that are affordable to those most in need in Canada.  We hope this will be only the first step, as 7,000 homes represents a tiny fraction of the 1 million such homes that Canada needs. 

We are disappointed that the government has not announced any other funding to build more affordable homes.  Instead, while $1 billion will be spent on those 7,000 homes, an additional $15 billion will be spent to finance construction of homes that are not affordable to the people who need them. This approach is based on a theory called “filtering,” which posits that building new unaffordable housing frees up affordable housing for the people who need it. The evidence shows that filtering is not a meaningful method for producing affordable rental housing.. In reality, it takes up to 40 years for new unaffordable supply to produce meaningful benefits.  In fact, in some cases, building new unaffordable homes actually raises the costs of existing homes. 

We urge the government to dramatically increase investments in genuinely affordable housing in both the public and private sectors. 

Supporting the enforcement of commercial short-term rental regulation

Building new affordable homes is only one part of what is needed to tackle the housing crisis in Canada. We also need to do a better job of preserving the affordable homes we already have. Currently, for every affordable home being built, two are being lost

One major cause of the disappearance of affordable homes is the surge in commercial short-term rentals (STRs), which has taken much-needed supply out of the rental market.  Investors are taking homes off the market to rent them to tourists instead of to long-term renters.  In British Columbia, for example, STRs were responsible for 19.8% of the rent increases which households experienced in a two-year period.  Municipal and provincial governments have started to recognize the extent of the problem, and to enact regulations that limit commercial STRs. 

In response to this problem, the government has announced that it will deny income tax deductions for expenses incurred to earn income through illegal STRs.  More importantly, the government has announced $50 million in funding to support municipalities in enforcing STR regulations. This is a welcome initiative because municipalities often do not have the resources to adequately enforce these regulations. The funding will be available to municipalities with strict regulatory regimes that are having a significant and measurable impact in returning short-term rentals back to the long-term housing market. We are pleased to see the federal government taking on a leadership role in the fight to keep affordable homes available to be lived in, and through an evidence-based approach. 

Canada is also losing affordable homes to demolition and redevelopment.  Municipalities have recognized this problem too, and have started to enact demolition control and rental replacement rules requiring that developers who demolish affordable homes must replace them with the same number of new affordable homes. Municipalities are also buying buildings at risk of redevelopment and turning them into public and non-profit housing. We urge the federal government to also take a leadership role in supporting and funding these initiatives. 

Finally, Canada is steadily losing affordable homes to excessive rent increases. Across Canada, rent regulations are weak or nonexistent and do not adequately protect renters. Every province and territory must take action. We urge the federal government to take a leadership role and support the implementation of genuine, effective rent regulation across Canada. 

New protections for homeowners facing eviction, but not for renters

Renters and homeowners alike are struggling with their housing costs, and face eviction when they fall behind on rent or mortgage payments. To protect housing security and respect the right to housing, eviction must always be treated as a last resort.  Instead, every day people across Canada continue to be evicted unnecessarily when reasonable alternative measures could be taken to resolve issues. 

We are pleased that the federal government has announced new rules to protect homeowners from unnecessary eviction through foreclosures. Banks will be required to work with struggling homeowners to provide tailored relief and ensure payments are reasonable, and to “proactively reach out to vulnerable borrowers and make full use of available tools to quickly and efficiently support borrowers through difficult times.” We urge the government to ensure that the new rules require that banks treat eviction as a last resort. 

We also urge the federal government to take a leadership role in providing the same protections against eviction to renters.  The majority of people facing housing insecurity in Canada are renters.  Provincial laws currently do not treat eviction as a last resort, and all too often, struggling renters lose their homes without being given an opportunity to catch up on their rent. Many of these renters will face housing insecurity and even homelessness as a result. The eviction crisis must end, for renters as well as homeowners.

More action is needed to address affordability 

While the government has taken some bold steps towards realizing the right to housing for all people in Canada,  much more still needs to be done.  

We need to build affordable homes on a whole new scale.  

We need to protect existing affordable homes from loss to redevelopments and rent increases as well as to STRs.  

We need to start treating eviction as a last resort.  

In its FES, the federal government has taken a few steps towards these necessary goals.  We hope that it will take many more. We continue to advocate for greater involvement of all levels of government to act with urgency to solve Canada’s housing crisis. 

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