In the face of an ever-worsening housing crisis, governments implement programs and policies designed to produce new affordable housing. To evaluate the effectiveness of these policies, an important question to ask is: how affordable will the “affordable” housing be? Will the people who need it actually be able to afford it?
We know who needs affordable housing. Statistics Canada and the Canada Mortgage and Housing Corporation (CMHC) determine that a household is in “core housing need” if they spend more than 30% of their income on housing costs, or if they have to live in overcrowded or poorly maintained housing due to the lack of affordable options. Data shows that, of the households in Ontario that are in core housing need:
- 11% have very low income. These are mostly households receiving social assistance benefits. They generally cannot afford adequate housing in the private market, and most are living in inadequate and unaffordable housing due to a drastic shortage of public and non-profit housing across the country.
- 66% have low income, roughly the equivalent of one full-time minimum wage job.
- 21% have below-average but moderate income, roughly equivalent to the starting salary of a nurse or teacher.
- 1% have median income – the average income of households in the province.
- Almost none have above-average high income.
In 2020, the Ontario government adopted a Provincial Policy Statement which sets targets for producing housing that is affordable to low and moderate income households. This was an important step forward, because most Ontarians in core housing need have low incomes. It is essential that the government produce housing that meets their needs and is affordable to them.
In 2022, the Ontario government introduced a policy called “development charge exemptions.” In brief, when developers want to build new housing in a municipality, they have to pay fees to the municipal government. Under the 2022 policy, if a developer agrees to build “affordable” housing, the municipality is required to waive the fees. This is intended to incentivize developers to voluntarily build affordable housing.
A significant problem with the 2022 development charge exemption policy was that it did not follow the Provincial Policy Statement’s definition of affordable housing. Instead, the policy exempted development charges for any housing with rents no more than 80% of average market rent. Market-based definitions of affordability, such as this one, are widely recognized by experts as being flawed. As we all know, in a housing crisis, market rents have vastly outstripped what people can actually afford. Indeed, in Ontario, rents at 80% of the average market rent are not affordable to any low income households. This contradicted the Provincial Policy Statement which states that affordable housing should be affordable to both moderate and low income households.
On December 4, 2023, the government passed Bill 134, the “Affordable Homes and Good Jobs Act, 2023,” which will make housing produced through development charge exemptions even less affordable than it already is. The government states that Bill 134 is intended to bring these exemptions in line with the Provincial Policy Statement, but in fact it has done the exact opposite, by increasing the market-based definition of affordable rent from 80% to 100% of average market rents. These new rents will no longer even be affordable to most moderate income households.
Bill 134 has also added an income-based definition of affordability. However, this defines housing as “affordable” if it is affordable to households at the 60th income percentile for renter households. Those households are median income households, so housing under this definition will not be affordable to any low or moderate income households.
In our submission to the Standing Committee on Heritage, Infrastructure and Cultural Policy, we explain why Bill 134 would be a step backwards for housing authority. We urged the government to adopt our recommendations to make affordable housing affordable to the low income Ontarians who need it. Unfortunately, our recommendations were not taken up in Bill 134, but we will continue to advocate for solutions to the affordable housing crisis that will actually help those who need it most.