How the “Canada Rental Protection Fund” will protect Canadians from steep rent increases
The federal government has introduced the Canada Rental Protection Fund as a key measure in its 2024 budget with the goal of “protecting and expanding affordable housing.”
Deputy Prime Minister and Finance Minister Chrystia Freeland delivered the budget Tuesday afternoon with a focus on “fairness for every generation.”
One of the barriers Ottawa aims to tackle is millennials and Gen Z’s access to affordable housing.
Budget 2024: Fairness for Every Generation — is a plan to build more homes, faster, make life cost less, and create more good jobs and economic growth shared by all. Because every generation deserve a fair chance at success.
— Chrystia Freeland (@cafreeland) April 16, 2024
“While we work urgently to increase the supply of housing, our government is taking action to bring relief to Canadians—especially younger Canadians—by making it more affordable to rent or to buy a new home,” said Freeland in the House of Commons.
“This starts with better protecting renters from steep rent increases and renovictions.”
Prime Minister Justin Trudeau announced the Canada Rental Protection Fund earlier this month. It will provide $1 billion in loans and $470 million in contributions to help affordable housing organizations acquire properties and preserve rent at stable levels, while preventing those units from being redeveloped into luxury condos.
But how effective will this program be in keeping Canadians from being priced out of their rentals?
The Rental Protection Fund has already been operating in BC for a little over a year. Daily Hive spoke with its CEO, Katie Maslechko, about how the program has helped renters on the West Coast.
How does the Rental Protection Fund work?
BC’s fund essentially provides non-profit housing organizations with capital to help them buy existing, occupied, purpose-built rental buildings with the aim of maintaining their affordability.
Maslechko says the properties these non-profits try to acquire are usually occupied by renters who have lived there for decades.
“We like to refer to it as secured affordability,” she explained. “So, if any of those tenants that are currently living in those units were to have to leave tomorrow, or their rent be elevated beyond what they can afford, like what would they be facing in the private market?”
According to the CEO, units acquired by affordable housing organizations typically rent for $1,000 less than how much they’d be going for in the private market.
The fund aims to fill the equity gap created when a building is up for sale.
“We can legislate rent controls until the end of time, or we can start by chipping away at the inherent economic drivers that motivate that in the first place,” said Maslechko.
How successful has the Rental Protection Fund been in BC?
Maslechko says the program has gone beyond their expectations in the province.
“We thought there would maybe be 20 non-profits or co-ops interested in participating and so far, we’ve already pre-qualified 35 applicants and we have about 100 applications total that are either working their way through or are in the process of being reviewed,” she said.
She adds that the 35 pre-qualified affordable housing non-profits have started bringing properties forward since about September last year. The fund has a pipeline of about 2,000 units in the works, and has approved around 900 of them.
What will the $1.5 billion in government funding go towards?
The funding will allow the Rental Protection Fund model to be scaled nationally to help renters not just in BC, but also in every province across the country, says Maslechko.
“We’re also losing this housing supply stock at a rapid pace, and so it ensures that we’re able to keep those units and keep those rents so that those renters can stay in place,” she explained.
The CEO is excited about the $1 billion in loans because of the level of predictability it’ll give organizations.
“Non-profits can go and find the right acquisition for them with certainty of what that debt is going to look like and what their mortgages might look like on a given property,” she said.
But more importantly, Maslechko adds that the predictability of the interest rate on the loans will help attract private capital into the program. This includes foundations, philanthropic donors, or social impact investors that are interested in contributing.
The federal government didn’t provide specifics on how the funding will be split up among provinces during the tabling of the budget on Tuesday.
How does the Fund prevent affordable rental buildings from going to profiteers?
Maslechko explains that equipping non-profits with the ability to purchase these properties brings a new buyer into the market who can go toe-to-toe with profiteers.
She says that the organization has seen many cases where private landlords who were selling their properties have made the active choice to select non-profits over private sector buyers.
“Private or mom-and-pop landlords who have owned these properties for decades have a good, close relationship with their tenants and want to see them be able to remain in place if they can,” said Maslechko.
The CEO added that there are plenty of stories from renters who have been saved by the Fund.
She recalls the story of one non-profit organization that purchased a building and set up meetings with the tenants to talk about how the transition of ownership would work.
Maslechko says the CEO of that organization had a lineup of over a dozen people who wanted to share their stories.
One of whom was a 75-year-old tenant who thought he was two years away from retirement until the building went up for sale.
“He was so sure and absolutely terrified that he was either going to never retire or, even more likely, end up homeless because he was not going to be able to find anywhere to afford to live,” said Maslechko. “Just the immense impact that the non-profit buying that building has had on his life — it was so beautiful.”
Are there any challenges the Fund could face expanding nationally?
Maslechko says one of the biggest hurdles that she hopes the government’s budget announcement can solve is that there aren’t any existing programs dedicated to helping non-profits acquire these properties in terms of process and funding.
“It’s going to be critical that the process itself and how those funds are accessed, how quickly and efficiently they can be accessed… can actually scale,” she said.
Because these rental properties already exist, with most of them occupied by tenants, Maslechko stresses that it’s critical that the funding is able to flow seamlessly and in a timely fashion.
“It’s the difference between waiting two months for an approval instead of eight months… that is a type of timeline impact that could result in those units having to be surrendered back to the private market,” she explained.
Under this year’s budget, the government has promised to introduce “new flexibilities” to the Federal Community Housing Initiative to ensure eligible housing providers can access funding to maintain affordability.
What do you think of the new Canada Rental Protection Fund? Let us know in the comments.
Follow Channels and Categories