While housing may appear to be an issue that would distinctly fall to provinces and municipalities, it is a complex intertwining of responsibilities and programs that involves all levels of government, non-profits, and economic markets. It is an area that affects all Canadians and concerns far ranging ideals like equity, dignity and human rights. Canada’s current housing system is a result of policies and actions of all layers of government. It is a ‘system’ rather than the housing market (economics) or housing policy (programs for low-income and the homeless population) because all of these things contribute to governments’ role in supply and distributing housing to its citizens (Hulchanski, 2006). This paper outlines challenges, concerns and multi-government issues of cooperation and contention with housing policy in Canada and provides some recommendations for policy directions.
KEY ISSUES AND CHALLENGES
Home Ownership
One of the main issues in the area of housing policy is that the federal government housing policies are largely aimed at market mechanisms that incentivize home ownership above other forms of housing (rental or social need) (Hulchanski, 2006). Some examples include, the 2009 first-time home buyers tax credit which allows for a non-refundable federal income tax credit for the principal residence for first time buyers, and the Home Buyers’ Plan that allows first time buyers to withdraw money from RRSP’s, tax free, to assist with home ownership. Of course, the largest and most expensive federal housing subsidy is the non-taxation of capital gains on Canadians principal homes (Chisholm and Hulchanski, 2019).
While it was mainly federal policies that encouraged home ownership, provincial and municipal policies in the 1990’s, like weak rent control and exclusionary zoning, discouraged renters (Rozworski, 2019). Additionally, the provincial legislation in the 1970’s that allowed condominiums as a form of home ownership contributed to a lack of rental housing. Previously, high and medium density zoned residential areas were exclusively rental properties. As condominiums are more profitable than rental properties, condo developers easily purchased and developed more of these zoned areas (Hulchanski, 2006).
While there is nothing inherently wrong with incentivizing home ownership, current financial and housing market circumstances are increasingly making this goal infeasible and it fails to ensure fair and adequate distribution of housing. For the last decade, as housing prices have increased, there has been a corresponding increase in housing inequality. Globalization has led to a more national and international housing market as opposed to former local markets. Increasing speculation and investment in real estate (without actual residence) have escalated the problem (Chisholm & Holchanski, 2019).
This disparity can be seen in the numbers. In Canada 40 per cent of households own 2 per cent of the available real estate, and the top income 20 per cent of these households own 63 per cent of real estate. Even with incentives, home ownership is not keeping pace. Home ownership had grown 9 per cent in the years from 1971-2011. Since the 2018 financial crisis, ownership has remained stagnant at around 68 per cent. This can be described as the ‘paradox of the housing crisis’, a situation where current homeowners have the wealth and the value of their homes increase while many others struggle to keep themselves housed (Rozworski, 2019).
This emphasis has affected how Canadians view housing. Home ownership is prized in a way that is not familiar to people in places like New York or European cities. An illustration is the emotions expressed over a property developer’s plan to purchase thousands of single family homes, renovate and rent them out as two units. Planning experts agreed that the developer’s plan was what the crowded cities needed but the general population was outraged and accused the company of profit mongering. As one op-ed piece pointed out, ‘Whether you call it ‘mongering’ or something that sounds nicer, earning a profit is at the indispensable heart of creating housing in Canada’ (Pittis, 2021). This highlights two troubling aspects of the government’s support for home ownership: it has been mainly left to the market, and the policies have left many Canadians focusing on home ownership to the exclusion of other forms of housing.
This emphasis on ownership support has created a system where federal government support of low income households who have a ‘social need’ for housing is a secondary concern (Hulchanski, 2007). The federal government did have some programs addressing this need with subsidies for public housing between 1949 and the early 1990’s, but only 12,000 units had been created by the early 1960’s (Hulchanski, 2007). The 1993 federal budget ended the funding for the construction of social housing, a move that ‘only accelerated the transformation of housing from human necessity into investment good, to be supplied almost exclusively by the private sector’ (Rozworski, 2019). With the 2017 release of the National Housing Strategy (NHS), discussed below, the federal government is trying to address this secondary, non-market housing population.
Importance of housing
Another issue that affects all levels of government but weighs most heavily on the federal government is the recognition of the importance of housing. At the World Conference on Human Rights in Vienna in 1993, adequate housing was affirmed by the international community as a human right. While the federal government had been involved in ensuring adequate and affordable housing off and on since the post-war years, the release of the 2017 National Housing Strategy (NHS) signaled “a meaningful re-engagement by the federal government in housing. It is a key element of our Government’s plan to help strengthen the middle class, promote growth for everyone, and lift more Canadians out of poverty” (National Housing Strategy, 2017). The NHS has been billed as the ‘first ever’ such strategy. With this strategy the federal government is creating legislation that will be a human-rights based approach to housing to ensure all Canadians can access safe housing within their means. The initiative outlines several clear targets and deliverables that cover areas such as community housing, housing benefits, support for provinces, cooperation with municipalities and non-profit groups, and (as always) improving home ownership (NHS, 2017).
While the NHS has made it clear that the federal government is re-embracing a role in housing, the COVID-19 pandemic has underlined the need to address the issue of Canadians experiencing homelessness. With stay-at-home orders, curfews and the closing of public parks to contain the spread of the virus, the need to create housing became very immediate. In response, the federal government launched the 2020 Rapid Housing initiative as the newest program to come out of the NHS. With this initiative the Canadian government offered money (through an application process) to governments, both municipal and provincial, non-profit and Indigenous organizations to create affordable housing through conversion of existing structures or through modular home construction. The housing is to be made available within 12 months of receiving the funds (CMHC, 2020). As well as being a response to the pandemic, this program corresponds to the priorities of various groups like the Federation of Canadian Municipalities, and the Canadian Alliance to End Homelessness (CMHC, 2020). So after being in and out of the policy housing arena the current government is back in and promoting a new era of cooperation with other levels of government and organizations.
Municipal Issue—Short Term Rentals
A growing policy challenge for municipal governments is short term rentals (STRs) such as those provided by Airbnb and VRBO. While the COVID-19 pandemic has eased this pressure in the short term, it will continue to be an issue that affects housing. As demand for STRs for tourists and visitors increases it can lead landlords and investors to either evict long-term tenants in order to gain more revenue or to convert properties into apartments specifically for STRs rather than long term rentals. The effect of STRs on housing prices is still not clear, and there is not enough data to unequivocally link them to increased prices. Studies in different cities have produced conflicting results about property values (Di Natale, 2018). However, there is anecdotal belief for this cause and effect and for the idea that STRs lead to reduced rentals (Zou, 2019).
One small city has studied the effects of STRs on the long term rental market. As a tourism destination, STRs represent a growing market in PEI. Landlords, primary householders and those with second homes can gain revenue from renting out space to tourists. This trend is growing against the background of an extreme housing shortage in PEI with residential vacancy rates as low as 1.2 per cent in the capital city of Charlottetown (Neatby, 2021). A commissioned report on STRs in Charlottetown analyzed listings on Airbnb and Homeaway and came up with estimates of the effect on the local rental market. The report found the following as a snapshot of the STR situation on September 1, 2019—135 housing units in Charlottetown were dedicated STRs and 111 of these were entire home listings while 24 were private room listings in the same housing unit.
Additional findings from this report include a 9 per cent increase in STRs from the previous year and that 318 housing units were converted to full-time STRs between 2017-19. Additionally, in the 3 years leading up to the study, STRs lost from the housing market had grown faster than the entire STR market (Wachsmuth, 2019).
INTERGOVERNMENTAL COOPERATION & CONFLICT
The main area of contention between governments in housing policy is jurisdiction. While encouraging home ownership is almost fully in the federal sphere, the provision of social housing is not. The federal government has fallen in and out of both provision and funding with the provinces occasionally involved and municipalities bearing a large burden.
In the early post-war years housing was provided mainly by municipal governments with federal assistance. While municipal governments have been hampered by provincial control of their actions and limited revenue generating capacity, there has been a long history of federal-municipal cooperation in funding housing. While provinces might not appreciate being by-passed, it would be impolitic for them to block municipal access to funds. From 1944-1964 the federal government provided funds to cities under the National Housing Act. In 1964, the provinces created housing authorities so they could be involved and disburse the federal money to municipalities. The federal government moved to funding non-profit organizations and provided direct funding from 1973-1993—allowing credit for housing support to accrue to the federal government (Hulchanski, 2006). On the provincial-municipal front, starting in the mid-1980’s when the federal government was decreasing transfer payments, the provinces passed along this austerity to municipalities and sometimes also passed along expensive service areas like housing. Once again, lots of service areas, coupled with little revenue generating avenues had created huge problems for cities. This mounting pressure resulted in new federal money for municipalities for housing and infrastructure improvements in 2004 and 2005 budgets (Hulchanski, 2006).
In spite of the federal government’s initial enthusiasm in the post war and baby boom years, housing was slated to be turned over exclusively to the provinces in the constitutional negotiations of 1992. The 1992 Charlottetown Accord failed to be ratified, but the federal government had made clear its wish to extricate itself from the social housing arena. In 1993, the federal government stopped all funding and removed itself from housing (Hulchanski, 2006). After 1993, the public housing previously created by the federal government devolved to the provinces and a minor federal affordable housing program was undertaken instead. An initiative ”that seems to produce more press releases than housing units” (Chisholm and Hulchanski, 2019).
RECOMMENDATIONS
Federal
A group of housing policy and economics scholars created a report based on international research and a widespread knowledge exchange between policy experts, academics and front line organizations in Australia, Britain and Canada. This report, contains recommendations for future directions for housing policy. Using some of these recommendations as benchmarks, the federal government is taking steps in the right direction with the creation of the National Housing Strategy (NHS) described above. For example, the report discusses that while the federal government must play a part in housing, it is imperative that the provision of housing be collaborative, but also focused on a municipal level. Housing should involve all governments and sectors to ensure open and effective governance, and financial resources as well as cooperation must be on offer (MacLennan, 2019). The NHS evidences both this cooperation and a municipal focus in the announcement of a partnership between the Canadian government, the City of London, and London & Middlesex Community Housing. The $40 million in federal funding will provide 2,082 housing units that will be under the umbrella of the LMCH. (CMHC, 2021). This represents a collaboration of a non-profit/community group, and two levels of government—municipal and federal, with the necessary financial resources.
Another principle discussed in this report is that housing policies need to be ‘intelligent’ and based on logical actions to solve goals. Governments need to ‘apply appropriate instruments to real (not ideal) housing systems’ (MacLennan, 2019). Echoing part of this sentiment the NHS includes a section on the need for more and better information about current housing statistics, policy research and expertise. There is money and actions in the strategy to address these issues. However, the federal government should also take heed of the ‘real (not ideal)’ portion of that statement. The NHS still contains some of the traditional support for homeownership while striving for ‘stable and competitive housing markets’ (NHS, 2017). It appears the government is still chasing the ideal of home ownership rather than the real need to supply housing to all and this may be a policy direction that is already being well served by currently running programs.
Provincial
Provinces should work with the federal government to achieve the goals of the NHS as much as possible. The federal government has made financial commitments for housing initiatives and programs with an expectation of some matching of funds by the provinces (NHS, 2017). As indicated by housing policy experts, all levels of government need to work together to ensure housing needs are met and encourages governments to work to create fairness in allocating and supporting housing (MacLennan, 2020). While the provinces may see housing as falling under their umbrella, it is clear that the federal government would like to direct housing initiatives. If working in collaboration is what is required to access the funds necessary to meet this essential need then provinces should do so.
To assist with non-market housing, provinces could encourage renting through stronger tenant protection, especially to assist with issues created by STRs and evictions related to conversion to STRs. Provinces should institute stronger tenant protection and rent controls. This should be accompanied by a program of education and information for both landlords and tenants.
Municipal
Municipal governments, especially cities should institute and enforce policies regarding short term rentals (STRs). Two particular avenues are worth exploring. The first is instituting some form of lodging tax that would be levied upon any renters and used to fund the cost of regulating STRs. The second is to ensure that only primary residences are made available for STRs. This will curb the issue of long-term accommodations being turned in to short-term rentals, thus impacting the available housing in a city. As an example, the City of Toronto has instituted both to these measures (City of Toronto, 2020).
Like the provinces, it will also be important for municipalities to collaborate with the federal and provincial governments to access as many funds and programs as possible. Working with local non-profits that have on the ground experience assisting people with housing issues would help to create and administer practical, effective programs.
Conclusion
All levels of government would benefit from working together and with non-profit and social agencies to achieve the goals of the NHS. However, for meeting housing needs in a stable, long term way more strategic work is needed. A more effective direction would be to come to a consensus about who is responsible for the various aspects of housing—both actual provision and funding. If this was more concrete and even enshrined in legislation it would avoid the housing hot potato game that is played when budgets become overwhelming and leadership changes hands.
Works Cited:
Canadian Mortgage and Housing Corporation. (11 March, 2021). Government of Canada provides affordable housing for over 2000 families in London. https://www.newswire.ca/news-releases/government-of-canada-provides-affordable-housing-for-over-2000-families-in-london-877000074.html
Canadian Mortgage and Housing Corporation (21 September, 2020). Rapid Housing Initiative. https://www.cmhc-schl.gc.ca/en/professionals/project-funding-and-mortgage-financing/funding-programs/all-funding-programs/rapid-housing
Chisholm, S., & Hulchanski, D. (March, 2019). Canada’s housing story. In Shaping futures: Changing the housing story: Final Report (pp. 21-28). https://cityfutures.be.unsw.edu.au/research/projects/shaping-futures-changing-housing-story/
City of Toronto. (25 August, 2020). City of Toronto registration of short-term rentals to launch September 10. https://www.toronto.ca/news/city-of-toronto-registration-of-short-term-rentals-to-launch-september-10/
DiNatale, S., Lewis, R., & Parker, R. (4 September, 2018). Short-term rentals in small cities in Oregon: Impacts and regulations. Land Use Policy, 79, 407-423. https://doi.org/10.1016.jlandusepol.2018.08.023
Government of Canada. (2017). Canada’s National Housing Strategy: A place to call home.
Hulchanski, D. (2006). What factors shape Canadian housing policy?: The intergovernmental role in Canada’s housing system. In R. Young and C. Leuprecht (Eds.), Canada: The state of the federation 2004. (pp. 221-251). The Institute of Intergovernmental Relations. https://shapingfutures.gla.ac.uk/wp-content/uploads/2016/06/14.6_2006-Hulchanski-What-Factors-Shape-Cdn-Housing-Policy-Book-chap.pdf
MacLennan, D. (March, 2019). Conclusions: Shaping futures: Towards real housing policy. In Shaping futures: Changing the housing story: Final Report (pp. 109-114). https://cityfutures.be.unsw.edu.au/research/projects/shaping-futures-changing-housing-story/
Neatby, S. (28 January, 2021). PEI rental market no longer worst in Canada. The Guardian: https://www.theguardian.pe.ca/news/local/pei-rental-shortage-no-longer-worst-in-canada-546326/
Pittis, D. (18 June, 2021). Outrage over developer’s plan to buy single-family homes reveals a Canadian fixation. CBC News. https://www.cbc.ca/news/business/core-home-ownership-column-don-pittis-1.6069021
Wachsmuth, D., Basalaev-Binder, R., Belot, C., Bolt, A., & Seltz, L. (February 2020). Short-term rentals in Charlottetown: Market overview, housing impacts and regulatory modelling: A report prepared for the Planning and Heritage Department, City of Charlottetown, by the Urban Politics and Governance research group, School of Urban Planning, McGill University.
Zou, Z. (3 December, 2019). Examining the impact of short-term rentals on housing prices in Washington, DC: Implications for housing policy and equity. Housing Policy Debate, 30(2), 269-90. https://doi.org/10.1080.10511482.2019.1681016
