Federal government to launch $1.5B fund to protect affordable rentals

Posted on April 4, 2024 by Peggy

Prime Minister Justin Trudeau unveiled a new $1.5-billion housing fund Thursday that he billed as helping non-profit organizations acquire more rental units across Canada and ensure they remain affordable.

The new Canada Rental Protection Fund will be part of the April 16 federal budget, which Trudeau’s Liberals are already promoting aggressively as part of a long-term play to win back younger voters.

The fund will provide $1 billion in loans and $470 million in contributions to non-profits and other partners to help them acquire affordable rental units.

An existing rental protection fund in British Columbia is a good “proof of concept” for the initiative, Trudeau told a news conference in Winnipeg.

“They recognize that for every new affordable rental home that is built in their province, four more are lost to investors, to conversions, to demolition, and to rent increases,” Trudeau said.

“And this is happening in communities right across the country.”

Thursday’s announcement was just the latest in a series of new housing measures unveiled by the Liberal government during a campaign-style pre-budget tour across the country that got underway last week.

The renewed political focus on housing policy comes as experts warn significant government action is needed to spur home construction and help close the gap between supply and demand.

Home prices and activity in the housing market are expected to rebound as the Bank of Canada begins lowering interest rates, with economists widely expecting rate cuts to begin around June or July.

As Trudeau spoke, the Conservatives were quick to point to a new report from the Canada Mortgage and Housing Corp. that warns next year’s home prices could match 2022’s peaks and exceed them by 2026.

Thursday’s housing market outlook report also said housing starts in Canada would likely decline this year before recovering in 2025 and 2026 — a reflection of the lingering impact of higher interest rates.

Protecting and expanding the country’s rental stock has been a particular focus for all three levels of government in recent months as Canadians face skyrocketing rents.

Advocates in the social housing and non-profit space have been calling for a mechanism to help them buy up affordable rentals that might otherwise be sold off to investors.

On Wednesday, Trudeau said the Liberals would add another $15 billion to an apartment construction loan program, bringing available funding to $55 billion.

The loan program was launched in 2017 and has helped create more than 48,000 homes so far. It’s aimed at building at least 131,000 apartments in the next decade.

On Tuesday, the federal government announced a $6-billion infrastructure fund to support homebuilding and a $400 million top-up to the housing accelerator fund.

The Liberals say that funding for provinces and territories will come with conditions, including adopting the recently announced renters’ bill of rights and allowing fourplexes to be built on residential land in municipalities.

Premiers from several provinces, including Ontario, Saskatchewan and Alberta, have slammed the federal government for overstepping into provincial jurisdiction.

This report by The Canadian Press was first published April 4, 2024.

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