A pooling of resources in a joint effort between the public and private sectors is required to resolve Manitoba’s severe rental housing shortage, according to a new report prepared by a provincially-appointed roundtable.
“I think it’s important that the public and private sectors work together,” said Mel Boisvert, a member of WinnipegREALTORS®, who co-chaired the 15-member roundtable along with Manitoba Housing and Community Development Minister, Kerri Irvin-Ross.
“A spirit of co-operation is needed to solve the problem, but there’s no easy solution,” added Boisvert.
The roundtable identified the existence of affordable rental unit shortage across the province and came up with a series of recommendations, which are contained in an October 2012 advisory document for the Manitoba government entitled, Report of the Housing Supply Roundtable.
“The report is an important first step,” said Boisvert, “but a lot more work needs to be done. There is no magic wand, but there has to be a starting point. We have to be able to ensure that the chosen programs are carried out and are effective in addressing the issue of affordable rental accommodations.
“And it should be noted that it’s not just a problem in Winnipeg, but also a problem in other centres across the province,” he added.
Boisvert said the city of Winnipeg, Manitoba municipalities, the province and the federal government all have to become involved in finding a solution to the rental housing shortage. But before approaching the federal government, a “made-in-Manitoba strategy has to be developed.”
Boisvert said the most recent report by the roundtable builds upon an earlier report prepared by a WinnipegREALTORS® task force, also chaired by Boisvert, on the Manitoba rental housing shortage crisis. After this report was sent to the provincial government, Kerri-Ross decided it was appropriate to hold discussions on the problem as outlined by the task force, and appointed the roundtable, which consisted of housing stakeholders. The roundtable met over the course of one and one-half years to prepare the report.
“Strong population and economic growth has caused Manitoba’s rental housing market to undergo a major shift in the previous decade,” according to the preface to the new report. “Rising rents and persistent low vacancy rates necessitate the development of new and expanded supports for new rental housing investment.”
Canada Mortgage and Housing Corporation’s Spring 2012 Rental Market Report showed an apartment vacancy rate of 1.2 per cent in Manitoba, which was the lowest among Canadian provinces. In Winnipeg and the surrounding municipalities, the rate was 1.2 per cent, while it was 1.1 per cent in Thompson and 0.7 per cent in Brandon. Portage la Prairie had the lowest rate among Manitoba’s urban centres at 0.5 per cent.
“Basically,” said Boisvert, “the roundtable dealt with how to increase rental supply and increase affordable housing.
“Just increasing the supply is not likely to address the affordability issue alone,” he commented.
The roundtable report contains recommendations on tax treatment for rental units, such as a sales tax reduction on materials and services used in the construction of new purpose-built rental housing; a property or income tax program for the first five to 10 years of a project, and the equalization of property tax rates on rental housing across the province.
The roundtable report also proposed that the province remove the education tax from rental housing properties, which would lower rents to be passed on to tenants.
Another recommendation calls upon the province for a capital grant system on the construction cost per unit to stimulate the development of reasonable market rents.
In consultation with the private sector, Manitoba Housing has estimated that a subsidy of $45,000 to $55,000 is needed to create an affordable rental unit. The specific grant amount would depend upon the market location and would require a developer to apply for a property-specific grant.
Boisvert said it is important to encourage investment by the private sector in rental housing by addressing the high cost of building such accommodations.
As well, it urges the province to collaborate with the city of Winnipeg to expand Tax Increment Financing (TID) for building rental housing units beyond the city’s downtown, as well as expand TIF to other municipalities in Manitoba.
Yet another recommendation is the creation of an affordable rental housing tax credit program similar to the Low-Income Housing Tax Credit (LIHTC) introduced in the United States in the 1980s. The U.S. program provides tax credits worth a higher percentage of construction costs under the condition that landlords accept tenants with incomes no higher than 60 per cent of the medians and set rents at an affordable level (30 per cent of tenant gross household income).
Based on the standard of a 30-per-cent shelter-to-income ratio (STIR), the report indicated that 27.6 per cent of Winnipeg households cannot afford the average two-bedroom rent in the city of $837 per month.
“Individuals and households with lower incomes have less access to private-market units and therefore are limited to non-profit providers offering social and/or affordable housing options,” according to the report. “It should also be noted that the Department of Housing and Community Development estimates that 60 per cent of households that fall under the low-income cut-offs in Manitoba are working poor who maintain employment as their main source of income.”
Boisvert said he would like to see the province and city provide zoning bylaw, permit and code changes, as well as other incentives, that create an environment favourable to the creation of more secondary, or “granny” suites.
“Winnipeg is one of the few cities in Canada that doesn’t have a good collection of granny suites,” he added. “Basement granny suites are an easy way to address the affordability issue.”
Boisvert said another requirement for affordable rental identified in the report is the development of a national housing policy.
“Canada is the only G8 country that doesn’t have a national housing strategy. In the 1990s, the federal government got out of housing altogether, dropping subsidies to the provinces attached to rents for low-income households, including social housing in Manitoba.
By the 2000s, Ottawa again recognized there was a need, so the federal government began to negotiate separate housing agreements with each province and territory to increase the affordable private-market rental supply.
Boisvert said the roundtable realizes governments at all levels are cash-strapped, “but sooner or later they are going to have to address this issue. The worst we can do is ignore the problem.”
In the meantime, he said, the federal government can look at programs to help first-time buyers become homeowners.
“When first-time buyers become homeowners, they free up rental units,” Boisvert added.
Instead of making it easier for first-time buyers, the federal government has introduced new mortgage regulations, such as increasing the maximum allowed amortization from 30 to 25 years, making it more difficult for such Canadians to enter the housing market, due to rising monthly mortgage payments associated with the decrease in the amortization period.
Boisvert said the province has shown a “willingness to address the problem,” by creating the roundtable, but it’s just the beginning.
“Up until now affordable rental housing hasn’t been a sexy issue, but it’s fast becoming one, especially with the steady increase in immigration to Manitoba over the past decade.
“If there isn’t affordable housing, where will these people live?” Boisvert wondered.
“Hopeful the public will also look at this new report as being helpful to resolving the rental housing affordable crisis facing the province.”