The urgency of the housing crisis in Canada currently has made it a key priority in the federal 2024 budget. It plans to introduce several measures to improve affordability while increasing the housing supply. These initiatives aim to ease the financial burden on homebuyers who are currently renting in Canada due to a lack of inventory. Let’s examine the current renter’s market, outline the budget’s steps to address concerns, and finally how these measures will improve opportunities for renters to enter the housing market.
Affordability and renting in Canada
Affordable accommodation for Canadians is hard to find because of inflation. Data shows this is putting intense pressure on renters in Ontario. In December 2023, Ontarians paid about seven percent more in rent than in 2022. This is according to an analysis of Statistics Canada’s Consumer Price Index data. The Canadian Mortgage and Housing found that renters country-wide faced record-low vacancy rates (1.5%) and record-high average rent growth (up 8%) in 2023. The number of people renting in Canada is increasing, and so are rental prices, putting more pressure on an already shaky housing system. This is according to the Canadian Rental Housing Index, released in June 2023. It found that Ontario is home to more than 1.7 million renters.
The percentage of people spending more than 30% of their income on rent in Toronto is 40%. 18% of people are spending over 50% of their income on rent.
Budget 2024: Improving opportunities for renters
In her 2024 budget document, Finance Minister Chrystia Freeland outlines various measures that the government plans to take to make homeownership attainable for younger generations. “We’re restoring the chance to make progress towards homeownership. By creating more tax-free ways to save for your first down payment,” she says in the document. “We’re giving renters credit for rental payments, so when it comes time to apply for that first mortgage, you’ll have a better chance of qualifying.”
Renting in Canada: Accommodations in the 2024 budget
One of the budget’s priorities is to move young people out of the rental market and into the home-buying market. According to RBC Economics, Young Canadians make up the largest share of renters in the 2021 census. The government’s plan has accounted for several measures to help renters:
- Allowance for 30-year amortizations for first-time buyers purchasing new homes and introducing a measure that will let rental payments count toward a person’s credit score.
- With demand still far outpacing supply for rental units, the government says it will top up its Apartment Construction Loan Program — which gives low-cost loans to developers and municipalities to build affordable rental apartments. An additional $15 billion will be allotted starting in 2025-2026, bringing the program to over $55 billion.
- Of the additional amount, $100 million will be used to build homes above existing shops and businesses, particularly in big cities. The top-up will help to build over 30,000 new homes across the country. This will bring the program’s overall output to 131,000 new homes by 2031-2032.
- The Apartment Construction Loan Program will also see some reforms, such as an extension on loan terms and making financing more accessible for student housing projects.
2024 federal budget: More protection for tenants
Renter’s Bill of Rights
The government’s headline proposal, the Renter’s Bill of Rights, includes several measures targeted at renters close to their home ownership dreams. The hope is to inspire those not interested in buying a home to reconsider it in the future. The plan to make rental payments count towards credit scores is an appealing incentive. “Renters deserve credit for the money they put toward rent over the years, especially when it comes time to apply for a mortgage for their first home,” the federal government’s announcement said. An amendment to the Canadian Mortgage Charter would urge landlords, banks, credit bureaus, and fintech companies to include rental reporting in a credit score. The Renters’ Bill of Rights will also include a national standard lease agreement and require landlords to disclose a unit’s pricing history to allow tenants to negotiate their rent. This aims to make renting in Canada more worthwhile.
Rental Protection Fund
In tandem with the Renters’ Bill of Rights, the federal government has also announced the creation of the Canada Rental Protection Fund, a financial aid package worth $1.5 billion to assist tenants. Following along the lines of improving opportunities for renters, the fund aims to enable non-profit organizations to obtain and maintain affordable rental properties. This initiative, which aligns with recommendations from affordable housing proponents, mirrors similar actions taken in British Columbia and Ontario. This fund offers a short-term solution to protecting the rights of renters looking to become first-time homebuyers through the extended mortgage amortization period.
Tenant Protection Fund
Prime Minister Justin Trudeau says there’s something fundamentally unfair about paying $2,000 monthly for rent. Especially while those paying the same for a mortgage get equity and build their credit score. The measures in the 2024 federal budget are aiming at more equity in the housing and rental markets. As part of the budget proposals, the plan includes a $15 million Tenant Protection Fund. This will pay provincial legal aid groups to help tenants against unfairly rising rents or ‘renovictions’. These are when landlords try to evict a tenant by saying they need to do significant renovations.
Whether you are a landlord or a tenant, having the proper insurance coverage is crucial. Improving opportunities for renters is important for the continued growth in Canada. Securing your own home is an important milestone for many! When you finally sign on the dotted line, you’ll need insurance to protect your investment. Contact us or request a quote today!
