Wednesday, March 28, 2012 - 8:30 AM

Federal Budget Must Jump-Start Rental Housing Construction

To keep our economic recovery on-track, the 2012 federal budget must jump-start new construction in Canada's tight rental housing market, says Mayor Dennis O'Keefe.

"We have not seen any new apartment construction in the City of St. John's in 30 years," says Mayor O'Keefe. "In this housing market, the task of securing adequate, affordable housing is becoming extremely difficult for people across the income spectrum. With access to only eight cents out of every tax dollar collected in Canada, no municipality can tackle an issue the magnitude of affordable housing alone and we need the federal government to step forward in its 2012 federal budget."

Building new rental housing will keep thousands of Canadians working when governments are turning off the stimulus taps and a slower new home market is creating fewer construction jobs. Canada's housing sector is producing 50,000 fewer construction jobs today than in 2007.

With low-cost market incentives, the federal government can leverage private investment to build and expand rental housing in St. John's and across the country.

Before the global recession, a home-buying, condo-building boom pushed land prices so high that new rental construction was crowded out. In many cities, rental housing shortages are pushing vacancy rates below 3 per cent, which leads to higher rents. The vacancy rate in St. John's is amongst the lowest in the country at 1.3 per cent.

One-third of Canadians are renters, yet rental housing has accounted for just 10 per cent of new residential construction over the past 15 years. Due to the demolition and conversion of rental properties, for the first time the number of rental units across Canada actually decreased between 2001 and 2006.

"Cities across Canada are taking action to increase and preserve the supply of rental and affordable housing," says Gregor Robertson, Mayor of Vancouver and Chair of the Federation of Canadian Municipalities' Big City Mayors' Caucus (BCMC). "All orders of government must work together to lower investment barriers to new rental housing, protect jobs, and give young families, new immigrants, and an aging population housing options they can afford."

Municipalities are calling on the federal government to use its spring budget to introduce cost-effective market incentives that encourage private-sector investment in rental housing.

These include:

  • Low-interest loans underwritten by the Canada Mortgage and Housing Corporation (CMHC) to finance new rental construction.
  • Tax reform to encourage owners to renovate rental properties, providing an incentive to preserve affordable rental housing.
  • Help for landlords to make rental housing energy efficient, reducing costs and easing pressure on rents.

For further information:
Jennifer Mills
Communications Officer
City of St. John's
Phone: (709) 570-2037
Cell: (709) 690-7586

Dennis O'Keefe
City of St. John's
Phone: (709) 576-8477