BUSINESS
04/10/2018 14:41 EDT | Updated 04/10/2018 15:03 EDT

Affordable Housing In Canada In Crisis As Rental Rates Climb, Supply Dwindles

The government used to mandate construction of affordable homes. Not so in recent decades.

Joanna Fletcher reacts while speaking about the living conditions in the one-bedroom apartment where she lives with her 10-year-old son, in Vancouver, B.C., on Friday February 23, 2018.

VANCOUVER — Joanna Fletcher lives in a one-bedroom apartment on Vancouver's east side with her 10-year-old son. The building has mice and mould, and her new landlord is threatening eviction.

While she has plenty of reasons to leave, Fletcher says she's fighting to stay for as long as possible because she can't afford anything else in the area and leaving would mean disrupting her son's school year.

"It's not just like I can pick up and go, there isn't anything for me to go (to)," she said in a recent interview.

Fletcher isn't alone in feeling the impact of the housing affordability crisis affecting cities across the country.

Watch: A 360-degree look at the impact of Canada's housing affordability crisis

The Canada Mortgage and Housing Corp. says average rents nationally went up last year by 2.7 per cent to $947 per month.

Meanwhile, the availability of rentals is becoming increasingly limited. The CMHC says the overall vacancy rate for cities across the country was three per cent in 2017, down from 3.7 per cent in 2016.

In its annual report on rental housing, the corporation said the demand for purpose-built rental is outpacing the growth in supply, while the rate of condominiums rented out also declined.

Craig Jones, a PhD candidate in geography at the University of British Columbia, said the situation is largely the result of the federal government's move away from building rental housing in the early 1990s, combined with the extreme profitability of building condominiums over rentals in the private sector.

The government used to build thousands of units of rental housing annually, and the private sector does not appear to have filled the gap in the years since, Jones said.

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Although up to a third of condos are estimated to be rented out by owners, Jones said the rents are typically not as affordable as rental only properties and tenancies aren't secure because owners can always choose to move back in, renovate or trigger other means of eviction.

Statistics Canada reported last year that nearly a quarter of Canadians spent more than 30 per cent of their income on shelter costs, which is the marker for affordability.

Jones said the statistics are a sign that many people live in precarious circumstances.

"It's taken us a long time to get here, it's taken decades of ignoring the system," he said, adding it would take a least 10 years of government commitments to resolve the problem. "That is something that is difficult to do because it's expensive and it doesn't show immediate results."

Fletcher is one of those people caught in the housing crisis.

"I'm just sort of pretending it's not happening in many ways. On certain days, I just keep it right off my radar, otherwise I'd lose it."Joanna Fletcher

She has lived in her Vancouver apartment for eight years and pays about $930 a month in rent, which included basic cable until February.

Fletcher has multiple sclerosis and is unemployed but looking for work. She said she's been looking for a two-bedroom home for years, but units are hard to come by. A suite that became available in the area was more than double what she pays in rent.

Her building was recently sold to a company and Fletcher said the new landlord began approaching tenants in January offering to pay them three months' rent if they move out by April. She was offered five months' rent if she signed an agreement by mid-February.

"It's a drop in the bucket if I don't have anywhere to live," she said.

Fletcher declined the offer and decided to wait for an eviction notice. She hopes that will be at least eight months away since a legal notice requires permits from the city to develop the property, which is a lengthy process to obtain. The city says it has not received applications for any development at the property.

The landlord did not respond to requests for comment.

Housing as a 'basic right for all Canadians'

A spokesman for the Tenant Resource and Advisory Centre in B.C. said evictions caused by renovations or redevelopment are among the most common problems tenants report.

Andrew Sakamoto said the province's Residential Tenancy Act should be changed to double the notice time for evictions to four months, and offer greater compensation to renters. Availability of housing may be a problem, but stronger laws that protect tenants could make a difference until supply catches up with demand, he said.

"You need to have security of tenure and safe housing in order to thrive in other aspects of your life," Sakamoto said. "I think we need to get away from this commodification of housing and see it for what it really should be, and that's a basic right for all Canadians."

Dan Garrison, Vancouver's assistant director of housing policy, said there is a lot of older housing stock that needs to be updated but the city has tougher rules than the province when it comes to redeveloping rental properties.

"We know that renters in the city are certainly feeling vulnerable to development pressure," Garrison said. "We are trying to strike a balance."

Landlords in Vancouver who evict their tenants are required to pay several months rent, assist in relocating them within the city, and pay for moving costs, he said. Developers would also have to give previous tenants the opportunity to move back into the new building at a discounted rate.

Not all jurisdictions share these policies.

In Toronto, Jillian Zeppa, 30, who works for a non-profit education organization, couch surfed with friends for six months after she was evicted from her one bedroom basement suite last fall.

Zeppa said she had lived in the unit for 16 months when the landlord decided to move in herself, prompting her eviction.

She disputed the notice with the province's rental housing enforcement unit and was awarded $2,000 in compensation. But Zeppa said the cost of moving, storing her belongings, searching for a new home and the stress of the experience had her hoping she'd receive twice that amount.

Evictions 'in bad faith'

Her situation reflects a concerning trend, say housing advocates in Ontario.

Geordie Dent, executive director of the Federation of Metro Tenants' Associations, said in nine of the last 10 years, the number one reason the agency received calls from tenants facing eviction was due to unpaid rent.

But last year that changed with an "explosive" increase in landlords choosing to make use of the home themselves or by their family, he said.

"Probably most of them are going to be in bad faith, meaning the landlord is not actually moving in, it's just pushing tenants out to be able to jack up the rent," Dent said.

The Ontario government responded by bringing in new rules last September that require landlords to pay a tenant one month of rent in compensation. If the landlord advertises, rents, demolishes or converts the unit within a year — signalling they aren't using it themselves — they could also face a fine of up to $25,000.

In many cases, landlords want to get rid of their oldest tenants who pay the lowest rents, Dent said. Being able to charge higher rents for new tenants could be enough to cover the penalties, he added.

Zeppa pays $1,050 per month. Finding a new place close to transit for the same rent with similar amenities, such as laundry in the building, proved to be impossible.

"The golden rule of spending 30 per cent of your money on rent, I feel like is out the window because rent is going up but no one's salary is going up," said Zeppa.

She moved into a new apartment on April 1 after months of searching. But at $1,300 a month, Zeppa said she has to make sacrifices.

The new unit accounts for 45 per cent of her take home income and it is far enough from her office that she'll have to spend an hour on transit, rather than walking or cycling.

Orchidpoet via Getty Images
Apartment and condo buildings in Toronto's Yonge and Eglinton neighbourhood.

There are also other changes she is looking at to cover the extra cost of rent.

"I'm either not going to travel or not going to make an RRSP contribution every year. One of them is going to have to be sacrificed, I realized, in the budget planning of it all. That doesn't really feel right," she said.

While she's confident her new home will be more stable, Zeppa said if she is evicted again, she's more likely to consider other areas of the country to live and work.

"This whole experience has allowed me to realize Toronto will not be a forever place for me," she said.

The federal government announced a national housing strategy last fall that commits $40 billion over 10 years to new units and upgrades of aging properties, including loans to encourage developers to build new housing geared toward modest- to middle-income families.

Aled Ab Iorwerth, the deputy chief economist at the CMHC, said whether there is enough incentive for developers to construct purpose-built rental housing remains unclear.

"I think there are a lot of incentives out there to build," he said. "How exactly the market supplies that is a little bit conditional on their own decision."

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