Affordable housing is a hot topic and it seems to be in the news all time. You often hear or read about politicians congratulating themselves on recently developed affordable housing projects, but is the model that currently exists the most efficient or effective way to handle affordable housing projects?
Affordable Housing is defined as modest housing (based on floor area and amenities) that is priced at or below average market rental rates compared to other housing in the same community.
The Canada Mortgage and Housing Corporation works with each province to set affordable housing rates based on total household income. The overall goal is to improve access to affordable, sound and suitable housing no matter where you live in Canada.
In Manitoba, the Affordable Housing Rental Program is for lower-moderate income households that are below the income limit ($56,694 for households without children). In Brandon, that means affordable housing rental rates are set at (not including hydro):
$640 1 Bedroom
$850 2 Bedroom
$954 3 Bedroom
For the most part, affordable housing units are built by non-profit organizations and encompass an entire building. The question that many developers and investors are left wondering is: could funding be made available for profit companies to allow a portion of their units to be designated as affordable housing units instead of centralizing all the units within one community/building?
From an investment point-of-view, government partnerships would be needed in order to successfully make the project work. When you take into consideration new building codes landlords would have to charge $1,250 per month plus hydro for a two-bedroom unit. This means that the monthly subsidy (or property tax incentive) would be approximately $400 per month or a contribution up front in terms of cash or land or servicing (in lieu of cash).
From a social perspective, those that don’t earn enough to live without government subsidies on rent may appreciate not being stigmatized by living in the projects or in ‘Manitoba Housing’. Living in a community surrounded by people of various income levels might help to boost their confidence and drive people to do better for themselves. The subsidy may be viewed as a hand up, rather than a handout.
While there are pros and cons to both approaches, it may be worth exploring a new model to better meet the demands of affordable housing.
Vionell Holdings Partnership (VHP) provides rental housing and property management for an array of residential and commercial customers, including Condominium Management. VHP currently has over 3,500 units under management in Manitoba. For more information please visit www.vhproperties.ca.