The Canadian Federation of Apartment Associations (CFAA) has two main goals, namely improving the federal tax treatment of rental housing, and improving federal housing policies. Both goals impact on rent control, which is a key issue for landlords in Manitoba.
Restriction of new supply
In the early 1970’s purpose-built rental starts averaged 60,000 units per year across Canada. Then the federal income tax treatment of rental property changed against our industry, and in 1973-75 rent controls were introduced In Manitoba and other provinces. Rental starts plummeted to less than 15,000 units per year, and then fell even further in the 1990’s.
Coupled with the excess demand caused by rent control, the reduction in starts resulted in shortages of rental housing. Those on-going shortages manifested themselves in below normal vacancy rates in Winnipeg from 2001 to now. Set out below is a chart of the recent vacancy rates for Winnipeg.
| Vacancy rates - Winnipeg | ||||
| 2001 | 2002 | 2003 | 2004 | 2005 |
| 1.4% | 1.2% | 1.3% | 1.1% | 1.7% |
Source: CMHC
CFAA and PPMA have worked on the rental housing supply issue with both federal and provincial governments. In those discussions, the Province has blamed rental supply shortages on the federal tax rules, while the Federal government has blamed the provincial rent control rules. Both were correct, but positive action by each government has been slow in coming.
Regrettably, and unlike several other provinces, the Manitoba government has not acted on the overwhelming evidence that strict rent controls do more harm than good to tenants and to the economy.
Housing policies
Also relevant to rental housing supply and demand are provincial and municipal housing and income policies. Due to low interest rates, rental demand has risen modestly over the last half-decade, whereas the demand for home ownership has increased strongly.
This is reflected in the markets for rental units and for homes for owner-occupation between 2001 and 2005.
| Housing cost increases - Winnipeg | ||
| Average Rent Increase (2 Bedroom Apt.) | Average price increase single family resale homes | |
| 2001 to 2005 | 13% | 45% |
Source: CMHC
Much provincial and municipal policy still seeks to promote the building of “affordable housing.” Such building requires large capital subsidies, and is the high cost way to provide housing assistance. The vast bulk of low-income tenants are already adequately housed at rents much less than the full carrying cost of new “affordable housing”. The cost effective way to reduce housing affordability problems is through direct assistance to tenants.
Housing allowance programs can target assistance quickly to those in the greatest need, and address these needs much more broadly and equitably than occurs when new “affordable housing” is built. Housing allowances also avoid unnecessary moves, while facilitating moves that tenants want, whether for changes in their circumstances or for job opportunities.
In the last two years CFAA has succeeded in freeing federal housing money for demand side programs, such as rent supplements and housing allowances. Now it is up to the industry’s provincial associations to push for expanded demand side programs in their jurisdictions.
When rental housing is more affordable to those in need, there should be less public pressure to control rents. In turn, less control on rents will reduce excess demand, and lead the private market to provide more supply. That would be a major help to the economy of Winnipeg.
A healthy housing market is one that is free to respond to supply and demand, and operates within an environment of positive tax and housing policies.
CFAA’s Conferences and Goals
At CFAA’s Annual Conference and AGM in June of this year, the CFAA Board reviewed CFAA’s priorities for 2006-2007. Due to the current federal political environment, the CFAA Board has decided to re-orient CFAA’s efforts mostly toward the various tax issues facing landlords.
In conjunction with CFAA’s internal conference, CFAA and the Eastern Ontario Landlord Organization held a Housing Conference in Ottawa to promote housing allowances. 67 people attended, including Lisa MacLeod, MPP for Nepean-Carleton. Both Conferences were a great success and the CFAA Board decided that it wants another Housing Conference in June 2007.
The CFAA Board also expressed its approval of the work Dickie & Lyman LLP has done for CFAA, and renewed the President’s contract with an increase in services to be provided. The budget and CFAA dues were approved with minor amendments.
The Board is pleased with CFAA’s current governance structure, namely the directors meeting one month out of every two, with the Government Relations and Communication Committee and the Membership, Fundraising and Finance Committee meeting during the alternate months. We will continue with that structure.
CFAA also decided to create two short term Task Forces, one on the issue of bed bugs and pesticides, and one on tenant and credit reporting. Any member with a particular interest in those areas is invited to contact president@cfaa-fcapi.org
CFAA looks forward to continuing to advance the interests of the rental housing industry at the federal level.
We work closely with provincial associations, including PPMA, since rental housing and tax policies interact in
many ways.
PPMA is pleased to support CFAA as one of 16 member associations across Canada. Together, our members own or manage more than 1,000,000 rental homes. CFAA is the sole national organization representing the interests of Canada’s $30 billion rental housing industry. For more information, go to
www.cfaa-fcapi.org.
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