Accelerated Housing And Infrastructure Is Crucial To Nova Scotia’s Future
Posted May 13, 2022
Politicians frequently use “affordable” when describing initiatives to help people find housing. Prices have spiked in all sectors of the market, and governments want to be perceived as working to provide help.
One might reasonably expect the word to indicate that the programs are for the homeless, or other citizens with very low incomes. In practice they can have a much wider scope.
Canada Mortgage and Housing (CMHC) has many programs for affordability. To qualify, an apartment must be in decent repair and appropriate for the size of the household. The cost including utilities must not be more than 30% of before tax total household income.
Under one such program a development must meet affordability requirements for at least 10 years. At least 20% of units must have rents below 30% of the median total income of all families for the area, and the total residential rental income must be at least 10% below its gross achievable residential income.
This has been widely criticized by anti-poverty activists. A qualifying development in Halifax is in an area where median household incomes are $89,510, so monthly rents can be $1,455 or more. In Moncton a project described as deeply affordable has an “average affordable rent” of $1,500 a month — far higher than Moncton’s average rent last year of $880.
To make matters worse, the CMHC has no way of knowing whether the tenants benefitting from the discount are the ones most in need. That said, the initiatives are useful in bolstering supply.
The Rapid Housing Initiative (RHI) is more tightly focused. Under it, the CMHC covers the construction of modular housing, as well as the acquisition of land, and the conversion of existing buildings to affordable housing for vulnerable populations. This is available to provinces, municipalities, and non-profit organizations.
Likewise, federally and provincially-funded programs to subsidize rents require more administration but only benefit the tenants truly in need.
Premier Houston has rightly asserted that the foundation of any plan to ease housing costs is increasing supply.
To that end he has:
- Accepted the recommendations of the 2021 Affordable Housing Report that was commissioned by the Rankin government.
- Inserted itself into municipal management to accelerate the development process. Like most municipal leaders, Halifax Mayor Mike Savage was not happy with the intrusion and said so at his excellent State of the Municipality presentation on April 28th. To his credit, he nevertheless pledged to work constructively with the province.
- Created tax incentives for young tradespeople to be in Nova Scotia
- Ordered a review of provincially-owned lands to identify opportunities for building new housing.
- Boosted housing funding for vulnerable populations, including new builds by non-profits.
- Increased funding for rental supports for low-income tenants.
- Improved protection for tenants when their leases are terminated to allow renovations or new builds.
- Funded substantial increases in student housing at Nova Scotia Community College campuses.
Less creditable was the ill-considered non-resident tax which was widely opposed by the owners and disparaged by their many friends and families. Houston was right to abandon the idea, but Nova Scotia’s welcoming reputation has taken a hit that will not quickly heal.
Also unfortunate and contrary to his campaign platform, he decided to implement and then extend rent control, limiting annual increases to 2% for both rich and poor tenants. It makes it impossible for landlords to recover surging costs for fuel and labour, among other things.
The longer that happens, the more it discourages new builds and proper maintenance of existing properties. It also becomes harder to unwind. When the 2% cap is lifted the controlled rents will be substantially below market rates for new tenancies. It may be necessary to phase in the lifting for certain groups of tenants.
Meanwhile, affordability has been more elusive for all property owners. Prices have risen rapidly, mortgage rates are increasing, fuel prices have spiked, and Nova Scotia Power wants a 10% increase in the cost of electricity.
Houston has set an ambitious but worthy goal to double the province’s population by 2060. Getting it done will not be easy.
Fixing the many problems with today’s health care delivery will not be enough. Plans for both infrastructure and staffing need to anticipate population growth of 15,000 or more people per year.
The same is true for schools and post-secondary institutions, roads and transit availability, and other government services.
The pace of housing construction, already at an historic high, must accelerate. Developers have had an especially inviting context in recent years, with low interest rates and surging demand. They are now facing some headwinds, with rising interest rates, growing costs of labour and materials, and supply chain bottlenecks that may be exacerbated by the demands for major hospital construction in Halifax and Sydney.
If construction fails to keep pace the pressure on housing affordability will continue. If public services do not grow as needed, health care delivery will be chronically late, schools will be overcrowded, and traffic jams will become the norm. This will result in resentment of the newly arriving Nova Scotians and an irreparable second hit to our welcoming reputation.