The federal government is investing $1.5 billion towards new co-operative housing through the Co-operative Housing Development Program.

In Canada, many households prefer homeownership because of the precarity of rental housing. The landlord-tenant relationship skews on the side of the landlord, leading to issues related to affordability, low maintenance standards, and security of tenure. The adjudicative body charged with overseeing and enforcing residential tenancy laws remains back-logged, such that it can take months- or even years- to deal with maintenance concerns, bad faith evictions and other issues.

Co-operative (or co-op) housing resolves many of these difficulties. Co-ops are non-profit entities, governed by the Co-operative Corporations Act, and are more affordable, as housing is provided at-cost. Residents of co-ops, also called members, control their own housing. Instead of a landlord, members elect directors who make collective decisions about the day-to-day operations of the property. This means that members can jointly create systems to properly maintain their homes and decide when capital repairs should take place. Typically, there are no limits on how long you can live in co-ops.

While the early co-op movement began as student housing initiatives in Canada, by the 1990’s almost 90,000 co-op homes were built across Canada. In the decades following, austerity measures and cuts led to a downturn in constructing co-op housing. The announcement of the program signals a renewed interest in revitalizing the co-op sector in Canada.

The program is part of the 2017 National Housing Strategy, a 10-year $82 billion plan to fund programs and initiatives to address housing affordability in Canada. While co-ops would have been eligible under other programs under the National Housing Strategy, this is the first time in decades that the federal government has explicitly and distinctly announced funding for the expansion of the co-op sector.

While $1.5 billion as an absolute amount is a significant commitment to the co-op sector, only about one-third of the funds are in the form of grants or forgivable loans. The balance is a promise to invest through low-interest loans to the co-op to carry out its project. More accurately then, the federal government has committed about $500 million to the co-op sector, or 0.6% of the funds available under the National Housing Strategy.

The program aims to have a net increase on the overall rental stock, so the funds under the program can only be used for new construction, densification of existing buildings or conversion of non-residential buildings. It’s notable that conversion of market rental buildings to co-ops does not qualify for the funding. Purpose built rental buildings often get purchased by Real Estate Investment Trusts or other financial organizations concerned with returns on investment. These buildings and the rents they can garner become financial assets. When purchased by these entities, these buildings eventually lead to displacement of long-time tenants living under rent control, who cannot afford higher rents after these financial institutions undertake cosmetic low-level renovations, allowing them to increase rents substantially. The federal government’s commitment to increasing not just the overall rental stock, but the affordable rental housing would have been stronger if the eligibility criteria for the funding had been expanded to include acquisition of at-risk existing rental units.

Nonetheless, the Program is a welcome development in the revitalization and expansion of the co-op sector as it was designed alongside stakeholders and the Co-operative Housing Federation of Canada. “The launch of the Co-operative Housing Development Program will kickstart the development of the next generation of co-operative housing. More individuals and families will be able to access the security, affordability and inclusion that co-operative housing offers,” said CHF Canada’s executive director, Tim Ross.

 

 

Filed in: Co-operative Law