Last month, the Manitoba government made a small change to its housing websites. The sites list the income limits that households cannot exceed if they are to qualify for the province’s Affordable Rental Housing Program. The sites also list the maximum amount of rent that non-profit housing providers who built units under this program, can charge households that meet the qualification.
On Friday June 19th, the website state that the figures were in effect until the end of the June 2020. On Monday June 22nd, the website stated the rates were “in effect until further notice.”
When queried about this development, the government stated that the rates were being frozen “due to the impacts of COVID-19.”
This would be believable were it not for the fact that the government froze the rates at the beginning of 2020, well before COVID-19 was on the government radar. The point that needs to be made is that this these measures are stealthy cuts to housing that restrict access to low-cost housing, decrease the expected revenues of non-profit housing providers, and decrease government spending. This has been done without consultation or advance notice.
The government website states that the income qualifications and allowable rents are “established annually by Manitoba Housing and are effective January 1 of each year.” The income rates have traditionally been increased as the beginning of each year to ensure that that the program continues to allow “lower-moderate income households” to qualify. The maximum rent is supposed to be reset every year at the median market rent, has been based on information provided by Canada Mortgage and Housing Corporation. At the beginning of 2020, the provincial government chose not to increase these rates.
At the time, the government stated that was freezing the rates because it was “reviewing the methodology for determining the Income eligibility criteria and rents for the social, affordable, and the market rental programs respectively. 2019 rates will remain in effect until the new rates are posted. It is anticipated that new rates will be posted within the second quarter of 2020.”
We are now at the end of the second quarter: rather than setting new rates to reflect inflation, the government has frozen them at levels that are a year-and-a-half old.
While COVID-19 has driven down incomes, decisions on whether a person qualifies for Affordable Rental Housing is based on the previous year’s income, so the government freeze (due the effect of wage inflation) will prevent families in housing need from gaining access to housing that was intended to address that need.
By freezing the rent levels, the government is sticking it to a portion of the non-profit housing sector.
Affordable Rental Housing units are housing units that have been built over the past 20 years on the basis of funding agreements between the provincial government and housing providers. Under these agreements, the government provided grants, mainly to non-profit housing providers of between $50,000 and $70,000 a unit on the understanding that rents would not exceed the median market rent for 20 years. Because the grants were never enough to build the unit, the non-profits had to fundraise and take on mortgages to complete the projects. The business plans for non-profit housing providers were based on the government’s commitment to allow rents to track the median market rent. Since January the government has been reneging on the spirit, if the not the letter of these agreement. And while the government is freezing non-profits’ revenue, it has not capped or reduced their major costs—mortgage payments, property taxes, utilities, and maintenance.
One might ask, ‘why is the government so interested in freezing rents?’ The answer lies in the fact that it is doing this to save itself money.
A considerable portion of the households living in housing built under the Affordable Rental Housing program receive a rent-geared-to-income rent supplement. Under this program households are required to pay no more than 30 per cent of their income on housing. The rest of the rent is paid by the Manitoba government through the Rent Supplement program. The government-imposed rent freeze on non-profit housing providers will save the government money. But it places a squeeze on non-profit housing providers, no matter how well managed.
These measures were taken prior to the COVID-19 crisis and do not ease its impact. They amount to an opportunistic seizure of a crisis to provide cover as the government further offloads its housing responsibilities.
Doug Smith is a Winnipeg writer and researcher.