Thank you.
I commend the committee for making housing a priority in this study on poverty reduction. As the underlying principle of housing dictates, people are better able to move forward with their lives if they are housed.
The CHBA and our 8,500 member companies are the voice of the residential construction industry in Canada, a vital partner in developing and implementing housing policy as part of an overall poverty reduction strategy. As you know, the government is also creating a national housing strategy and much of what I will say here today, we've recommended there, too. After all, a national housing strategy and poverty reduction strategy should go hand in hand.
What may not be so obvious—and what I must emphasize today—is that addressing the entire housing continuum right up into market rate, rental, and home ownership is critical to both the housing strategy and the poverty reduction strategy. The ripple effects of deteriorating market-rate affordability and barriers to home ownership cascade right down to those in housing need and impede progress and poverty reduction if not addressed.
I should also note that I'm the chair of the International Housing Association and meet regularly with housing experts from around the world. I can tell you that international experts remark that you cannot fix social housing challenges without fixing market-rate housing affordability too.
With finite resources to address any public policy issue, we need innovative solutions. There are hundreds of thousands of Canadians in housing need who require help. To be successful, we need to find the tools to house more people in better housing for less public dollars. This can only be achieved if the housing strategy addresses issues across the entire continuum, from homelessness to social and supportive housing right through to affordability for market-based rental and home ownership.
Overall, we need to keep Canadians moving across the housing continuum towards market-rate housing. People need to keep moving along the continuum to make space available for those less fortunate. Even more important, we need to ensure people are not sliding back in the wrong direction. If affordability problems and market-rate housing push those who would otherwise be self-sufficient into a requirement for public support, our system has truly failed.
CHBA is very concerned that ignoring wider market-rate affordability and restricting opportunities for market-based housing will put more pressure on resources better used to help Canadians who truly need housing support.
With this in mind, let me now focus on some innovative approaches to housing Canadians in need. CHBA is part of the National Housing Collaborative, a cross-sectoral group of national housing stakeholders—public, private and non-profit—supported by foundations and charities. The collaborative was formed to develop deep, transformative, durable, and innovative policy proposals. The collaborative landed on four priorities. I'm sure you've heard, and will hear, a lot about the need for more social housing.
Today I'd like to focus on the collaborative's priority that would ease the burden on social housing, and that is a portable housing benefit. The majority of Canadians in core housing need do not have a housing problem. They have an income problem. As many of the front lines of anti-poverty organizations would agree, simply building and offering more and more social housing will be too slow, too expensive, and will not achieve the desired results. Yes, we need social housing. We need more of it and much of what we have needs to be improved, but social housing is not the answer in the majority of cases.
Most families in core housing need are already properly housed. The problem is their income. Rent is the largest item in the family's budget and simply leaves too little for other essentials. A portable housing benefit would alleviate this basic challenge. The design put forth by the collaborative can be implemented in steps to first meet those most in need. However, if and when fully scaled up, it would move a massive 800,000 people out of housing need, and contrary to myth, it would not cause rent inflation nor would it reduce rental availability. A portable housing benefit is probably the single most cost-effective and far-reaching anti-poverty measure open to the federal government.
It would move people into, or keep them in, market-rate rental housing, freeing up social housing for those who need more comprehensive support. One of the greatest strengths of the housing benefit is that it promotes individual autonomy and choice because it is not tied to a particular housing unit. People choose where they want to live and find accommodations that meet their specific needs. This flexibility has the potential to improve labour-market mobility and promote mixed-income neighbourhoods.
To make this system work, it is also essential that we keep home ownership within reach of would-be first-time homebuyers. This is because over 80% of rental units that become available each year for rent are those vacated by people moving into their own homes for the first time. Thus, keeping entry-level home ownership accessible makes more rental stock available. Moving people along the continuum from rental properties into home ownership, for those that want it, percolates back to those most in need.
With market-rate affordability in jeopardy in our most successful cities, action is required to support access to home ownership. CHBA has many recommendations on how the government can help with market-rate affordability, and we have submitted these recommendations to the national housing strategy—from mortgage rules, to transit-oriented development, to development taxes, and more.
I won't go into all those here, but it is important for the poverty reduction strategy that upstream affordability be addressed. For today though I'll focus on an innovative measure that can help both typical first-time homebuyers, as well as responsible hard-working lower-income families for whom affordable home ownership programs provide an excellent hand up.
I'm talking about shared equity down payment plans, sometimes referred to as shared appreciation mortgages. It's an approach already used on a small-scale by some 40 organizations across Canada. These initiatives provide access for home ownership for lower-income families through a third-party financial equity interest in the home that either reduces the amount required for the down payment, or the size of the first mortgage, or both.
The third party then shares in the house value appreciation or depreciation, as the case may be. There are many successful home ownership assistance programs across the country. They should now be facilitated in the scaling up of their efforts in particular to unlock private capital to invest in entry-level housing and support first-time homebuyers.
Before I finish I would like to turn briefly to housing supply.
It is worth noting that we estimate that given current demographics compared with current construction trends, we will be 300,000 family-oriented units short over the next decade, further driving up home prices and rents. Supply shortages are already driving up home prices in our largest urban centres.
With respect to rental properties, there has been a significant lack of purpose-built rental being constructed over the past few decades. Tax policy has been part of the problem, but if amended could be part of the solution.
First, we need to amend the tax regime to avoid GST being applied to new purpose-built rental developments. This increases rents for tenants and renders the business model for investing in purpose-built rentals less attractive, hence discouraging the construction of affordable rental units.
Second, we need to fix the tax on tax for accessory suites, such as granny flats and laneway housing. The current tax system, which incorporates land value rather than just construction cost, is discouraging this important form of of infill housing that is favoured by more and more municipalities. These innovative infill projects increase the number of affordable homes in established neighbourhoods.
Finally, the government needs a national NIMBY, not in my backyard, to YIMBY, yes in my backyard, campaign. New developments, especially densification and mixed-income housing, are often met with local public opposition even when aligned with community plans. A national NIMBY to YIMBY campaign can facilitate a smoother transition into the communities of tomorrow.
I'll conclude by reiterating that a national housing strategy that addresses the full housing continuum is an essential part of a successful poverty reduction strategy.
Thanks.