Rental housing developers are asking senior levels of government to step up financial support for housing projects. Stranddev | The_CapeGroup | realestate realestatenews Vancouver BC
, both of which are low-interest rate loan programs to incentivize rental construction. The RCFi has proven especially popular with developers the last few years because of the loan size and a possible 50-year amortization in exchange for the delivery of rental units with middle-income affordability. The Canada Mortgage and Housing Corporation oversees the program, which lasts until 2028, and has a budget of $25.
“We anticipated it. As soon as they started raising rates, you knew they would start going on a roll. That was the problem I had with it. I don’t mind them raising rates, use it as a tool. But the way it’s being done is not allowing anyone to make adjustments to their lives. Inflation is a lagging indicator, and it’s critical that we don’t overshoot interest rates and put us into an even deeper recession.
The only solution is government intervention, says Mackay. His company has benefitted from the CMHC’s new MLI Select, a mortgage loan insurance program for the construction or renovation of multi-unit projects, based on a point system for affordability and energy efficiency. Points determine amortization periods and loan-to-value ratios. Borrowers must have a minimum net worth of at least 25% of the loan amount they’re requesting. He said it’s more straightforward than the RCFi program.
“But I think we are in a situation though, where we have a crisis of housing supply at all ends of the spectrum, and really what we need to do right now is figure out a way to unlock further funding. The private sector can do a lot of it, but if we don’t have additional funding from senior levels of government it’s not possible to be in the rental business today.”
Government could also make an effort at de-stigmatizing trades jobs to encourage youth to go into the trades. Labour shortages have become a key issue as trades are aging out in the next decade, and the next generation isn’t stepping into those jobs.“There’s a holistic approach that’s necessary, and it needs to be better integrated across municipal, provincial, and federal government levels if we are going to even maintain the current situation.
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