Canada is overdue for a new generation of affordable rental housing.
Currently, around 1.7 million Canadian families don’t have a home that meets their basic needs and that they can afford. Renting can be a good option, but only if there are units available in the right places and price ranges.
Experts agree that having a stable supply of rental housing is critical to our nation’s housing future. That’s where the Rental Construction Financing Initiative (RCFI) comes in.
Part of the National Housing Strategy (NHS), the RCFI provides low-cost loans to encourage the construction of rental housing which is affordable to middle class Canadians across the country. The initiative has a total of $3.75 billion in loans available to encourage the construction of more than 14,000 new rental housing units.
“Canada’s middle class will benefit from the construction of new rental housing,” states David Charron, National Director, Multi-Unit Affordable Rental at Canada Mortgage & Housing Corporation.
“As part of Canada’s first-ever National Housing Strategy, this initiative provides low-cost loans to support new construction projects, relieving pressure in rental markets that are experiencing low vacancy rates and high rents,” he continues. “It will allow more middle-class Canadians to spend more time with their children by living closer to public transit, schools and services.”
By supporting construction and early operations with low-cost loans, the initiative will help expand the number of housing developers, non-profit organizations and municipalities able to access financing for rental housing projects. The focus is on supporting sustainable apartment projects in areas where there is an acute need for additional rental supply.
Prioritizing the housing needs of Canadians
These new rentals are one part of the 100,000 total new housing units the $40-billion National Housing Strategy aims to help create over the next 10 years.
Through a variety of construction and research funding and social programs, the NHS is designed to address a wide range of housing challenges and find solutions across the entire housing continuum – including the rental market. It aims to promote diverse, accessible, sustainable and livable communities while, among other objectives, cutting chronic homelessness in half.
The RCFI, specifically, will prioritize standard apartment projects that meet or exceed certain requirements for financial viability, affordability, energy efficiency and accessibility, and those that support vibrant, socially inclusive neighbourhoods, are close to public transit, and are developed through partnerships or collaboration. Projects that are closer to breaking ground are also more likely to be prioritized.
To be eligible, projects must include at least 5 rental units, respond to a demonstrable need for rental supply, and have zoning in place, a site plan in process and a building permit available.
Projects must decrease energy use and greenhouse gas emissions at a level at least 15% below requirements in the 2015 National Energy Code for Buildings or the 2015 National Building Code. In addition, at least 10% of the project’s units must meet or exceed accessibility standards and have barrier-free common areas as regulated by local codes.
Loans for projects that meet the eligibility requirements are offered on a 10-year term at a favourable, fixed interest rate that is locked in at first advance for greater cost certainty. They can be amortized up to 50 years, and are insured by CMHC at first advance.
You can learn more about the RCFI, eligibility requirements, and how to apply online at cmhc-nhs.ca/financinginitiative. Loan commitments are available through December 2020.