Federal Housing Minister Sean Fraser on Thursday launched a new $1.5 billion housing cooperative development program, promised by the Liberal government two years ago in its 2022 budget.
Mr. Fraser was in Winnipeg on Thursday to launch the program, which the Liberal government presents as “the most significant investment in cooperative housing in 30 years.” This new Housing Cooperative Development Program should allow the construction of “thousands of new cooperative housing units by 2028,” Ottawa hopes — the exact number will depend on where these cooperatives are created.
“The real reason we want to invest in housing co-ops is not just so that we can reduce the cost of rent today, but also so that affordability is preserved in the long term when profit is not taken into account in the equation,” said Minister Fraser in an interview with The Canadian Press.
Housing cooperatives are administered by their residents, without outside owners, and generally operate on a balanced, non-profit basis.
The federal government specifies that the program was designed jointly with the Co-operative Housing Federation of Canada – which represents more than 900 cooperatives across the country – as well as other players in this sector.
This federal program is one element of a government plan released this spring to combat high housing costs in Canada.
Prime Minister Justin Trudeau’s government is trying to woo young voters by tackling key economic issues like housing, which polls show are prompting many of them to turn away from the Liberals.
Prioritize those who need support
Minister Fraser said Thursday the program would prioritize funding for projects that help women and Indigenous communities.
“Previously, Canada had a much healthier proportion of its non-market rental housing stock,” the minister said, highlighting the lack of investment in non-market private rental housing stock from both Conservative and Liberal governments in the past. over the last decades.
“I believe Canada needs a much healthier housing mix if we are to reflect the needs of the Canadian population. »
According to data from the Organization for Economic Co-operation and Development, only 4% of Canada’s housing stock was comprised of social housing in 2020. In comparison, the OECD average was 7%.
“By prioritizing people over profits, housing cooperatives help maintain housing prices at an affordable level in the long term,” Minister Fraser recalled Thursday.
The federal government says that for a first round of funding, housing co-op providers will be able to apply between July 15 and September 15. Other rounds are planned subsequently, indicates the government.
The program, which will provide $1 billion in loans and $500 million in grants, will be administered by the Canada Mortgage and Housing Corporation.
Interest rate
The program is launched the day after the Bank of Canada decided to lower its key rate by a quarter of a percentage point — a first reduction in four years.
High interest rates have taken a toll on many mortgage holders as their interest payments have increased. Many real estate developers have also had to put their projects on hold due to higher financing costs.
Mr. Fraser estimated Thursday that lower interest rates will reduce both the cost of construction and the cost of borrowing for mortgage holders.
“I don’t want to suggest that 25 basis points will suddenly solve the housing crisis,” said Mr. Fraser. But it is very clear, with the decision of the Bank of Canada, that we have reached an important milestone and that we are moving in the right direction, despite the fact that we have important work to do in the months to come. »
The Co-operative Housing Federation of Canada stressed Thursday that during the 1970s and 1980s, these cooperatives allowed Canada to meet its housing needs. “Cooperatives built several decades ago today offer affordable and safe housing to a quarter of a million Canadians,” supports the Federation in a press release.
