New ONPHA report analyses pros and cons of rental assistance programs
With rents and housing prices on the rise and growing waiting lists for housing assistance, governments have two strategies available for tackling housing unaffordability: they can build new social housing or they can offer subsidies to households living in private rentals.
Using subsidies as a rapid response
As the number of households in housing need has risen, governments have been under pressure to find rapid solutions to the growing problem of unaffordable housing. Over the past decade, rental assistance programs like rent supplements and housing allowances that allow residents to access units in the private market have emerged as a popular response.
ONPHA’s latest release, “Making ends meet: Opportunities and challenges of rental assistance programs,” explores the rise of these types of programs in Ontario and their implications for residents and rental markets. The release is the fifth paper in ONPHA’s focusON research series, which examines key issues facing Ontario’s affordable housing system and presents a variety of perspectives.
The report begins with a recognition that housing policy has evolved significantly since the supply-focused programs of the post-war period. Today, the high cost of land in much of Ontario, coupled with an emphasis on the notion of client choice in government-funded programs, has led to increased funding for rental assistance programs (such as housing allowances and rent supplements) which cover the difference between the price of rent and what a household can afford to pay. The main difference between the two programs is that in rent supplement programs, subsidies are paid directly to a landlord, while in housing allowance programs, the subsidy goes to the household.
Currently, rental assistance programs receive funding from both the federal government and the Province of Ontario. At the same time, a number of local areas like the Region of Peel and the Region of Halton have developed their own innovative rental assistance programs to help residents that are struggling with the cost of housing and decrease the number of households on social housing waiting lists.
What’s the catch?
But rental assistance programs are not without their critics. Some have noted that unlike traditional government investments in housing, rental assistance programs do not fund an enduring public asset. Often, the money spent on them goes into the pockets of private landlords, who offer no guarantee that their units will remain affordable over time. In rental markets with low vacancy rates, landlords have an incentive to routinely raise rents. Because of this reality, government investment in new social housing may provide better value for money in the long-term than rental assistance programs.
At the same time, though, rental assistance programs do offer significant advantages. Constructing new social or private rental housing takes a great deal of time, and many households – particularly those in crisis – need an immediate solution to their housing troubles. For the majority of households in housing need in Ontario, the main problem is affordability: they simply don’t have enough income to afford rental costs in their community. In this aspect, rental assistance is very effective at improving their security and wellbeing.
Overall, both supply programs that create new housing and rental assistance programs that help people afford existing units in their communities are needed. While more research on some of the nuances of these programs is merited, a balanced government approach that emphasizes both solutions is recommended.