A recent study by Statistics Canada found that 1 in 6 new immigrants rent their home, and those who have recently arrived are having more difficulty finding affordable housing than immigrants who have been in Canada longer.
The study defines affordable housing as a situation where more than 30% of pre-tax household income is spent on shelter costs. It uses renter data from Census 2021 but excludes those who came after 2019 when evaluating housing affordability.
It defines recent immigrants as those who arrived in Canada between 2016 and 2021, and current renter households as those in which at least one person has lived for more than a year. It found that more than one-sixth (16.7%) of recent immigrants were recently living in a renter household.
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Statistics Canada says more than a third (37.1%) of recently arrived immigrant tenants were unaffordable in housing, compared to 23.2% of existing tenants.
According to the 2023 Rental Market Report by the Canada Mortgage and Housing Corporation (CMHC), the rise in the cost of home ownership has led to an increase in the demand for rental housing. Simply put, prospective home buyers cannot afford to purchase a home, so a large portion of the population has no choice but to look for rental housing.
Renting in Canada
Many newcomers have to find rental accommodation when they arrive in Canada, as it takes a lot of time to establish roots in a new country.
Renting in Canada has become more challenging as the cost of rent has increased significantly following the COVID-19 pandemic. According to Rentals.ca, the average price of a one-bedroom apartment in Canada is $2,149. However, prices are generally higher in Canada’s largest urban centres, going up to $2,976 in Vancouver and $2,614 in Toronto.
Census 2021 data shows that the growth of recent immigrant renter households (+21.5%) was more than double that of owner households (+8.4%) from 2011 to 2021. This means that renters were more than twice as likely to live in affordable housing than owners.
It also found that nearly 80% of renters living in poverty were living in unaffordable housing. The study said a recent rise in evictions, forcing renters to move homes at a time when rent costs are at an all-time high, is a contributing factor.
The median housing cost for renters who recently lived below the poverty line was $1,400, while it was $1,050 for renters currently living below the poverty line, it said.
A point of struggle for some newbies
One of the biggest contributing factors to the lack of affordable housing is that the average income of a freshman is not keeping pace with rising costs. According to Talent.com, the average gross (total before deductions) starting salary of a freshman in Canada is $51,480. It based the data on a sample size of 230 freshmen.
The same site offers a net pay (income after deductions) calculator by province. So, for example, a newcomer in Ontario earning the average starting salary will lose 26% of his income due to taxes and other deductions, leaving his annual take-home pay at $37,621.
Divided over 12 months, this means newcomers are earning just $3,100 per month. After rent, that leaves very little money to cover other expenses like food, cell phones, transportation, or other essentials. More specifically, a newcomer in Toronto has an average salary, pays the average rent, and has about $500 in expenses each month.
How is Canada helping make rent affordable?
Recognizing that the cost of rent is prohibitively expensive for low-income people, beginning in 2023, the federal government offered a one-time increase of $500 to the Canada Housing Benefit.
In addition, under the recently introduced Affordable Housing and Rent Act, developers building new rental properties may be eligible for a $25,000 GST rebate from the federal government.
However, housing is a provincial responsibility and Canada’s provincial governments are taking some steps to increase the supply of rental housing to reduce costs. For example, Ontario announced on November 1 that it was eliminating the entire provincial portion of the HST on new purpose-built rental housing. Earlier this year the province also imposed a cap on rent increases for existing tenants that is below the rate of inflation.
In 2019 British Columbia committed to build 114,000 units of affordable market rental, non-profit, supported social housing, and owner-purchase housing through partnerships by investing $7 billion over the next decade.
Last April, the province also announced a new Homes for People scheme to address the housing shortage.
The B.C. government says it’s on track to have 108,000 homes completed or under construction by 2027-28.
IRCC’s strategy to improve housing affordability
Immigration Refugees and Citizenship Canada (IRCC) released the Immigration Levels Plan 2024-2026 on November 1 this year. The department maintained the previous targets for 2023-2025 to help stabilize Canada’s population growth and therefore increase housing demand through immigration. It said bringing in immigrants to fill labour market shortages will help Canada fulfill its National Housing Strategy, a 10-year plan that will invest more than $82 billion in building more housing in Canada.
The Levels plan was heavily influenced by the new IRCC Strategic Immigration Report, which states that Canada should take a “whole of government” approach to immigration levels in order to facilitate growth.
The report recommends that IRCC work on best practices and adopt immigration pathways for foreign nationals committed to building and investing in new housing in Canada. Strict design and monitoring for compliance will ensure that the benefits are fully realized.
The IRCC report said the department would consider options to develop a more integrated plan to coordinate housing, health care and infrastructure across federal government departments.
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