The impact of COVID-19 on the Canadian and global economy has led the Government of Canada to implement measures to help stabilize the economy and support Canadians facing hardship. Besides income support to workers and businesses, the government of Canada has also implemented measures to help ease the burden of certain expenses many Canadians face like mortgage deferrals and a moratorium on student loans. However, many Canadians who rent are now feeling unheard as no measures were taken to help them with their rent.
Check out how Coronavirus (COVID-19) is affecting the Canadian mortgage.
What Hasn’t The Government Of Canada Introduced Deferred Rental Payments?
According to an article by CBC, the Government of Canada doesn’t have the ability to coordinate such a plan with landlords due to the lack of structure and management that banks possess. Moreover, according to CTV News, “the federal government said any relief on rent falls under provincial jurisdiction”. However, both the federal and provincial governments hope that landlords will not evict their tenants and be accommodating during this unprecedented and exceptional circumstance.
Why Do People Who Rent Need Deferred Payments?
As more and more businesses close and stop production in an effort to keep their business afloat, more and more Canadians are finding themselves jobless. The problem is, despite income stopping, payments like heating, water, electricity, mortgage, car, food, and other expenses don’t stop. As such, the government has provided homeowners with the ability to defer their mortgage payments. This combined with the Employment Insurance or Canada Emergency Response Benefit, Canadians homeowners have the support they need to survive until the economy recovers.
On the other hand, in most provinces people who rent, currently don’t have that luxury, they are still required to pay rent, despite the average rent for a 1 bedroom apartment is $1,406, but can easily cost $2,240 in areas like Toronto. Even with the Emergency Care Benefit, Canadians will get a maximum 1,800, which may cover rent for some people but leaves barely enough for food and other essential expenses. According to a Global News article, people who rent account for 3.4 million Canadians and of those, 46% have savings that can only last them for about a month. In fact, 24% said they barely have enough savings to get them through a week without pay. So, how will renters cope, if they lose their jobs?
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Can The Provinces Help?
As previously mentioned, rental laws are provincially regulated, so, any rent deferrals or rent freezes will be determined by each individual province. Currently, only Ontario, British Columbia, Quebec, and Nova Scotia have implemented measures that will help renters who are affected by COVID-19 from being evicted.
British Columbia – The BC Housing recently put up a bulletin addressing rent and eviction. The measures include a temporary moratorium on eviction for tenants in subsidized and affordable housing buildings. They have also included a temporary rent adjustment for BC residents who have experienced a job loss or reduced hours due to COVID-19. You can apply with BC Housing who will subsidize and re-calculate your rent based on your income loss.
Quebec – According to an article to the Regie du Logement, the Housing and Municipal Affairs Minister is suspending all evictions unless the “accommodation was re-let by the landlord before March 17, 2020”.
Ontario – According to CTV News, a representative of the Ministry of the Attorney General, said no new eviction notices will be issued and any current enforcement of evictions will be postponed in Ontario.
Nova Scotia – The government of Nova Scotia has implemented a 3-month ban on eviction for tenants who cannot pay rent due to income loss caused by COVID-19.
Prince Edward Island – Evictions will be on hold for 6 weeks for individuals residing in P.E.I Housing Corporation.
New Brunswick – The Government of NB has banned rental evictions due to missed payments until May 31st.
These bans on evictions means your landlord cannot evict you if you do not pay rent or only pay a portion of your rent. You are protected until the your government lifts the ban. However, the problem with rent deferrals is that, unlike a mortgage where you simply adjust the amortization schedule, your rent will still be owed during your lease. You may have to do one of the following to pay back the missed rent:
- Pay the missed payments in on lump sum after the ban is lifted.
- Create a payment plan with your landlord that will help you pay off the rent you missed. For example, if you missed 2 payments of $1000 and you have 1 year left on your lease. Your new payment plan could be the regular $1000 dollars rent, plus $166.67 every month for the missed payments. This amount is calculated by spreading the 2 missed payments over the 12 months of your lease ($2000/12 months = $166.67).
Many landlord associations and rent advocates in Canada are asking the provincial governments to establish rent banks during the pandemic to help both landlord and tenants pay rent. These Rent Banks work by providing money as a benefit or a no-interest loan to individuals struggling to pay rent. Their loan terms after often low cost and have long repayment periods making them ideal during harsh financial times.
What About The Landlords?
The problem with freezing rent and deferring rent is that ultimately, landlords still have to pay. They may be able to defer the mortgage payments with their banks, but if not, they will face the burden. Moreover, interest may still be charged over the deferral period. According to the Edmonton Journal, the premier Kenney said: “barring landlords from collecting rent for two or three months could lead to a total collapse of the stock of housing that’s available to people”.
As COVID-19 continues to shut down the countries activities, we are likely to see more of the provincial governments implement measures to help their residents. Until things go back to normal, it is advised you keep up to date with the measures your provincial government and the federal government makes. This will allow you to prepare and organize your finances for the coming months.