Nunatsiaq Online
NEWS: Nunavut January 24, 2013 - 4:23 pm

Nunavut unveils new public housing rent scheme

GN hopes new scale will remove disincentives to work, reduce poverty

NUNATSIAQ NEWS
Nunavut public housing units under construction in Taloyoak, in an undated file photo. (FILE PHOTO)
Nunavut public housing units under construction in Taloyoak, in an undated file photo. (FILE PHOTO)

(Updated 6:30 p.m., Jan. 24)

If you’re a tenant within the Nunavut Housing Corp.’s public housing system, by the fall of this year you’ll see big changes in the way your rent is calculated.

Peter Taptuna, the minister responsible for the housing corporation, announced long-awaited adjustments to Nunavut’s public housing rent scale Jan. 24.

The GN promised such a new rent scale in February 2012, when officials released the Makimaniq anti-poverty plan.

And this past June, Taptuna told MLAs that he would likely release the new scale some time in 2013.

The changes announced Jan. 24 are aimed at fixing glitches in the old system that caused dramatic rent increases for tenants who found jobs.

This, in turn, led people to quit those jobs to go back onto income support — a perverse disincentive the GN hopes to eliminate.

“In the short term these changes mean less revenue for the Government of Nunavut. However, allowing tenants to accumulate wealth and advance in their field of employment will create economic spinoffs to the community and a reduced social burden,” Taptuna said in a statement.

A background document said the new rent scale will likely cost the GN about $2.4 million a year in lost revenue.

But the GN hopes they can make that up in reduced welfare payments if the new rent scale encourages more tenants to get jobs.

“If eliminating rent assessments on non-primary leaseholders allows them to obtain and maintain work, there is a gain to the GN in reduced or eliminated Income Support costs,” the backgrounder said.

Even if only 500 public housing tenants come off income support, the GN estimates they will have recovered the $2.4 million in lost rent money.

The new rent scale system will take effect in the fall of 2013.

Here are some of the new policy’s highlights:

• rent will be calculated only on the income of the unit’s two primary leaseholders;

• a new method for calculating rent will use a graduated income scale similar to the tax brackets used to calculate federal income tax;

• the minimum rent will be indexed to Nunavut’s minimum wage, which amounts to about $22,000 a year;

• elders will only pay rent calculated on the portion of their income that exceeds their community’s “Core Need Income Threshold”; right now elders earning more than the CNIT pay rent based on their full income;

• the GN will review maximum rents to encourage tenants to transition out of public housing.

Here’s what will stay the same:

• minimum rent will stay at $60 a month;

• eligibility for public housing will continue to be based on total household income based on Revenue Canada information;

• rent deductions for overcrowding, unit condition ratings and cost of living will still apply;

• if a public housing tenant gets a job or a pay raise, their rent will not increase until Sept. 1 of the following year;

• the rent scale will still allow for immediate reductions in rent for seasonal workers or tenants who lose their jobs and suffer a loss of income;

• the income of students and people attending pre-trade and trade courses will continue to be exempt from rent calculations.

Here’s how the new graduated rent scale works:

• annual household income under $22,000 — minimum rent of $60 a month;

• annual household income between $22,000 and $40,000 — rent will be calculated at 20 per cent of income;

• annual household income between $40,000 and $80,000 — rent will be calculated at 25 per cent of annual income;

• annual income between $80,000 and $97,200 — rent will be calculated at 30 per cent of annual income;

• annual income above $97,200 — rent will rise to the maximum level.

Right now, the housing corporation operates more than 5,000 social housing units.

That represents 51 per cent of Nunavut’s total housing stock. About 60 per cent of the territory’s people live in those public housing units.

Of those households, 58 per cent pay $60 a month or less in rent.

After the new scale takes effect, a whopping 76 per cent of Nunavut public housing tenants will pay $60 per month or less.

The housing corporation says only a small number of higher income households live in public housing.

Of the more than 5,000 households living in public housing, only 69 pay more than $1,500 a month in rent and only 39 report incomes greater than $120,000 per year.

As the housing corporation prepares to carry out the new rent scale, it finds itself facing an uncertain financial future.

This past October, Taptuna told the legislative assembly that even if Nunavut could afford to build the 3,580 public housing units it needs to fix the current housing shortage, the cost of maintaining those units would require an additional $82.3 million in annual spending.

At the same time, the Canada Mortgage and Housing Corp.’s annual contribution is shrinking every year under an agreement reached years ago.

This year, the CMHC will give the housing corporation $21.9 million. But by 2037, that contribution will fall to zero.

 

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