Renters Bill of Rights

Renters Bill of Rights

The federal government announced that it will implement more robust safeguards for renters in Canada through the upcoming Budget 2024. This includes the introduction of a Canadian Renters’ Bill of Rights. According to Mr. Trudeau, the government will implement various actions to prioritize renters. In the coming weeks, the government will also address the efforts to promote equity for young individuals and all Canadian citizens. The government’s language aimed to attract the attention of younger Canadians, specifically mentioning Millennials and Gen Z. The revised charter will now require landlords, banks, credit bureaus, and fintech companies to consider rent payment history when evaluating creditworthiness.

Action on Affordable Rentals and Tenant Protections

According to Prime Minister Justin Trudeau, it is exceedingly difficult for younger Canadians to find a reasonably priced rental property. According to the Minister of Finance, Chrystia Freeland, renters should receive recognition for the funds they have contributed to rent. The government is assisting them in receiving credit for their rental payments, enabling them to qualify for a mortgage earlier or secure a lower interest rate, ultimately opening the door to their first home and assisting renters who aspire to enter the housing market.

Ottawa has committed to collaborating with provinces and territories to create a renters’ bill of rights. This legislation would mandate landlords to provide a transparent record of apartment pricing and establish a standard lease agreement that would apply across the country. The decision to take this action is a response to the growing issue of tenants experiencing illegal rent hikes and deceitful evictions. In Ontario, there has been an almost 80% increase in applications for personal use evictions, which have a reputation for being used dishonestly. Additionally, there has been a continuous rise in demand for rental properties, surpassing the supply in major markets nationwide. 

Vision for Rental Credit Inclusion

The government plans to modify the Canadian Mortgage Charter to assist renters in transitioning to become homeowners. This amendment would enable renters to establish credit history by making timely rent payments. This process will require collaboration with landlords, banks, credit bureaus, and fintech companies to implement the necessary adjustments and consider rental history in an individual’s credit score. 

Interestingly, this would have no consequence if the federal government’s push for open banking had not been stalled due to lobbying by the nation’s biggest lenders – the banks. Initiatives such as open banking, digital land and property registrations, digital identity verifications and digital rental lease registrations would make banking and housing more competitive for all Canadians.

Empowering Renters Through Tenant Protections

The Prime Minister admitted that there are technological obstacles, as some rental payments may involve transactions between relatives or roommates. He also stated that the lack of proper record-keeping and documentation may make the process difficult. Therefore, an implementation period is necessary. Although some financial institutions and landlords already implement this in certain areas and situations, a systematic approach is needed to cover the entire country. This will enable individuals to receive credit for their monthly rent payments, which can help them improve their credit score and ultimately make it easier for them to obtain a mortgage and achieve homeownership, leading to a more successful life.

The government aims to release budget details beforehand to generate greater interest in the measures it is implementing. In the upcoming 2024 budget, Prime Minister Justin Trudeau has revealed a series of initiatives designed to aid renters, such as a $15-million tenant protection fund and the establishment of a bill of rights for Canadian renters. The fund will support provincial legal aid organizations in safeguarding tenants against unjustified rent increases, renovictions, and problematic landlords. According to government officials, although the dollar amounts for this fund are insignificant, this will be the initial among a series of declarations in the upcoming weeks that will disclose specific components of the budget released on April 16.

Balancing Fiscal Responsibility

This comes as the Liberal government grapples with balancing the need to increase spending and exercise caution to avoid causing inflation. In the November fall economic statement, 3 specific objectives were outlined: to maintain the deficit for the current fiscal year under $40.1 billion, decrease the debt-to-GDP ratio by 2024-2025 and ensure that it continues to decline after that, and keep annual deficits below 1% of GDP from 2026-2027 onwards.

According to Freeland, the government established a definite set of fiscal markers during the fall economic statement that it is committed to meeting. However, according to a report by financial experts such as the Business Council of Canada, achieving Ms. Freeland’s recent targets is unlikely as the Liberal government has a history of failing to meet its own spending goals.

If you’re a renter with some savings and solid income, today’s mortgage market might be the perfect situation to secure homeownership. Reach out to nesto’s mortgage experts to see if you can afford a mortgage with your financial circumstances.