Affordable housing plans face backlash

Local realtor and landlord organizations are warning of trouble if the Yukon government moves forward with its plan to build more affordable housing.

Local realtor and landlord organizations are warning of trouble if the Yukon government moves forward with its plan to build more affordable housing.

“There’s not going to be one tenant in need moving into these units,” said Terry Bergen, a past president of Yukon Real Estate Association.

Bergen and Sonny Gray, a director with the Yukon Residential Landlord Association, are speaking out against a plan by the Yukon Housing Corporation to subsidize developers and organizations if they promise to build affordable housing options.

Under the plan, the Yukon government has said it will use the $13 million left in the Northern Housing Trust to match private and non-government organization investment up to 50-50.

All the groups have to do is guarantee that rental rates remain affordable for at least 10 years.

In this case “affordable” means rents remaining at or below 95 per cent of median rates. The latest statistics put that rate at about $900.

But doing it that way is going to flood the market with units, Bergen and Gray say, and not actually help the people who are most in need.

“Obviously they’re targeting a certain demographic. They’ve just missed a step,” Gray said. “They haven’t had a pre-qualification. There should be some form of screening to make sure the right people get in there.”

Without any screening process, anyone could apply to the low-rent units, even if they could technically afford to pay a higher rent, Bergen said.

Yukoners who rent out units – and had to pay full price to buy them – are going to be hurt, they say.

“Both our organizations support wholeheartedly that people who can’t afford rentals should be able to get assistance to have rentals. Nobody should be out on the street,” Bergen said. “But this whole program is targeted at all tenants. So that means there will be a drain of tenants from current housing which costs 100 per cent to provide.”

Michael Hale, vice president of the Yukon Housing Corporation, wouldn’t comment on whether or not there will be any sort of screening in place for prospective tenants in these new units.

“It’s certainly true that what this is is private sector,” Hale said. “And we’ll have a conversation with proponents about what’s possible.”

Five projects have been identified for funding. But until discussions are complete, many of the details of the agreement have to remain confidential, he said.

Of the five projects, three are being built in Whitehorse.

That works out to about 75 units, mostly bachelor and one-bedroom apartments between 320 and 600 square-feet, he said.

Two projects are being funded outside of Whitehorse, though Hale would not say where.

Those make up less than a dozen units.

The housing corp.‘s contribution to projects represents about 40 per cent of the cost, Hale said, adding that the government has not used up all of the $13 million in the trust.

“For instance, if you’re a proponent, you had to come up with your own land and we wouldn’t contribute money towards your land acquisition,” Hale said. “If you had anything in your building that isn’t affordable housing, if you have a downstairs commercial component where you’re going to rent out commercial space, it was excluded and it wasn’t allowed to be funded (out of the trust).”

Affordable housing is designed to fill the gap between households that make less than $40,000 a year and can qualify for social housing, and those who can afford higher rents, he said.

“We’re not trying to create more social housing…. If there’s social housing to be built, we can do it and we have built a ton of it. We’ve built over 200 units since 2009,” Hale said.

Gray, who manages hundreds of rental units in Whitehorse, said rents are high because the cost of buying a unit to rent out is high.

He uses the example of a two-bedroom apartment renting for $1,500 a month.

“Out of that $1,500 there is $850 that goes to my mortgage, there’s $200 that goes to my condo fees, there’s $1,200 that goes to city taxes every year, there’s insurance and then of course I need a buffer for maintenance,” he said.

All that combined comes up to the $1,500 mark, he said. “When you talk about lowering the rent, I can’t go any lower.”

Bergen said many people who buy new homes often do it with the understanding that they will be able to rent out part at a certain rate to cover the bills. That’s the only way they can afford it.

“Basically the government has allowed hundreds of young Yukoners to go out, invest their money in these condos, and pay full price and get a full 25-year mortgage. They’re locked in for 25 years,” he said.

Both groups also have concerns about the 10-year rental guarantee that comes with the government money.

As it stands right now, nothing stops developers from turning the units into condos and selling them off separately the moment that 10-year window is over.

Hale said the 10-year timeframe is consistent with what is used in other jurisdictions for similar projects.

“It’s deemed appropriate for what you can lock someone into around a residential asset,” he said.

As it stands, the 10-year guarantee doesn’t start until after the units are built.

“Before any of these units hit the market, if they hit the market, if people decide to sell them, we’re talking like 2026,” Hale said.

“If it takes two to three years to construct these projects, it is a ways off before anyone is selling anything and there is no obligation and no guarantee that they will be sold.”

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