With the rising cost of living, it’s getting harder and harder for Canadians to keep up with basic living expenses for food, shelter, utilities, and more. For those who rent rather than own their homes, rent assistance programs can be an invaluable means of making ends meet while dealing with other financial challenges.
From 2011 to 2021, the number of households that rent their home grew by 21% compared to the 8% growth in home ownership over the same period.
Though more Canadians still own their home than rent it, the gap is starting to close. If you’re one of the many modern Canadians who rents rather than owns, or are considering renting, please read on!
What’s the Cost to Rent a Home?
The cost of renting a home has increased to the highest it’s ever been—the average cost of rent surpassed $2k for the first time in November 2022. This is up 12.4% from November 2021, outpacing the rate of inflation during that same time period.
Let’s compare this to the cost of the average mortgage in Canada. The city with the highest average monthly mortgage payments in Canada is Vancouver (at $2,018 in Q3 2021) and the city with the lowest average mortgage payment is Quebec City (at $923 in Q3 2021). This makes the median cost $1,470.50/month for mortgage payments.
At first glance, the cost of owning a home seems lower than the cost of renting one. However, this calculation doesn’t take into account factors like:
- Property taxes
- Upfront costs for the home (down payment, legal paperwork, etc.)
- Building maintenance
- Utilities (some rentals may or may not include utilities in the cost of rent -be sure to check your rental agreement)
- Property insurance
- Risk of housing “bubbles” bursting and diminishing your equity, or putting you “upside down” on your mortgage (e.g., owing more on your home than it’s worth on the market)
- Flexibility in moving (it’s easier to cancel a rental and move out than it is to resell your home and move into a new one)
For many, the added costs of home ownership in addition to the basic cost of the mortgage can more than offset the difference in the cost between a mortgage and rent payments. On the other hand, owning your home gives you a chance to build equity that you can leverage later on if you need it.
When assessing whether to rent or buy your home, it’s important to consider the benefits of renting and compare them to the benefits of home ownership.
Rent Assistance Programs You May Be Eligible For
So, you either are currently renting a home in Canada or plan to start renting soon, but think that you might have trouble managing debt while paying rent (or are already struggling). What can you do?
One option is to start looking into rent assistance programs offered by various government agencies. Some benefits are strictly for renters, others might apply equally to all Canadians, whether they rent or own their home. To help you get a head start, here are a few benefits you can use as rent assistance, or to cover other expenses so you can afford your rent more easily:
1. The Canada Housing Benefit
The Canada Revenue Agency (CRA) administers the Canada Housing Benefit to help low-income renters keep up with the cost of living. In late 2022, the CRA added a one-time “top up” payment of $500 to the housing benefit. Applications for this benefit are open until Friday, March 31, 2023.
If you’re having a month where money’s tight and you just need a little help getting through, applying for this rent benefit could help.
2. The Canada-Ontario Housing Benefit
This is a rent benefit specifically for those living in the province of Ontario and available if you’re part of an “eligible priority group” that is on or eligible to be on the Centralized Waiting List for Rent Geared-to-Income (RGI) subsidy. RGI is, typically, 30% of a household’s monthly Adjusted Family Net Income (AFNI).
However, it should be noted that the waiting list could make getting this particular piece of rent assistance difficult—there are more applicants for subsidized housing than there are available units. So, if you need help now, it might help to apply for other benefits while you’re on the waiting list for this one.
3. The Rent Supplement Program (Alberta)
Those living in Alberta can apply for rent assistance under the Canada-Alberta Housing Benefit:
- The Rent Assistance Benefit. This is a long-term benefit paid directly to tenants available through most housing management bodies in Alberta. This benefit is calculated based on household income and local market rent and is reviewed annually to determine eligibility—though there’s no limit to renewals.
- The Temporary Rent Assistance Benefit. This is a short-term variant of the benefit meant to help those with low income or who are between jobs so they can afford their rent while they stabilize their finances. Availability is limited to households in Calgary, Edmonton, Fort McMurray, Grande Prairie, Lethbridge, Medicine Hat and Red Deer (plus some surrounding communities). Unlike the other benefits, there’s a 2-year limit to this program. Also, if you’re receiving social assistance already from other benefits like income support or the guaranteed income supplement, then you may not be eligible for the temporary rent assistance benefit.
4. Employment Insurance Sickness Benefits
Say you’ve recently suffered a temporary loss of ability to work because of illness. If so, you could qualify for employment insurance (EI) sickness benefits and use that income to cover basic costs like rent or food while you’re recovering.
Note that this is a benefit for those not already receiving paid sick leave or temporary disability plan benefits through their employer. The Government of Canada recommends checking if your employer has such a plan in place before applying for EI sickness benefits.
The benefit is for 55% of your normal earnings up to a cap of $650 a week. So, it won’t completely replace your normal income—especially if your salary is on the higher end.
Applicants filing for EI sickness benefit claims after December 18, 2022 are eligible for up to 26 weeks of this benefit.
5. Guaranteed Income Supplement
If you’re a Canadian resident over the age of 65, are already receiving the old age security (OAS) pension, and your income is below the maximum annual income threshold for this program, then filing for the Guaranteed Income Supplement (GIS) may help you cover basic living expenses like rent.
Typically the Government of Canada will send you a letter letting you know when you will start receiving the GIS benefit a month after you reach the age of 64. However, if the government doesn’t have enough information to enroll you automatically, you may need to apply for GIS manually.
The amount of the benefit may vary depending on factors such as your:
- Current income
- Marital status
- Whether you’re a widow/widower who hasn’t remarried/entered a common-law relationship
These are just a few of the rent assistance and other income benefits that you could potentially use to help make rent. There are many other programs that you could use that may be specific to where you live, your income level, or other qualifying factors.
Need Help Managing Your Debt While Paying Rent?
What can you do if you’re struggling with a significant amount of debt that makes paying rent difficult? If you’re having a hard time making rent payments not because of insufficient income, but because you’re managing large debts, then you might want to investigate your debt management options.
For example, you could look into financial coaching for advice, file for insolvency with a Licensed Insolvency Trustee (LIT), or apply for a debt consolidation program (DCP) to help you manage or even get rid of your outstanding debt.
You could also take a look at some free online debt management tools like our debt calculator or budget calculator to help you assess your current expenses and income to create a budget that works for your income.
Need help managing your debt right now? Reach out to Credit Canada for assistance. Our counsellors are standing by to help you get out of debt so you can get back to living your life instead of living in fear of collection calls.