GN housing plan: from tenant to homeowner

This September, the Government of Nunavut will give public housing tenants a new way to become homeowners.

The program, called “TOP,” will provide subsidized mortgage payments to public housing tenants who want to buy their units from the Nunavut Housing Corporation.

What’s new about TOP is that it takes fuel costs, taxes, insurance, and maintenance into account when calculating how much money eligible clients will pay each month on their mortgages.

Mortgage payments will be based on 20 per cent of the client’s gross monthly income — but most other shelter costs will be deducted, to arrive at the final mortgage payment.

“It’s dramatically changed now, in that we’re taking [all shelter costs] into consideration as part of their income,” said Kelvin Ng, Nunavut’s housing minister. “Their mortgage payments will be less the operating costs of the unit.”

For example, if a tenant’s mortgage payment works out to $20,000 a year and the unit costs $6,000 a year to operate, then the actual mortgage will cost the tenant only $14,000 a year.

The housing corporation and the local housing organization must agree first on what units will be sold. Prices will be calculated at market rates.

After a sale, the housing corporation must replace the unit within three years.

What’s in it for the government? Ng says it will eventually reduce some of the costs the government must now pay to operate and maintain public housing, and will generate new cash to build more units.

“First of all, in the long run, it will get rid of the ongoing costs because eventually the individual will end up owning the unit, and once their mortgage is paid off, they will be on their own,” Ng said.

“Secondly, it will free up some cash from the sale of the unit, and we will be able to reinvest that in public housing units.”

Under a long-term agreement with the Canada Mortgage and Housing Corporation, the federal government’s contribution to Nunavut for the operation and maintenance of Nunavut’s public housing stock will gradually shrink until it reaches zero.

But now, the annual CMHC contribution is granted to Nunavut every year under a “block-funding” agreement.

That means Nunavut has more choices than in the past on how to spend the public housing money it gets from Ottawa.

“In the past, if you had a unit and you disposed of it, you had to pay back the particular mortgage on that specific unit to the CMHC,” Ng said.

“But now, if there are shortfalls, we’re responsible for it. From that perspective it doesn’t matter to them. They’re only giving us this much money to operate those units that we have, and at the end of it, we own the units regardless.”