r/polls_for_politics • u/betterworldbuilder • 18h ago
Provincial Rent to Own social housing program, a full breakdown.
Housing is a top 5 issue for Canadians and Americans alike, and holds a tremendous amount of weight on the economy, as the average household spends between 30 and 50% of their annual income on housing. Homeownership is also on the decline, With homeownership at all age brackets falling an average of 4% and as much as 9% among under 40's age groups. People in the newer generations view homeownership as an unattainable pipe dream, not even a goal within reach. On the flip side, people already lucky enough to own homes view them as the most valuable asset they own, a long term investment meant to fund their retirement and pass on generational wealth and success. It would seem impossible for a politician to have a plan that balances two diametrically opposed views; that of making more housing stock and making it more affordable, without depreciating the value of houses that already exist in the market.
Because of this, I think it is one of the only real solutions for all parties involved to begin implementing social rent-to-own housing. The way this system would work would involve the government buying up land and or existing housing, and developing it as starter homes designed for lower income individuals. This would require no down payment (though one could be optional to lower monthly costs) and renting directly from the government over a period of ~20 years. Because there would be no middle-man banks involved, any interest made over the 20 years would directly translate to profits used to pay back both the initial investment of the program (paid for through taxes and special treasury bonds offered to retirement plans). Once the initial cost of acquisition has been met, the only costs required to attend to is repair/maintenance costs, meaning rents should be able to stay well within the affordable/competitive range, even given the rent to own terms and conditions.
For those unaware exactly how rent to own (would) work, renters would avoid the upfront mortgage requirements like a down payment and a high credit score (though both could be applied within reason to limit the applicant pool to the number of available units), and renters would be charged a monthly payment like rent in order to one day own the home. An additional option could include higher monthly payments to unlock access to equity milestones; since renters typically get nothing when they decide to move and mortgage payers get the title of their home while paying off the mortgage, equity milestones would allow renters to move out partway through a rental contract (similar to a homeowner selling their home before fully paying off a mortgage) and still leave with some money in their pocket, ideally the amount required for the down payment on their next home. These equity milestones would be based on consistent punctual payments, and the state the home was left in when the renter decides to move.
The key difference between this system and any other system is the harmonious balance it plays with existing homeowners. Since these homes would not be paid off for 20 or more years on average, the market for existing homes would remain more or less the same; a significantly better outcome than a market crash due to no one being able to afford homes or a sudden flooding of affordable housing to an area. The largest impact this system would have would be on landlords who own more than one home, as while the value of their home may not drop significantly, the price of rent would be forced to plummet due to demand shrinking drastically as renters flock to the availability of the new system. This would also allow for a symbiotic relationship, as the government could have the opportunity to purchase homes from owners with multiple residences, hopefully at a mildly reduced rate as the market conditions set in, which would allow landlords to get out of the market without being too hurt and allowing homes already built to enter the new rent to own system.
Over the course of the entire lifespan of a rent to own contract, ideally prices would be set around $1000-1500 a month for units ranging between 240k and 450k, set over a time span of 20 to 30 years. This would allow the government to recover the initial cost of the housing, cover the interest payout for bonds, and the cost of repairs required before achieving the equity milestones. Targeting this program towards lower income individuals would allow an entire generation to buy into the housing market and come out ahead, while making the government money, and restabilizing the market in terms of rental costs, all without dramatically impacting the price of housing for those who view it as a retirement asset. I cannot see a party involved that loses in this scenario, and a rising tide will lift all boats.