Supporting the development of affordable rental housing: A review and analysis of tax credit incentives and recommendations for Canada

One in five renter households in Canada spends 50% or more of their income on housing, a severe rent burden which can lead to poorer social and economic outcomes for households and communities. Below optimum levels of investment in the rental sector contributes to high rents, partly due to institutional structures which favour investment in the ownership market. This study examines the insufficient supply of affordable rental housing for low and middle income households in Canada, and how tax credit incentives can be used to address this problem. Three programs are reviewed: LIHTC in the United States, NRAS in Australia, and RHCTC in Manitoba. Three policy options are proposed and analyzed using criteria and measures. The final recommendation is to implement a non-transferable and non-competitive tax credit program which provides tax credits worth approximately 10% of total development costs for rental housing projects with at least 20% affordable units.