Governments are generally well-meaning when they support groups of citizens financially. In some cases, however, programs have adverse effects, which can harm beneficiaries.
This is obviously the case of the program intended to subsidize poor households for housing (Rent Supplement program or PSL), of the Société d’habitation du Québec (SHQ).
The rules for allocating the PSL subsidy are such that they penalize beneficiary households that increase their income. In other words, they discourage work, unless it is black.
The rules create what is called a “poverty trap”, which tends to keep less well-off recipients in their situation, rather than taking them out of it.
This kind of trap was experienced by social assistance recipients a few years ago, before the provincial and federal governments came to correct the situation, in part, with the work premium and the Canada Workers Allowance (CWB). ).
The phenomenon continues to exist for some low-income workers, with an additional income tax rate reaching 65%, for example, but that is another story.1.
How does the trap look with housing subsidies? Well, there it is. The PSL subsidy is paid to households that do not earn more than a certain level of income. It allows them to pay no more than 25% of their total income in rent.
The problem is that the subsidy decreases when the level of household income increases. And it disappears completely when the income exceeds the regional threshold established by the SHQ, with its harmful consequences.
The income threshold used is called the Core Need Income Ceiling (CNI). In Montreal, this PRBI is $32,500 for a couple or $43,500 for a family of 4 or 5 people. This PRBI is similar to Gatineau ($32,000 and $44,000), but lower in Quebec City ($31,000 and $42,000)2.
The calculation of the subsidy is very complex, but essentially, as soon as a couple’s income exceeds $32,500 in Montreal, the subsidy disappears, from what we can understand.
“That doesn’t make sense. And that encourages moonlighting, I hear it every day,” says Bernard Campeau, general manager of Habitations des rivières de l’Outaouais, a non-profit organization that has hundreds of housing units in Gatineau.
He gives the example of artists, whose income is irregular. A contract that is added in a year can cause them to lose the housing subsidy. Same thing for retirees who have small pensions: additional work income of $5,000 can considerably reduce or even eliminate the PSL subsidy.
Impact of $300 per month
In Montreal, a 30-unit housing co-op is currently experiencing exactly this situation. Of the 15 households that receive a PSL subsidy, 3 have just been told that they are losing their subsidy and 1 that it has been greatly reduced.
“I have tenants who cry on the phone when they hear the news,” explains the president of the co-op’s board, who asks me to remain anonymous because she did not have permission from her board to speak publicly.
In one case, the impact is $300 per month. As the loss of the subsidy applies retroactively, the tenant has $1200 in late payments (4 months since November), in addition to a monthly rent increased by $300.
“Even if the coop makes payment arrangements, the amounts are huge. And I turn into a social worker with tenants who are sometimes not very French-speaking, panicked, ”explains my interlocutor.
According to her, federal aid for COVID-19 (PCU and PCRE) may have increased the income of the tenants concerned, which would have caused them to lose their PSL subsidy.
Under SHQ rules, this co-op must have a minimum of 15 units dedicated to PSL subsidies (50% of the 30 units), but this year the co-op will only have 12 due to the situation.
The 3 unallocated PSL subsidies will be suspended, since the tenants concerned are entitled to remain in their accommodation. They could be reallocated to needy tenants on a long waiting list, but housing must first become available, which can take time given the shortage.
These 3 PSLs are therefore added to the list of 7,000 PSL grants which, for various reasons, are unused in Quebec, as I explained in a recent column. Some 3,000 of these PSLs are in AccèsLogis buildings, like that of the coop.
In Gatineau, Bernard Campeau managed to maintain the 50% share of subsidized PSL housing out of the 351 housing units of Habitations des rivières de l’Outaouais that are eligible for it.
The general manager regrets not being able to increase his share of PSL housing, something he often asks for, without success. In urban Gatineau, there are 2,812 households on the waiting list, which is updated annually.
The manager also fears that the explosion in real estate prices will make affordability very problematic, even for government-funded projects that are not eligible for the PSL. To obtain public funding, projects must not charge tenants more than 94% of the median rent for the sector. However, this median rent has risen sharply in recent times…
1. With that note, check out these three links:
2. Over the past 5 years, PRBIs have increased by approximately 12 to 16%.