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Strategies to support housing affordability

Strategies to support the affordability of housing will generally fall into one of two categories. A municipality can build a regulatory environment that supports the long-term development of a diverse supply of housing types and/or it can invest financial resources to create incentives and partnerships that will lead to the development of dedicated non-market housing.  

Planning and regulatory environment

The cost of housing is directly linked to the market conditions within a community and the cost inputs to construct housing. If there is a high supply of housing, then market rents and house prices will typically fall. If there is a low supply, market rents and housing prices will typically rise. Therefore, municipalities can contribute to the affordability of housing by maintaining a regulatory environment that is conducive to the development of a diverse range of housing types.

An effective municipal regulatory environment will be influenced by its:

  • land-use and development policies;
  • strategic plans; and/or
  • fees and levies placed on development.

Changing a municipality’s regulatory environment represents a long-term strategy to support housing affordability. The following offers a range of options for municipalities to consider when attempting to implement a regulatory environment that will support the affordability of housing.

Permit the development of secondary suites (i.e. ‘granny’ suites/flats)

Permitting the development of secondary suites is a low cost approach to create additional supply of housing. Examples include basement suites in detached houses, suites above detached garages, or garden suites. Secondary suites are considered advantageous because they geographically disperse low income units around the community, creating immediate supply, preventing urban sprawl through increased density and offering property owners the ability to earn income on their home. In addition, the permitting process can help ensure that suites are created legally according to building and fire codes.

Density targets and development standards

The density targets for new developments will have a corresponding impact on the cost of housing. Higher density developments offer lower costs through reduced need for roads, water, and wastewater infrastructure per unit. Alternative development standards such as reduced right of way, narrower roads and smaller lot sizes will also reduce a developer’s cost inputs and, in turn, allow a developer to sell homes at a more competitive price.

Encourage infill development

Encouraging infill development and lot splitting allows more efficient use of land, helps revitalize urban areas and discourages urban sprawl, which reduces the need for additional infrastructure.

Redevelop underutilized industrial and commercial sites

The rezoning and redevelopment of underutilized industrial and commercial land can offer additional supply of land to be used for non-market housing.

Promote new types of development in the community  

The promotion of alternative types of development can contribute to a diverse housing stock. For example, mixed-use projects such as buildings with commercial units on the ground floor and market or non-market residential units on the upper floors. The market-based component can offset the costs of non-market units, which can make the development more sustainable over the long-term.

Location of rental housing

By providing non-market or market rental housing in all areas of a community, lower-income households are able to live close to family and friends and have easier access to jobs or services. Two ways to test this principle is to ask whether a young person can afford to obtain housing in the same neighbourhood as where they were raised or if a senior can stay in the same neighbourhood while downgrading to a small rental. These types of questions can highlight the breadth and diversity of housing types within each neighbourhood of a community.  

Reduce the length of approval for developments that have a non-market housing component

For each day that a developer waits for project approval, his or her cost on the land increases (financing interest, project staffing, etc.), which increases the base cost that a developer will be willing to sell the home for. In addition to reducing approval timelines for non-market housing developments, a municipality can take proactive steps to reduce NIMBY (not in my backyard) attitudes that may prolong the approval process.

Density bonusing

Density bonusing encourages developers to provide for non-market housing units on a voluntary basis in exchange for receiving increased developable space such as smaller lot sizes or taller buildings. The increased developable space allows the developer to earn a reasonable return on what would have been lost on the non-market housing units.

Inclusionary zoning

Inclusionary zoning refers to policies that require a proportion of housing units within a new development be reserved for non-market housing. Inclusionary zoning has been met with legal challenges in Alberta; however, in the spring of 2016, the Government of Alberta passed first reading of a modernized Municipal Government Act that proposes to enable inclusionary zoning as an optional approach for municipalities to increase the supply of non-market housing.

Strategic planning

The creation of strategic housing plans will help guide a municipality as it engages with developers to build the community. For example, it can be helpful for a municipality to set targets for a minimum percentage of residential units in the community that are considered rental stock or are an alternative to low-density single family dwellings.

Support potential residents and stakeholders through communication

Use municipal websites to provide information on non-market and market rental housing opportunities that will assist households that are considering moving to your community. 

Financial incentives and partnerships

Financial incentives can be an effective approach to generate the development of non-market housing over the short-term. The following offers a range of options for how a municipality can incent non-market housing development using its own financial resources.

Contribute to mortgage down payments or capital construction costs

The City of Lacombe contributed $80,000 towards the down payment on a four-unit building designed to support young males without a home. A non-profit organization is responsible for the remaining costs of the mortgage and ongoing operations of the facility, which is funded through donors and below-market rent paid by the young tenants.

Donate land or provide at below market value

The City of Lacombe purchased and donated land to Habitat for Humanity for the construction of four non-market housing units to be owned by low-income households.

Grants to homeowners that create secondary suites

Strathcona County offers a Secondary Suites Grant Program that provides up to $15,000 in grant funds to encourage homeowners to construct a new secondary suite. Approved homeowners must agree to specific terms such as the rent must not exceed 85 per cent of market value and the suite must be rented to a household that earns less than 80 per cent of the median income for their household size in Strathcona County.

Grants to developers that create rental housing

In 2013, the City of Cold Lake implemented a Multiunit Rental Housing Incentive Program that was designed to increase the supply of rental housing in the community in an effort to stabilize or lower the average cost of market rental rates. Developers that created a minimum of three rental dwelling units on a single parcel of land were eligible to receive a grant from the City. The grant offered up to $7,500 per developed unit. Within three years, the City saw significant growth in new rental housing as 312 rental units were constructed and an additional 160 units were in the development stage.

Waive municipal fees for developments that include non-market housing or designated market rental housing

Waiving development charges and other building fees is an incentive used by many Canadian municipalities to lower the costs of non-market housing development.

Provide tax abatements for a defined period

The City of Saskatoon, Saskatchewan offers any non-profit affordable housing rental project an abatement of any incremental increase in property taxes for five years after development.

Create a revolving fund (trust fund) to further the development of future non-market housing

A municipality may choose to create a revolving fund that is dedicated to the on-going development of non-market housing projects. The revolving fund may be generated based on revenue from chosen sources of revenue such as rents from existing municipal properties, proceeds on the disposition of road right-of-ways, the sale of municipal property, or specific taxation models.

Provide second mortgages to low-income buyers

The Town of Strathmore provides a second mortgage to low-income households that purchase a designated housing unit in the community. The homeowner is not required to make payments on the second mortgage, which dramatically reduces the cost of the home and allows low-income households the ability to qualify for a mortgage. The reduced first mortgage often carries payments that are smaller than rental costs. The second mortgage loan is only repaid if the owner sells the home. If the home is sold, the funds received on the second mortgage are carried forward to provide the next homebuyer the same opportunity.

Provide operating subsidies

Municipalities may opt to provide operating grants similar to the province’s Rent Supplement Program that provides subsidies to landlords so that rents remain below market value.

Housing First

A growing approach to address homelessness involves the concept of Housing First. Housing First is based on the principles that:

  • The best way to end homelessness is to provide people with permanent housing as quickly as possible;
  • Once in housing, people have the ability to stabilize their lives through support services.

The Government of Alberta adopted a Housing First approach in 2009 with the approval of its 10 year plan to end homelessness. Housing First is considered a more cost-effective approach because a reduction in homelessness will reduce the costs on the justice and health care systems, and improve the quality of life of people who were previously experiencing homelessness. The Homeless Hub provides a series of reports on the costs of homelessness including the following diagram that summarizes the average monthly cost to house an individual by service type.


The diagram highlights that the cost to provide non-market housing is much lower than the alternative outcome of homelessness, which commonly leads to housing through the justice and health care systems. 

A report titled, Housing First in Rural Canada, reports on the feasibility of Housing First for communities under 25,000 population. Out of the 22 communities that were surveyed, Alberta was represented by the City of Camrose, Town of Cochrane, Town of Pincher Creek, and the Town of Rocky Mountain House. The report recommended that regional approaches should be used, as it was found that there is a high level of interest in Housing First but that small communities are challenged by a lack of funding and local expertise, insufficient housing stock and an inability to reach efficiencies of scale due to low client numbers.

The City of Medicine Hat has implemented a Housing First and Systems Planning approach. A review of the program found that of 970 homeless individuals that used the system, 63 per cent now live in market housing and 28 per cent in non-market housing. In addition, the Housing First approach led to the following successes:

  • 53 per cent reduction in the number of days in hospital;
  • 12 per cent reduction in EMS interactions;
  • 32 per cent reduction in the use of the hospital emergency room;
  • 58 per cent reduction in the number of days in jail; and a
  • 24 per cent increase in court appearances.

To learn more about Housing First, municipalities may review the Canadian Housing First Toolkit that was developed by the Mental Health Commission of Canada.