Proposal for a Canada Renters Credit

Maytree’s proposed Canada Housing Benefit System calls on federal and provincial/territorial governments to work together to integrate their income supports for renters into one, enhanced benefit. It’s a long-term vision for reorganizing, augmenting, and enhancing the patchwork of existing housing benefits. Work on a Canada Housing Benefit System should begin immediately, but it will take time to implement.

The Canada Renters Credit is the first step towards this vision. It would create an immediate income floor for renters with low incomes that could be delivered solely by the federal government. Over time, this benefit should be enhanced and integrated with other housing supports, consistent with our vision for a Canada Housing Benefit System.

Consult the full report for more on why Canada needs an integrated system of housing benefits and how one should be designed, governed, funded, and delivered.

Income support for renters complements supply-side housing policies; it does not replace them.

On the supply side, many experts have called on Canada to at least double its stock of social housing, especially housing where there’s access to other critical health supports. Maytree joins this call for urgent action, but we acknowledge that building our way out of homelessness and housing unaffordability will take years, possibly decades. In the meantime, income is what pays the rent today.

The proposed Canada Renters Credit can help people stay housed or find a home urgently while supply catches up.

Preventing homelessness: A Canada Renters Credit would create a broad, nationally consistent income floor for low-income market renters. By providing modest income support, it would reduce housing affordability pressure and help prevent more people from being pushed into homelessness.

Addressing homelessness: The Canada Renters Credit would also take pressure off the existing Canada Housing Benefit, allowing governments to refocus this more flexible and locally delivered support to people experiencing homelessness or at greatest risk of homelessness.

In 2019, the federal government recognized in the National Housing Strategy Act that adequate housing is a fundamental human right affirmed in international law and committed the federal government to the progressive realization of that right.

The Canada Renters Credit would advance that commitment by creating a broad, nationally consistent income floor for low-income market renters that provides the most support to people with the lowest incomes. It would help many people remain housed, reduce affordability pressure, and prevent more households from being pushed into homelessness.

It is not a substitute for social housing, stronger rent regulations, or deeper homelessness-prevention supports, but is a concrete and immediate rights-based measure that uses federal tools to improve housing outcomes for people in need.

The Canada Renters Credit would not be based on the actual cost of a household’s rent. This design feature limits the potential effect of rent inflation by ensuring that landlords wouldn’t know if their tenants receive the credit, how much they receive, or if they’re using it for rent.

Most provincial and territorial rent regulations also place some limits on annual rent increases, which help keep rents affordable relative to the cost of living. However, there are often gaps in these regulations that end up leaving new renters with higher costs. To help protect the value of the credit over time, we call on the federal government to encourage provinces and territories to strengthen their rent regulations.

Benefits from the Canada Renters Credit are designed to target renter households who have low incomes. They would depend on a renter’s annual income and the size of the housing they need for their family.

For example, single renters with annual incomes below roughly $24,000 could receive $200 per month in support from the credit. As their income rises beyond this amount, their credit would be gradually reduced by 30 per cent for each additional dollar of income. Once their annual income reaches just over $31,000, they would no longer qualify for the credit.

The benefit amount and income threshold where benefits start to decrease would change for larger families. This means that a lone parent with one child who needs a two-bedroom unit could access a higher maximum benefit and would start to see their benefits decline at a different income level. The formula for this benefit adjustment based on family size would be similar to the design of other income supports.

Renters of any age, including seniors, would be eligible. Full-time students would be excluded, as they can access grants and loans through other programs.

The credit could be delivered on a monthly or quarterly basis. Plus, as a refundable credit, support would be provided regardless of whether tax is owing, similar to the Canada Groceries and Essentials Benefit.

While an additional $200 per month in support doesn’t seem like a lot, it would ease the affordability burden faced by many renters with low incomes, especially single and single-parent households.

In 2024, for example, a single renter living in Ontario who receives support from Ontario Works, without additional income, would only have been able to access up to $733 in social assistance per month. Yet, the average asking rent for a single room in Toronto was $860 per month during this time. Even after accounting for other tax benefits and credits, Maytree’s analysis shows that, in 2024, they would have had less than $900 in total monthly income, meaning that nearly all of their income would have gone to paying rent.

Providing this person with an additional $200 per month could prevent them from becoming homeless, help them find more suitable housing, or ensure they have enough money left over for food. It would also offset the considerable net loss of income that many low-income renters will experience from the cancellation of the Canada Carbon Rebate and Carbon Tax. To have a bigger impact, benefits would need to be increased and expanded to more people, but this would come at an additional cost that should be shared among governments. We envision this credit as a first step towards a larger transformation of housing benefits at all levels of government, where, over time, rent supports are integrated into a more meaningful and accessible system. Consult our complementary report, Blueprint for a Canada Housing Benefit System: Architecture and design features, for our analysis of what the new system could look like.

Renters would apply when they submit their annual tax returns, just like they do for many other federal, provincial, and territorial tax credits. There would be no separate application process needed.

To identify households who rent in the private market, our proposal suggests using Revenu Quebec’s method for proving renter status. It asks landlords to submit a form about their tenants, including the address where they live, and then provides a corresponding number for tenants to report on their tax returns. This avoids the need to ask each renter for proof that they rent market housing.

The federal-provincial-territorial Canada Housing Benefit (CHB) is an important direct financial support for households with low incomes. Over the past decade, it has assisted roughly 300,000 households across Canada.

The success of the CHB demonstrates the important role that direct income support can and should play in making housing more affordable for people with low incomes. However, the CHB wasn’t designed as a permanent income floor – there’s a different CHB in each province and territory with no consistent way of qualifying or applying, there isn’t enough money to support everyone who needs it, and federal funding is set to end in March 2028.

Learning from the CHB, we have proposed a new tool for the federal government to reach more renters with low incomes. But this is not a replacement of the CHB. Instead, the CHB should also be enhanced and repurposed toward ending homelessness – something that all governments in Canada should care about.

Our proposal digs deeper into how the CHB could work alongside the Canada Renters Credit, including an assessment of which CHB recipients could be supported by the credit over time. Importantly, any efforts to reform the CHB in isolation run the risk of leaving hundreds of thousands of current recipients worse off. Consult the full policy brief for more details on what we think this transition could look like.

The Canada Renters Credit and repurposed Canada Housing Benefit are designed to complement and fill in gaps in existing supports for renters. They would not, and should not, replace other supports, like provincial and territorial tax credits or social assistance benefits.

Importantly, the Canada Renters Credit has not been designed to support renters in rent-geared-to-income housing – these renters still need assistance to pay for housing.

The Canada Renters Credit is an important tool to target assistance specifically to renters with low incomes.

No existing federal tax credit or benefit is designed to exclusively help these households. Since existing supports have different objectives, they can even end up leaving out some low-income renters who need assistance. For example, the Canada Child Benefit only supports families with children, and the Canada Workers Benefit does not support seniors.

Importantly, the Canada Renters Credit is designed to stack on top of many existing programs. Assistance received through the Canada Child Benefit, Canada Workers Benefit, and provincial/territorial tax credits that help with the cost of rent would be excluded from determining Canada Renters Credit amounts, and vice versa.

The Canada Renters Credit is designed to support renters with low incomes who rent at market rates. However, we recognize that there are also many other Canadians struggling with their housing costs, such as low-income homeowners. Governments should strengthen supports for these individuals through a separate suite of initiatives that are better suited to their needs.

We estimate that the annual cost of the Canada Renters Credit would be roughly $4.72 billion, supporting over two million tax families. 

The Canada Renters Credit could be implemented relatively quickly because the mechanisms already exist within the tax system. It also does not require complex interprovincial negotiations to implement. In our policy brief, we recommend that the credit be available in 2028, lining up with the timing of when federal funding for the Canada Housing Benefit is set to end.