Chris Atchison: Mortgage investment corporations could bring dream of home ownership to essential workers
Credit to Author: Gordon Clark| Date: Sat, 31 Aug 2019 01:00:10 +0000
On Labour Day on Monday, as British Columbians honour the skilled workers who are the backbone of our province, we in the construction sector believe it’s time to address the housing affordability crisis facing many workers.
Communities across B.C. depend on essential workers such as tradespeople, nurses, educators and emergency responders. Where they are able to put down roots, these workers make invaluable contributions to community life and the people, businesses, neighbourhoods and social causes around them.
But for too many of these workers, the high cost of housing in many B.C. markets, combined with the toughened mortgage-eligibility requirements of traditional banks, makes their dream of owning a family home near their workplace unattainable, despite their in-demand skills, steady employment and higher-than-average wages. The unwanted result is that they and their families must either commute long distances, live in rental housing or move elsewhere.
So how can we make home ownership more affordable for these workers? Government-subsidized “affordable housing” is neither a sustainable nor applicable solution for this middle-income group. There is on the other hand a sustainable unique-to-Canada solution that would reduce the barriers to home ownership for highly skilled middle-income families, while also providing a competitive financial return to investors.
In 1973, Mortgage Investment Corporations were legislated into existence to attract more private money to the mortgage market. MICs pool the funds of investors with a mandated minimum 50 per cent loaned out as residential mortgages or insured deposits. Unlike banks and credit unions, they are not subject to the federal mortgage stress tests that thousands of workers struggle to meet. Additionally, shares in MICs are eligible for government deferred and tax-sheltered savings plans such as RRSPs, RESPs, RRIFs, TFSAs and RDSPs.
The B.C. Construction Association proposes creating an essential workforce mortgage investment corporation that would provide long-term affordable mortgages to essential B.C. workers, based on more than just their income and credit. The MIC would also help independent contractors who, despite long-term work histories, sometimes cannot secure a traditional mortgage without proof of a steady income or employer.
The benefits of this proposal would be far reaching and multi-generational. Essential workers could own a home and raise their family near where they work, municipalities would gain tax-paying families dedicated to their community and employers would have long-term access to essential workers.
In addition to mortgages, the MIC would support the construction sector through loans to construction companies for bridge financing and pre-construction, or to better manage prompt payment. As investors in the MIC, industry organizations would receive dividends they could use to further support their member companies through sector-specific programs and services. Collectively, MIC mortgages and other loans are projected to generate a better than six-per-cent annual return for the growing number of organizations and individuals wanting a tax-deferred/sheltered impact investment, such as supporting access to housing for essential workers.
As an industry sector that faces a skilled worker shortage and whose employees too often struggle to qualify for traditional bank loans despite their skills and years of employment, we were compelled to develop a sustainable housing solution that supports B.C.’s construction tradespeople and employers.
We believe the MIC is a bold idea with potential application to other industry sectors, and we look forward to exploring this partnership and investment opportunity with other organizations that support highly skilled workers such as educators, health care providers, and emergency responders. By investing our creativity, expertise and resources in home ownership for essential workers, we can all help build a better B.C.
Chris Atchison is president of the B.C. Construction Association, which represents employers in B.C.’s industrial, commercial and institutional construction sector.
Letters to the editor should be sent to sunletters@vancouversun.com. The editorial pages editor is Gordon Clark, who can be reached at gclark@postmedia.com.
CLICK HERE to report a typo.
Is there more to this story? We’d like to hear from you about this or any other stories you think we should know about. Email vantips@postmedia.com.