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Rent freezes, eviction deferrals needed amid coronavirus fallout: experts

Coronavirus outbreak: Trudeau addresses efforts being made to help renters
WATCH: Trudeau addresses efforts being made to help renters

Nearly half of Canadian renters live paycheque to paycheque — and the novel coronavirus pandemic is bound to strain their finances more, according to a report released by the Canadian Centre for Policy Alternatives on Monday.

Nearly 3.4 million Canadian households that rent earn income via employment or self-employment, according to Statistics Canada data from 2016. The CCPA report found that 46 per cent — or 1.6 million households — of those Canadians have savings to last them one month or less. Beyond that, 24 per cent don’t have savings to get through even one week without pay.

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READ MORE: Coronavirus — How the Trudeau government and provinces are helping renters

“For those who have already lost their jobs, come March 31, what should they do? Should they use the little amount of savings that they’ve managed to put together in the last years or months and pay rent? Or should they keep that money and buy food?” asked Ricardo Tranjan, a political economist and senior researcher with the CCPA Ontario.

Layoffs have hit several Canadian sectors in the past days, with more expected in the coming weeks and months. The tourism and hospitality industry, for example, is among the most impacted.

Air Transat announced Monday morning that it is temporarily laying off “about 70 per cent” of its workforce. Days before that, the union representing Air Canada‘s flight attendants said more than 5,000 members will be temporarily laid off as the airline severely limits its travel network.

Coronavirus outbreak: Morneau says government committed to helping renters
Coronavirus outbreak: Morneau says government committed to helping renters

Both the federal and provincial governments have announced emergency funding to help Canadians struggling with bills amid the COVID-19 pandemic.

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Prime Minister Justin Trudeau announced an emergency aid package last week that includes $27 billion in direct support to Canadians to help pay for things like rent and grocery bills. Trudeau said the newly announced Emergency Care Benefit would give those who qualify up to $900 bi-weekly for up to 15 weeks. However, the benefits won’t be available in time for those facing immediate difficulty.

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The Trudeau government has faced criticism for introducing an option for homeowners to defer mortgage payments for six months, but not freezing rent payments.

READ MORE: How small businesses can apply for COVID-19 wage subsidy, and is it enough to help?

On Monday, Trudeau said the government is aware of challenges renters are facing and that the government is “working extremely quickly to get money out the door during this extraordinary time.”

“We recognize there are hundreds of thousands of Canadians out there who are applying for EI benefits online. What we’re working through — including with the step of recalling Parliament tomorrow — is a legislative package that will allow us to move forward even quicker to get money into the pockets of Canadians who need it right across the country,” he said.

Some provinces have plans to help renters. Ontario Premier Doug Ford’s Progressive Conservative government has said no new eviction orders will be issued until further notice amid the COVID-19 pandemic. Quebec’s rental board is also suspending most eviction hearings.

Growing push to ban evictions during coronavirus pandemic
Growing push to ban evictions during coronavirus pandemic

While Tranjan praised the governments’ actions, he said all provinces must suspend evictions.

“They all need to suspend evictions and they need to do it right now. We cannot be putting people on the streets when our medical authorities are telling people to stay home,” he said.

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Tranjan noted that not all provinces have fiscal capacity to offer extensive emergency funds to people, but they can use regulatory powers to help.

“All provincial governments have regulatory powers in their hand,” he said. “They can say we are suspending all the evictions in the near future and we are freezing rents right now.”

READ MORE: Coronavirus — Here’s where Canada is on the curve

Thomas Davidoff, an economics professor at the University of British Columbia, agreed that an emergency fund from the federal government is a good start, but governments should also be looking at other measures like instituting rent freezes.

Davidoff explained freezing rent would likely require a co-ordinated government effort, rather than leaving it up to private companies.

“Forcing private companies to modify contracts is tricky because you still want to maintain market confidence,” he said. “I think a national freeze on rent is something you’ll have to think about eventually.”

Coronavirus outbreak: Trudeau announces economic aid package to help Canadians amid outbreak
Coronavirus outbreak: Trudeau announces economic aid package to help Canadians amid outbreak

Rubina Ahmed-Haq, a financial adviser based in Toronto, explained that the situation is also difficult for landlords.

“Mortgages are handled by companies that have access to hundreds of millions, if not billions, of dollars,” Ahmed-Haq said. “For them to put mortgages on hold for six months is a lot, but it’s a lot easier than an individual who just bought an investment property.”

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She said individuals who are having trouble paying rent should talk directly to their landlords, while knowing what their rights are at this time. They should try to figure out which other companies they owe money to that are willing to delay payments.

“From the landlord’s perspective, property taxes in many cases have been delayed, so a lot of their costs are being pushed down the road,” Ahmed-Haq explained. “So they should be able to accommodate the request as well to push your rent right down the road.”

READ MORE: 500,000 Canadians filed for EI in first week of COVID-19 measures

Ahmed-Haq agreed that the government putting rent on hold for three to six months would ease many of these headaches for renters.

“They need to do something for renters, especially in cities like Toronto and Vancouver where rent is very high and takes up a major portion of income.

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“They need to protect those people.”

She also urged Canadians to also take a closer look at their expenses and cancel subscriptions and non-essential expenses.

Ahmed-Haq noted that the coronavirus pandemic is an “extreme example” of why all Canadians need to work on having savings for an emergency.

“When the virus is contained, and we go back to some sort of normal — whatever the new normal is going to be — it’s so important to start building that emergency fund.”

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— With files from Global News’ Andrew Russell