Linking income to rent in Canada

20 July 2016

Income and social housing rents have been linked in Canada since the 1970s through what's known as Rent Geared to Income (RGI).

This relies upon the same income figures as the UK's Pay to Stay: it is the amount of rent charged to people in social housing, and in Canada is often around 30% of the combined household income. The RGI figure is produced by the NPS Housing platform using information gathered from the tenants.

There are two main parts of the process for calculating RGI: gathering and verifying income information; and changing rents and housing.

Getting the right information
Social housing tenants are required to provide pay slips, income tax forms and relevant information from social services or they can and will be required to pay market rents.

NPS Housing creates the customer contact schedule, beginning with letters alerting tenants to the annual review of their rents and requesting financial information. This escalates if necessary into telephone calls, and finally with employees physically visiting the property.

NPS Housing

– calculates the RGI rent level
– generates the customer engagement strategy for the annual financial review
– determines the tenants' correct property. 

Says Michael Wilson, Director of Operational Effectiveness at Ottawa Community Housing: "We start the RGI annual review process 150 days in advance to meet legal requirements related to rent increases and for tenants to avoid paying market rents.

"An extension period may be granted to assist tenants to provide the information. In some cases, a hands on approach to go and talk with them directly is necessary. In the case of challenging tenancies, we need to help them get the information."

Changing rents and housing
Using the income information NPS Housing is able to calculate the right rent. It's important to get the process right: people could end up paying dramatically more if they don't provide the information, and others could end up with a large debt if they have underpaid.

The platform determines the amount for both social housing and market level rents. It also works out where to move people whose circumstances have changed, as about 20% of Ottawa Community Housing's turnover is internal. This typically happens when either income levels change, or there is a change in who is living at the property. To ensure that RGI is being applied fairly, every year housing providers in Canada are audited by an external firm to ensure the right rents are being paid.

Northgate Public Services is providing a new service to support housing providers in capturing and validating household income. NPS will contact tenants to obtain income information and evidence, which can be submitted online, in writing or over the telephone to the NPS call centre.

Once captured, income details will be validated against various sources including benefits data. The service can be provided as a one-off or periodically as part of an annual review.

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