A rental housing co-operative (co-op) is a non-profit corporation in which each member-resident owns one share. A form of community housing, rental co-ops are democratically governed by their members, who may also participate in management and operational functions. Shares do not appreciate and cannot be sold, and rents are generally set to break even with operating costs such that no profit accumulates. Any surpluses are saved in a reserve fund. Canada’s rental co-ops follow a non-equity model that offers security of tenure and permanent affordability, making them an affordable housing option for low-income households and an alternative to homeownership generally.
The federal government offered targeted co-op housing development programs from 1973 to 1993. These created over 67,000 units, over 33,000 of which remained under federal responsibility as of December 2022. Canada currently has over 92,000 co-op housing units, representing about 0.7% of occupied dwellings (see Figure 1).
Figure 1 – Number of Co-op Housing Units by Province: Total and per 1,000 Occupied Dwellings, 2024
Federal co-op programs are delivered by the Canada Mortgage and Housing Corporation (CMHC). Since 2005, CMHC has contracted certain functions to the Agency for Co-operative Housing (ACH), an arms-length body created by CMHC and the Co-operative Housing Federation of Canada (CHF). The CHF is a national non-profit organization that supports co-op advocacy and capacity-building.
Figure 2 illustrates the relationships between key actors in the co-op space.
Past federal co-op housing programs have required co-ops to allocate a portion of their units to “rent-geared-to-income” (RGI) tenants. These comprise about one third of co-op households. Where provinces and territories agreed to share the cost, federal rent supplements have been provided to bridge the gap between RGI rents and operating costs.
A mature co-op with a paid-off mortgage has the potential to sustain itself at below-market rents. Moreover, co-op rents tend to become increasingly affordable relative to market rents over time. A 2022 CHF report entitled The Co-op Difference: Comparing co-op and market rents in five Canadian cities found that federally assisted co-ops were 25% more affordable than comparable market rentals in 2006, and the gap had increased to 33% by 2021. Depending on the program design, this implies potential savings on rent subsidies for co-op units as compared to market rentals.
Guided by principles like self-help and member participation, some co-ops require members to participate in co-op administration or maintenance. CMHC’s 1992 Evaluation of the Federal Co-operative Housing Program found that “the dollar value of self-help resident participation [was] substantial,” and its 2003 Co-operative Housing Programs Evaluation estimated that co-ops’ capital and operating costs were 11% lower than other non-profit rentals. However, it also found that co-ops were three times more likely than non-profit projects to experience financial difficulty. In recent years, federal co-ops have increasingly contracted some functions to property management companies, with only 2% being volunteer managed according to the ACH’s 2022 Biannual Portfolio Performance Review.
As with other forms of social housing, the groups that benefit most from co-op housing are those experiencing housing affordability challenges. CHDP funding will prioritize projects focused on housing those in greatest need, including Indigenous groups, women and children, and persons with disabilities. Indeed, the Budget 2022 Impacts Report suggested that these groups, along with as racialized groups and female single parents may benefit most from the CHDP. CMHC’s 2003 evaluation and recent analyses by co-op federations in British Columbia and Quebec support these assertions. Notably, sources such as a 2020 report entitled Indigenizing the Co-operative Model and remarks by the Native Inter-tribal Housing Co-operative suggest that the co-op model is especially conducive to Indigenous community development, self-determination and traditional lifestyles and values.
History of Federal Involvement
The first full-scale federal co-op housing program was launched in 1973. The Section 61 Co-operative Housing Program offered 50-year mortgages directly from CMHC for 100% of development costs – with 10% conditionally forgivable – at an effective 8% interest rate. Standard rents were set to break even with operating costs, while RGI rents for up to 25% of units were set at 25% of household income. Whereas previous public housing projects had been criticized for creating stigmatized, concentrated areas of poverty, this program made creating mixed-income communities a principal objective.
A more market-based approach was taken in 1979, with the creation of the Section 95 Co-operative Housing Program, in which CMHC insured 100% of 35-year mortgages from private lenders while subsidizing payments to create an effective 2% interest rate for the first three years. Subsidies gradually decreased thereafter, with excess subsidy going to RGI rent supplements. At least 15% of units had to be RGI, and other rents were set at the “low end of market.” During this time, the Rural and Native Housing Program, established in 1974, and the Urban Native Non-Profit Housing Program, which began in 1982, also helped develop co-op and other non-profit housing for Indigenous people.
In 1986, the federal government announced changes to its housing policies with the publication of A National Direction for Housing Solutions. Largely in response to criticisms that resources should be targeted to those in greatest need, co-op housing funds would now be split into two distinct programs:
The federal–provincial Non-Profit Co-operative Housing Program, which offered CMHC backing for 100% of 35-year private mortgages, with non-RGI units targeted to households for whom homeownership would cost more than 30% of their income. Provinces could add funding for non-RGI units to facilitate income-mixing.
The Federal Co-operative Housing Program, which offered CMHC backing for private 30-year “index-linked mortgages.” This instrument tied interest rates to the Consumer Price Index to ensure a constant real rate of return with variable payments. This proved more cost-effective than traditional mortgages with constant payment amounts.
Figure 3 provides a breakdown of co-op housing units created under these four federal programs.
Figure 3 – Federal Co-op Housing Portfolio, Number of Units by Province and Program, 2000
Note: The figure depicts the number of units under portfolio administration by CMHC or provincial housing agencies in 2000, which includes projects with continuing mortgages in 2000 or projects receiving financial assistance. These numbers exclude co-operative projects for which mortgages had been paid in full or projects that had been sold, totalling 2,163 co-operative units. Source: Figure prepared by the Library of Parliament using data obtained from Canada Mortgage and Housing Corporation,Co-operative Housing Programs Evaluation, September 2003.
Noting that federal spending on social housing had reached $2 billion annually, and seeking to reduce spending generally, Budget 1993 ended funding for new social housing except on reserve. Beginning in 1996, responsibility for federal co-ops was devolved to most provinces and territories, resulting in an abrupt decline in co-op housing development. Only Quebec, British Columbia and – until 1995 – Ontario continued developing co-op housing unilaterally. While co-ops were eligible for funding under the Affordable Housing Initiative, which ran between 2001 and 2011 and the Investments in Affordable Housing Program, which lasted from 2011 to 2019, the development of new co-ops was limited outside Quebec, where the provincial government offered strong support (see Figure 4).
Figure 4 – Co-op Housing Starts in Centres of 10,000 and over, by Province, 1989–2023
For most co-ops, RGI rents are unviable without government funding. Consequently, in April 2018, the federal government committed $38 million in FCHI Phase 1 funding to extend rent supplements for federal co-ops with agreements expiring between 1 April 2016 and 28 February 2020. Co-ops with agreements that expired before this date could receive 12 months of Temporary Rental Assistance for low-income households starting in April 2021. FCHI Phase 2 committed $580.2 million in rental assistance – and for the most vulnerable groups, transitional operating funding – to housing providers with agreements expiring by 31 March 2028.
Figure 5 illustrates the timeline of key federal co-op housing initiatives.
Figure 5 – Federal Support for Co-op Housing: Key Programs and Events
Text Version
Unit counts are approximate as they exclude 1,003 units which were no longer under portfolio administration at the time of data collection.
Timeframe
Program or Event
1973
Amendments to the National Housing Act enable federal lending to co-ops.
1973–1978
Section 61 Co-operative Housing Program (approximately 6,913 units created).
1974–1993
Rural and Native Housing Program (includes co-ops but not exclusively).
1979–1985
Section 95 Co-operative Housing Program (approximately 39,577 units created).
1982–1993
Urban Native Non-Profit Housing Program (includes co-ops but not exclusively).
1986–1991
Federal Co-operative Housing Program with index-linked mortgages (approximately 14,433 units created).
1986–1993
Section 95 federal–provincial Non-Profit Co-operative Housing Program (approximately 5,510 units created).
1993–2028
Operating funding and rent supplements continue under CMHC legacy programs (until agreement expiry).
1996–1999
Responsibility for federal co-ops devolved to most provinces and territories via social housing agreements.
2001–2011
Affordable Housing Initiative (includes co-ops but not exclusively)
2005
The Agency for Co-operative Housing begins administering federal co-ops in British Columbia, Alberta, Ontario and Prince Edward Island.
2005
Operating agreements from CMHC legacy programs begin to expire.
2011–2019
Investments in Affordable Housing Program (includes co-ops but not exclusively).
2018–2020
Federal Community Housing Initiative Phase 1 (includes co-ops but not exclusively).
2020–2028
Federal Community Housing Initiative Phase 2 (includes co-ops but not exclusively).
2021–2022
Temporary Rental Assistance Program (includes co-ops but not exclusively).
2022
Announcement of a forthcoming federal Co-operative Housing Development Program.
2024
Launch of the federal Co-operative Housing Development Program.Announcement of a forthcoming Canada Rental Protection Fund and flexibilities under the Federal Community Housing Initiative (includes co-ops but not exclusively).
