October 2005

Background and Policy

Canadian Forces housing operated by the Department of National Defence (DND) is governed by the same rules and regulations as all other government housing. Government policy states that shelter charges (rent, exclusive of utility charges) for Crown-owned housing must reflect the market rates found on the local economy.

The aim of the policy is to respect the principle of fairness for all CF personnel, regardless of where they choose to live. Fewer than 11,000 military households choose to live in DND residential housing. Historically, the phrase Married Quarters (MQ) has been used to describe the DND housing portfolio. In recent years, the profile of occupants of housing has evolved to include a mix of both single and married. For the sake of familiarity, the term MQ will be used to describe DND residential housing.

In the past, members living in DND MQs (residential housing) enjoyed shelter charges below the market value rents paid by their colleagues who chose to buy or rent private-sector accommodations. For example, in Vancouver and Esquimalt, the difference was as great as $700 per month. In 1997, a rent phasing program was introduced to gradually bring DND MQ (residential housing) rents to market value. This special phasing program was completed in 2002 and since 1 November of that year, new occupants of DND MQs (residential housing) have been charged the market value for their houses. The QR&Os; limit rent increases to a maximum of $100 per month ($1,200 per year). Furthermore, in keeping with QR&Os; , rent (excluding utilities and garage rental) shall not exceed 25 per cent of gross family income.

With the exception of the rent-control provinces of Manitoba and Ontario, and in Vancouver, market value charges were achieved across the country last year. In 2004, fewer than 3 per cent of DND MQ (residential housing) occupants saw their rent go up by $100 because of phasing. In rent control provinces, it is a little different. Over two-thirds of our occupants in Ontario are at base shelter value and receive rent control; the remainder have not yet reached the appraised value where this provision would kick in. In Manitoba, almost 90% of current occupants benefit from rent control legislation.

The rent increases will continue until the fair market value for DND MQs (residential housing) has been reached, after which time annual rent adjustments will reflect the local rental market activity. Rent increases are normal practice in the civilian market place, and in general, the DND MQs (residential housing) on military bases will have a market value rent increase only if there is a corresponding increase in the civilian market.

Rent increases are only linked to increases in local market value rents.

How rents are determined

To determine up-to-date market rents for DND MQs (residential housing), the Canada Mortgage and Housing Corporation (CMHC), evaluates the housing at all CF sites against comparable housing in the local economy. First and foremost, the appraiser collects and researches local real estate market data, including the availability of rental properties, turnover and vacancy rates, terms and conditions of leases and any other factor that may influence the market in a particular community. This data is obtained from numerous sources including property managers, newspapers, owners, realtors, developers, rental magazines, data services, fee appraisers and municipalities.

CMHC appraisers then estimate the degree of similarity or difference between a specific DND Married Quarters (residential housing) unit (benchmark MQ) and comparable rental properties by considering various elements such as type and size of the house, its age and condition, and the location of the house with regard to access to schools, community facilities and transportation. The appraiser isolates and reviews each element, developing dollar or percentage adjustments to account for each difference. The final step in determining the appropriate market rent is taking the results of the data collection and the analysis of comparable market rental properties and reconciling this information into a single rent figure. This figure becomes the base shelter value for the DND MQ (residential housing) unit. The annual review by CMHC ensures that DND MQ (residential housing) shelter charges are always current and fluctuate with changes in the local housing markets.

To accommodate the annual posting cycle, shelter charges are adjusted on 1 November, and occupants are given three months’ notice of any changes. By 1 August 2005, CFHA Housing Managers will advise each current occupant, in writing, of their shelter charge effective 1 November 2005.