October 2006

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.

In the past, members living in DND housing units 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 the shelter charges for DND housing units to market value. This special phasing program was completed in 2002 and since 1 November of that year, new occupants of DND housing units 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.

Nine years after the beginning of the first phasing program, market values have been achieved across the country. Currently only 2% of occupants pay shelter charges below market values, mainly because their rents have been reduced due to one the following reasons: 25% shelter charges ceiling, maintenance abatements, and the method used to calculate designated residence shelter charges.

For occupants whose rents are below market values for reasons mentioned above, rent increases will continue, when applicable, until fair market value is 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 housing units 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 housing units, 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 housing unit 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 shelter charge figure. This figure becomes the base shelter value for the DND housing unit. The annual review by CMHC ensures that DND housing unit 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 2006, CFHA Housing Managers will advise each current occupant, in writing, of their shelter charge effective 1 November 2006.