P.E.I. government allows for smaller units with affordable housing revamp

The P.E.I. government announced changes to its Affordable Housing Development Program Thursday.

The program, established in 2019, provides forgivable loans to developers to assist in construction of new units. Housing Minister Brad Trivers said with construction costs growing the program needed revision.

"What we've seen, of course, recently is an increase in construction costs, an increase in labour costs because there's a high demand for labour," said Trivers.

"As well we've seen a need for two-bedroom and three-bedroom units. And we've also seen the need to create a higher density of units, especially in areas of great need or where land is really expensive."

The biggest change to the program is the minimum size of the units to qualify, which in the case of bachelor apartments is cut almost in half as compared to the original program. Three-bedroom apartments may be 20 per cent smaller.

The program also adds four-bedroom apartments.

"We're allowing more flexibility on the size, and that means we can consider, really, smaller units if needed in these areas where we want higher density," said Trivers.

"The key is flexibility here. We don't want to turn down a project in downtown Charlottetown because we didn't have the flexibility to go to a smaller unit size."

Allowing smaller apartments doesn't mean they will all be smaller, he said. The province will consider proposals on a project-by-project basis.

Rents unchanged

While the minimum size of the apartments has changed, the maximum allowable rent has not.

It ranges from $794/month for a bachelor or one-bedroom to $1,191 for the new four-bedroom option.

Prince Edward Island is a destination and housing will continue to be tight, and that means prices are going up, said Trivers.

"What we're seeing is supply and demand. There's greater demand and there's limited supply, so the prices are increasing," he said.

The province also increased the loan amount available for larger units. The old program provided up to $45,000 per unit. Developers can now get up to $50,000 for a two-bedroom and $55,000 for a three- or four-bedroom.

The money is provided to developers as a forgivable loan, meaning if they adhere to the rules of the program the money does not have to be repaid.

The loan forgiveness period has changed from 15 to 25 years to a minimum of 10 years. During the loan forgiveness period landlords may increase rents as outlined by IRAC.

The changes were made in response to feedback from developers and non-profit groups interested in the program, as well as from the Opposition Green Party, said Trivers.

The budget of $2.25 million a year for the program remains the same, but he said that could be increased if interest is very strong.

More from CBC P.E.I.