Affordable Housing Solutions: Financial Tools

The most common way to support the development of more affordable housing is through financial incentives. However, the range of financial incentives and the types of support they offer vary widely depending on the target. Below is a general list of financial incentives that have been successfully used in various communities.

  1. Establish a Housing Reserve – addressing housing issues will need financial resources. Establishing and maintaining a housing reserve can be achieved without putting strain on mill rate revenue. 
  1. Tax Abatements – this is the most common form of incentive offered by municipalities. Abatements are particularly effective for affordable rental projects.
  1. Capital Grants – capital grants are necessary to help bridge the gap between construction costs and available financing to bring a project to life. Typical funding grants are offered as a per unit cash incentive or an overall percentage of the total capital costs.
  1. Land Acquisition Incentives – these can be pre-designated sites offered by a municipality at favourable terms to help non-profit housing providers purchase land. This type of incentive also helps to integrate affordable housing within communities.
  1. Demonstration Project – funding a demonstration project by offering a vacant parcel is a great incentive to show the community how innovative housing can be used to meet specific needs. It could take the form of a competition, or offered through a Request for Proposals.
  1. Rent to Own Programs – when the gap between ownership and rental is very large, a rent to own program is an effective way to allow more households to move into homeownership.
  1. Incentives to Promote De-concentration – targeted incentives aimed at meeting specific needs can be effective, such as offering a higher capital grant to housing providers who build in areas with low amounts of affordable housing stock.
  1. Downpayment Assistance – funded through an innovative program that is self-financing. This program provides a downpayment grant to households towards the costs of purchasing a home while providing the municipality with assurances that the grant will be re-paid. 
  1. Land Cost Assistance Program – offered during periods when land is scarce and values are rising. Consists of replacing the Capital Grant with a Land Purchase Grant to allow non-profit housing providers with the opportunity to purchase  
  1. Property Tax Pre-payment Program – offered by builders, who will pre-pay 10 years worth of property taxes and lower a household’s qualification requirements to obtain a mortgage.
  1. Waiver of Development Charges – This incentive works well for infill development when development charges are owing on older properties.

Other incentives such as Rent Banks, Property Tax Deferrals, Land Trusts, Land Assembly, etc. can also be offered to builders for affordable housing. These types of incentive programs typically are designed for very specific purposes.

Alan wallace

Alan Wallace

Municipal Housing Specialist

Alan Wallace is the planning director with Wallace Insights and president of the Saskatchewan Professional Planners Institute. He is the former director of planning and development for the City of Saskatoon.

Contact: 306-291-7024


Photo of Author

Alan Wallace

Municipal Housing Specialist

Alan Wallace is the planning director with Wallace Insights and president of the Saskatchewan Professional Planners Institute. He is the former director of planning and development for the City of Saskatoon.

Contact: 306-291-7024

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Creative solutions for affordable housing provided by NAHC’s Municipal Housing Specialist, Alan Wallace.