You pay your rent on time. Why isn’t that considered when qualifying for a mortgage?

An innovative resolution at this weekend's Conservative Party convention will debate that question.

Today, the City of Calgary released its Housing Needs Assessment report. Of the many troubling indicators of Calgary's acute housing crisis - a trend experienced across Canada - a few stand out. Calgary area renters now need an annual income of $84,000 to afford average market rent, which increased from $67,000 in just a year. And over three years, the median cost to buy a detached home in Calgary has risen by a whopping 37%.

Skyrocketing rent and house purchase prices aren't news to anyone struggling to find and afford housing. But they do pose challenges that have yet to begin to be addressed.

One of these challenges was recently pointed out by Jaxson Owchar, a 23-year-old recent education graduate (full disclosure: Jaxson works in my Calgary constituency office).

Jaxson's problem with achieving homeownership - one faced by virtually every Canadian his age - looks like this. While paying a significant amount of his monthly income to rent, he needs to save for a substantial down payment to pass Canada's strenuous mortgage stress test. But high rent and the high cost of groceries make it hard to save for that downpayment and build the positive credit history needed to qualify for a mortgage.

A tall order, indeed.

Then, Jaxson made an intelligent observation. With rental costs as high as they are, many peers in his age group will pay monthly rent that could approach the amount of money they would spend on a mortgage payment. If they had a history of making their rent payments on time, why couldn't that be used as proof that they could pay a mortgage for about the same amount?

Great question.

Currently, in Canada, rental history isn't directly considered by a mortgage lender unless it is for something serious and negative like an eviction. Due to the nature of the payment, rent isn't necessarily included in an applicant's credit score. That's not to say that rent payments can't be reported to credit agencies. They can be, but only if the tenant and landlord are both willing to do so and can only be done using services like the Landlord Credit Bureau, an organization that can allow landlords to report their Tenants' payments (or non-payments) to Equifax and eventually end up on their credit report. 

But this system isn't a silver bullet for people with a positive history of making rent payments on time. That's because many landlords don't want to voluntarily and proactively engage in this system (even though it's likely in their best interest to do so). And, having a rental history impact your credit score is different from it being directly a factor in mortgage qualification. Someone's credit score will include a mix of different types of debt payments, not just housing. Also, the Landlord Credit Bureau system only works with Equifax, not Transunion, Canada's other big credit bureau. The system also isn't available in Quebec. And similar programs, like the Borrowell Rent Advantage System, require a monthly fee.

To address this issue, Jaxson, also a member of the Calgary Nose Hill Conservative Electoral District Association (i.e. the group of people who help run my election campaigns), decided to champion a policy proposal for this year's Conservative Party of Canada National Convention. It reads as follows:

**[The Conservative Party of Canada] will encourage financial institutions to develop a framework that allows for the consideration of a potential homeowner's previous rental payment history when applying for a mortgage.**

His policy, honed with the assistance of our riding association, will be debated at the National Convention, being held in Quebec City this weekend. 

The proposal's merits have yet to be formally debated by convention delegates, but it's received a lot of advance positive support. That's mainly because of this type of innovative thinking that Canada needs more of to help address the lack of hope many young Canadians face when making home ownership plans. 

It also has precedent. The American Federal Housing Administration and the British Tories have recently proposed similar measures to support first-time home buyers. Some of the debate on the issue in these jurisdictions has focused on how this could help a wider swath of people than young homebuyers, for example, people who find themselves out of the housing market after having gone through relationship breakdowns.

The beauty of Jaxson's resolution lies in its broadness. It's an invitation for the federal government to use its convening power to bring together lending institutions, landlords, renters, and other relevant jurisdictions to do something to help people achieve the dream of home ownership.

We'll see how the debate goes this weekend. But seeing the next generation of Canadians champion policy like this gives me hope that our country can solve the housing crisis and build a better future for everyone.

(Proud of you, Jax! And kudos to the entire Calgary Nose Hill CPC EDA team for making this debate happen. ~MRG)