# 3 - Brains and Beds: Unlocking Student Housing for Canada's Future
We're pumping the brake on international students. Let's hit the accelerator on student housing...or face consequences
This Issue:
The Problem: Canada needs highly-skilled students, but we’re short on student housing. This will have far-reaching ramifications.
Solutions: There are untapped opportunities for governments, institutions and the market to unlock student housing.
Moving Forward: A reframing is needed. A new student dwelling is an investment in our future while freeing up rental stock elsewhere.
1. The Problem
The scarcity of student housing in Canada is an important – but often forgotten – part of Canada’s housing supply and affordability crisis.
The Federal Government’s recent announcement of a temporary cap to international student permits included highly-skilled graduate and doctoral students1. Federal immigration Minister Marc Miller has argued,
“It would be a mistake to blame international students for the housing crisis, but it would also be a mistake to invite them to come to Canada with no support, including how to put a roof over their heads” - Hon. Marc Miller
This perspective is grounded in the notion of “responsibility”, but also changing public sentiment. It’s connected to Ottawa’s pending drop in permanent resident levels by 20% and polling that a majority of Canadians support reducing immigration until housing is more affordable2.
Let’s address the root issue. We must focus our efforts on creating the conditions for domestic and international post-secondary students to be successful here in Canada, and that starts with housing.
Brains - why do we need them?
Highly skilled students - domestic and international - are literally Canada’s future. It’s easy for us to see by looking around our networks. For me, my father immigrated to Canada before university and was homeless for a period of time while he worked and saved for tuition. He ended up co-founding a successful software company. And my roommates in first-year at McMaster University from China and Nigeria, went on to become a doctor and an electrical engineer respectively (here in Canada).
Canadian businesses desperately need the next generation of skilled workers to build and service our economy and fuel our growth. In fact, one third of business owners in Canada with paid employees are immigrants3. Many more skilled immigrants are needed in the coming years to ensure Canadians enjoy a continued quality of life. Skilled students are that pipeline.
Canada also depends on international students for economic activity. International students contribute $37B annually to the Canadian economy (2022) on tuition, accommodation, etc. - with more than half coming to Ontario4.
Our post-secondary institutions depend on international students to operate sustainably. International students pay 5x the tuition of domestic students. As a source of revenue, international student tuition has climbed while domestic tuition has remained flat5. Are domestic students and Ontario taxpayers ready to pay more for tuition and/or subsidies? Doubtful.
Fortunately, Ontario already has a world class infrastructure of 23 publicly-assisted universities and 24 colleges. They are attracting international students as a source of our future economic vitality and cultural richness. But, we need to house them.
Beds - how bad is the shortage?
Despite this collective reliance on international students, we have a BIG shortage of student housing - especially Purpose-Built Student Accommodation (PBSA). Nationally, we have only 1 bed per 10 students and in some cities like Toronto this is lower. This ‘provision rate’ (PBSA beds/students) of 10.3% nationally is low relative to other jurisdictions like the UK (27%)6.
Within major Canadian college and university cities, occupancy rates in PBSAs are nearly 100%. Experts in the sector warn that unless the supply gap is addressed this could impact Canada’s competitiveness to attract international students and cause lasting reputational damage7.
The current pipeline in the planning and construction stages won’t get us there either8. On-campus, it’s difficult and slow for institutions to borrow money and procure projects. Off-campus, regulatory approvals are lengthy and complex and the private sector has historically gravitated towards more traditional assets.
At the moment, domestic and international students alike must compete for the limited rental stock in the market and are highly susceptible to sub-standard living conditions.
2. Solutions
Governments, post-secondary institutions and the private sector have a role to play in meeting the student housing demand.
There have been some positive moves recently, including:
Ottawa and Ontario waiving GST/HST on purpose-built rentals
Ontario exempting publicly assisted post-secondary institutions from Planning Act processes (e.g. site plan) and application fees
Ontario has committed to embrace modular housing and its ability to deliver units quickly with minimal site impact and greater cost certainty and even to leverage surplus government lands
Big players in debt capital like Harrison Street have firmly declared a mandate to invest in Canadian student rentals having recently acquired multiple assets in Ontario and across Canada
Some student housing projects are breaking ground and institutions are exploring creative partnerships
As below, each party has opportunities to further contribute to securing brains and beds.
3. Moving Forward
In the broader discourse, the importance of building student housing has been lost in the fray.
Many have argued that students visas should be reduced because of the housing crisis, but they stop short of demanding/advancing more student housing.
Others have pointed to bad apple private institutions who operate ‘diploma factories’ that take advantage of international students. They argue student visas are just a ‘back-door’ entry to citizenship.
Provincial opposition parties have even questioned if student housing should be considered as new housing in our provincial counts.
Put simply, if we don’t deliver on student housing, domestic and international talent will go elsewhere. The Canadian brand would lose. Canadian businesses would lose. Our institutions and domestic students would lose too. We all lose.
We must elevate the discussion on Purpose-Built Student Accommodation and hit the accelerator on getting them built - not just the brake on accepting new talent. Each new unit not only houses students but frees up a rental elsewhere for someone else.
Building Edge Strategies is a strategic consulting firm on a mission to unlock progress on projects that deliver housing, infrastructure and jobs. It provides strategic advisory, government relations and public affairs services to private and public sector clients.
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References:
Government of Canada. “#ImmigrationMatters: Canada’s immigration track record”
Government of Canada. “Economic impact of international education in Canada - 2022”