April 28, 2003
The charges for government housing are reviewed and adjusted annually. The normal date for implementation of revised charges is August 1 of each year.
Under the former Living Accommodation Charges Directive (LACD), rents at isolated posts were established in relation to those at the respective base cities. In response to concerns of equity, fairness and comparability, it was agreed that the former methodology should be modified under the new Isolated Posts and Government Housing Directive (IPGHD).
The Canada Mortgage and Housing Corporation (CMHC) will now calculate the Base Shelter Value (BSV) of units, based on local market conditions or, when no market exists, the nearest market with appropriate location adjustments as the case may be.
REVISED RENTAL CHARGES PHASE-IN PROCESS
As is the usual practice, CMHC will soon be providing departments (you may have already received them) with the revised BSV's for government housing units, which have been calculated on the basis of the new methodology.
Where the new BSV is lower, that new amount is to be applied effective August 1, 2003. Where the new rent is higher it shall be phased in as follows:
The annual monthly increase shall be equal to 25% of the current rent or $50.00, whichever is higher, up to a maximum of $100 per month. The following examples will help illustrate the phase-in process.
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Example 1 |
Example 2 |
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Current rent: $565/month |
Current rent: $180/month |
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New BSV (provided by CMHC): $750/month |
New BSV (provided by CMHC): $280/month |
|
25% x $565 = $141.25 |
25% x $180 = $45 |
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Increase is capped at $100/month |
Increase is $50/month |
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Revised rent for year 1: $665/month |
Revised rent for year 1: $230/month |
|
Revised rent for year 2: $750/month |
Revised rent for year 2: $280/month |
**Note: The phase-in process will continue until such time as the unit reaches full "market" value.
In the event the current occupant vacates a unit during the phase-in process, the Isolated Posts and Government Housing Committee (IPGHC) agreed the new occupant would not immediately be charged the full market rent. The rental charge for the unit at that given point in time would be used, and that amount would subsequently be increased in keeping with the phase-in process.
Example:
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01 August 2002: |
BSV is $565.00 |
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01 August 2003: |
New BSV for a unit is $750.00 |
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Phase-in calculation: 25% of $565.00 (or $50.00 - whichever is higher; maximum of $100.00) = $141.25; Increase is therefore capped at $100/month. |
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01 August 2003: |
Rent charged to the occupant is $665.00 |
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01 October 2003: |
The current occupant vacates unit |
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01 November 2003: |
The unit is assigned to a new occupant. The rent charged is $665.00 |
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01 August 2004: |
The rent can be increased by $100.00. The new full market rent is therefore charged, i.e. $750.00. |
ALLOCATION OF ACCOMMODATION
Based on the premise of "one bed per head", Departments have the responsibility for ensuring that the initial assignment of accommodation is appropriate.
Where an appropriately sized unit is not available, an employee without dependants who is allocated a unit that is larger than one bedroom would be charged 60% of the full rent.
An employee with one or more dependants who is assigned a unit that is larger than the norm will not benefit from an adjusted rent as the Committee agreed that a larger unit is not necessarily a disadvantage. Similarly, where an employee with dependants is assigned a unit that is smaller that what would normally be assigned, no adjustment will be made as the rent paid would be lower.
RENTAL CHARGE ADJUSTMENTS
Departments may apply a "Loss of Privacy and Quiet Enjoyment" adjustment if warranted, although the maximum adjustment cannot exceed 50% of the rent (Refer to section 6.7 of the IPGHD).