Spurred by a national housing crisis, Canada has experienced a year of announcements and new policies related to international student numbers and study permits in Canada. Even though international students make up only 2% of the non-purpose-built student housing (PBSH) in Canada’s rental housing market, certain areas have been impacted disproportionately by the rapid influx of international students, whose numbers in Canada have grown exponentially over the last decade. This is especially true in Ontario, which has put a freeze on tuition for public institutions. International student numbers have grown to make up 18% of full-time enrollment at Universities and 37% in Colleges and Polytechnics.
The Federal Mandate
To achieve a reduction in international students, the federal government announced a 2-year reduction in study permits and directed the provincial governments that oversee higher education to implement and enforce the cap across their institutions. This year, a national 34% reduction in new permits was spread across the provinces based on the relative population of international students. The impact was most pronounced in Ontario (52% of the permit reduction) and British Columbia (26%), followed by Nova Scotia and New Brunswick.
The first year of the permit reductions played out differently according to provincial location. For example, British Columbia spread the cuts across the higher education industry, including the private and public sectors. Ontario focused specifically on private colleges and a handful of public colleges, which recently had the highest increases in international students but left the university sector almost completely unaffected. Ontario also banned the Public-Private Partnership (P3) curriculum delivery system, which generated very high revenues for several colleges. Nova Scotia implemented reductions that negatively impacted institutions, but perhaps more importantly, it mandated that institutions in Sydney and Halifax house at least 15% of their enrolment, which would require increases in capacity for all campuses.
The country is waiting for the Fall of 2024 and January 2025 intakes to see what the impact of a year of study permit cut discussions will have on actual student yields. Similar issues in the UK and Australia, Canada’s two primary competitors (currently) for international students, further complicate the situation, as does the election in the United States this Fall.
It is important to remember that there will be a second year of these reductions. It is assumed that the coming year’s reduction will occur under the same general rules used this past year and will be based on the student populations of each province. If this is the case, the distribution will change somewhat, but Ontario and British Columbia will remain the most impacted. Yet to be seen is how each province will implement the second year of cuts.
Ontario
Ontario’s decision to limit the P3 delivery system may have adverse effects on many private colleges, and some have already closed. The coming decision for Fall 2025 will need to be somewhat different. Many institutions are implementing housing strategies, which may also drive a change in targeted reductions.
Ontario’s government has put forward about 50% of the funding recommendations from its Blue-Ribbon Panel on higher education but has kept the tuition freeze. Their advice and recommendations aim to make the postsecondary education sector financially strong. The government also declared that “guaranteed housing options for incoming international students” would be required, but it has not yet explained what that means. Technically, if you do not consider the safety, affordability, or proximity of housing options, most campuses meet that requirement with their communities’ current housing. This statement will need to have more clarity. Some campuses have already announced that international students are guaranteed housing for all of their years at the institution. Although under current conditions and prices, the international student population often leaves campus housing after the first year.
A question the Ontario government’s announcement raises is whether international students will be required to live on campus for any year of their studies. Such a requirement is not unusual; many higher education institutions in the USA and St. Clair College in Windsor, ON, already have such a policy on a limited basis. If international students are not required or choose not to (or cannot) pay for a bed on campus, a mandate for campuses to have housing for them will make planning for campus housing very difficult. Campuses need some definition attached to housing for international students to strategize multi-pronged housing solutions. Scion is currently working with several Ontario Colleges and Universities on studies and strategies to account for various final decisions from the government.
British Columbia (BC) – A Model of Success
BC’s loan/grant program continues to function smoothly, and campuses continue to submit for funding after doing demand studies, financial feasibility analyses, and business plans. Scion has a long history of supporting these bids, and it is exciting to see our research and planning turn into approved facilities and eventually into new homes for students. At the time of this post, more than 8,500 new student beds have been approved under this program, with several thousand more coming. Some projects have already been constructed or purchased and are now open; others are currently under construction, while many more are in development and planning.
Quebec
Concordia University and McGill University have brought action together against the province for the tuition changes, which impacted only those two institutions. Initially, a doubling of tuition for new domestic students from out of province was mandated, but that has since been reduced to an extra $3,000 of tuition annually. International students faced another increase in tuition fees to attend these two institutions. The tuition increase would go to a fund to support the French language higher education system. There is a heightened nervousness regarding the size of this Fall’s entering class, especially at Concordia. Given the targets of such increases, student housing on and off campus will need to be closely monitored in Montreal for future impacts.
Canada Mortgage and Housing Corporation (CMHC) Funding
CMHC’s existing apartment program has recently been promoted as an option for off-campus student housing for developers. Another long-standing program is the CMHC program to support the creation of Co-Op housing, which has been and can be done by university/college student societies. This Co-Op option often involves collaboration with the university/college.
Off-campus developers, somewhat buoyed by a recent market interest rate deduction, have many future facilities in various stages of planning across the country. It will be interesting to follow how many end up with direct and/or indirect partnerships with institutions, especially in downtown areas where a campus may have little land to spare.
A “low-cost loan” program, due out in the Fall of 2024, will support the development of on-campus housing. Thus far, the definition of “low-cost loan” is unclear. The recent reduction in the Bank of Canada interest rate of 0.25% brings positive news but still leaves the housing development industry with an interest rate nearly triple what it was only a few years ago. However, this initiative could serve as a substantial catalyst for growth by facilitating housing development on-campus at a borrowing rate below market. This opportunity would be accessible to both the campus itself as a developer and to partner developers collaborating with the campus and utilizing campus land. Should it choose to do so, this plan could use the BC student housing loan program as a model.
An interesting offshoot of this program is a developer’s land donation to a campus. This has happened in Canada already – Lincoln Alexander Hall at McMaster, which is currently under construction – where the developer bought land adjacent to the campus to link to campus land and create ‘campus housing’ on what is now McMaster property land. To achieve property tax savings, development charge waivers, and the CMHC on-campus housing loan access, the donation of land may become a strategy for private partners. In some locations, it would also relieve some development and design approval processes from which campuses are exempted.
Off-Campus Housing and City By-Law Enforcement
Most noticeable in the College markets and non-U15 markets, the overcrowded housing and illegal housing issues in the ‘shadow market’ of student housing continue to be a problem, but a few cities are taking active steps to manage the situation. Historically, the cities of London, Oshawa, and Waterloo (all in Ontario) have been quite active in collaborative efforts with their local institutions on providing resources and information to students, licensing landlords, inspecting units, and generally enforcing by-laws related to housing. Most of the cities with significant student housing populations have very similar by-laws in place.
The City of Brampton recently announced a concerted effort and resources targeted at the housing issues that often involve students and their housing situations. If the enforcement is able to change the off-campus market by making it safer, less crowded, and more transparent, it will result in multiple positive impacts. Responsible developers and campuses can feel safer building more housing that will not be undercut dramatically in price; students will have more awareness of their rights, and responsible landlords will see their situations improve. Combined with lower interest rates and other development incentives (covered earlier in this post), the development of affordable and safe housing on and off campus to serve students can start to expand. This enforcement will close the gap between the very low prices in the illegal shadow market and responsible and affordable student housing, making the latter more attractive and attainable for students. Other cities are considering similar actions in by-law enforcement and examining the collaborative models of London, Oshawa, and Waterloo.
Scion continues to monitor and track all developments in higher education and student housing policy in Canada. If you have any questions about the new regulations or need insight into how they may impact your campus, please do not hesitate to reach out to Scion at advisory@thesciongroup.com or click below to Ask Scion.
