In the face of a mounting housing crisis, British Columbia should massively increase public investment in below-market rental housing. This up-front investment could literally pay for itself, with no increase to taxpayer-supported debt.

While this might sound too good to be true, it simply follows from the basic logic of rental housing development. When building new rental housing, the up-front costs of construction are offset by the stream of rental income the project generates over time. This is, of course, the premise on which private-sector rental housing developers base their business models. For them, building new housing is not a cost but rather a way to generate substantial profits.

Similarly, when the government — or the nonprofit sector — builds rental housing, the investment can also be self-sustaining. But there’s a key difference: instead of generating profits, housing projects can operate on a break-even basis, with rents set at below-market rates. Marc Lee, from the Canadian Centre for Policy Alternatives, did the math on break-even rental housing development in a recent report on affordable housing options in the Metro Vancouver market. The following is an analysis of what a similarly ambitious, publicly led build-out of self-sustaining rental housing would mean for government finances and debt.