LOOKING UP RUE DE LA MONTAGNE from the Bell Centre, the view toward Mount Royal is dominated by construction cranes and the soaring glass condominium towers they’re helping to build.

Many see the new residential neighbourhood sprouting up as a positive sign for Montreal: major investments mean jobs, confidence in the city’s future and a boost in property taxes. Plus, an influx of new residents could help revitalize this area, where new developments are pushing the boundaries of downtown toward a long-derelict district.

But the rosy outlook belies a growing problem: the shrinking availability of affordable rental housing and the deplorable condition of much of the city’s low-cost apartments.

Montreal’s public health department opened many eyes in September, when it published a report on the alarming state of affairs. Affordable rental housing is a national problem, but it is particularly acute in Montreal because 61% of its households are renters. Across Canada, renters account for only about one-third of the population.

Montreal’s health department started by looking at how much people pay for rentals. Average rent for a three-bedroom apartment in Montreal jumped by 38% between 2001 and 2014, a period that saw inflation rise by only 28%.

Even more troubling, 40% of renters spend more than the recommended limit of 30% of their income on rent. One-quarter of those 200,000 households don’t have enough money to buy enough food, in part because their rent is high.

For some, the situation is worse. A national study has suggested one in five Canadian renters spend more than half of their income on housing.

Renters, who tend to have lower incomes than homeowners, often face tough living conditions. In Montreal, 15% of renters have to contend with mould, 10% with mice or rats, and 5% with cockroaches or bedbugs. For children in low-income families, food insecurity, unsanitary living conditions and their parents’ fear of being evicted can affect health, development and learning, the Montreal study notes.

Many renters have to settle for squalid conditions because the vacancy rate is so low. In Montreal, it’s 3.5% for apartments, and 2.5% for apartments with three or more bedrooms.

Part of the problem is that builders have focused for years on condos; in some cases, tearing down rental units to make way for new condo developments. Of the new housing built over the past decade in Canada, only one-tenth have been rental units. Almost half of Montreal’s rental buildings were built before 1961.

Montreal and other cities are calling for federal tax incentives to encourage construction of new rental units and for Ottawa to reverse its decision to reduce social-housing subsidies gradually. Ottawa spends 40% less on housing today than it did in 1989.

Cash for social housing was a key demand when Montreal Mayor Denis Coderre unveiled a wish list for the federal government this autumn. The city says it needs $185 million per year for building, renovating and maintaining low-cost housing.

Investing in rental housing is the humane thing to do, and it would create jobs. And such investment could provide the stability some poverty-stricken Montrealers need to improve their lot in life.

© 2015 Investment Executive. All rights reserved.