When a housing agency pays part of a tenant's rent, one unit has two payers. The tenant pays their portion, the agency pays the rest, and the split changes whenever the tenant's income or household changes. Landlords who track this on a single rent line end up with phantom arrears, confused tenants and an agency balance nobody can explain. This guide explains the two common program designs and a record-keeping method that holds up when the split changes.
Two designs: subsidy tied to the unit, or to the tenant
New Brunswick runs both kinds, which makes it a useful example. The details of any program are in its agreement and the agency's guidance, so treat this as an outline and check the terms that apply to you.
| Unit-based | Tenant-based (portable) | |
|---|---|---|
| Who the agreement is with | The landlord, for specific units | The tenant's eligibility; the subsidy goes with them |
| NB example | Rent Supplement Program: Housing NB has agreements with private landlords for subsidized units | Portable Rent Supplement Program: for eligible people with disabilities, who choose a unit that meets their needs |
| What the tenant pays | In NB's programs, rent equal to 30% of adjusted household income | The same 30% rule in NB's portable program |
| What happens when the tenant leaves | The subsidy stays with the unit; the next eligible household moves in under the agreement | The subsidy leaves with the tenant |
| Vacancy | Depends on the agreement; some unit-based agreements provide payments while a unit is vacant | No subsidy once the tenant has gone |
Housing NB describes the Rent Supplement Program as covering the gap between what the household pays and the unit's market rent, with the tenancy otherwise being an ordinary landlord and tenant relationship. That last point matters: the tenancy law of your province still applies to notices, deposits and repairs.
Why the split keeps changing
Because the tenant's share is tied to income, it moves when income moves: a new job, a pension change, a household member moving in or out, or an annual review. The total contract rent usually stays the same; what changes is how it's divided. The agency notifies the landlord, often by letter, and the letter has an effective date that is frequently earlier than the date it arrives.
A worked example
Contract rent for a unit is $1,250. From January, the tenant's portion is $410 and the agency's is $840. On March 20, a letter arrives saying that, effective March 1, the tenant's portion becomes $465 and the agency's $785.
| Month | Tenant charged | Agency charged | Notes |
|---|---|---|---|
| January | $410 | $840 | Original split |
| February | $410 | $840 | Original split |
| March (as first billed) | $410 | $840 | Billed before the letter arrived |
| March adjustment | +$55 | −$55 | Correct March to the new split from its effective date |
| April onward | $465 | $785 | New split |
After the adjustment, the tenant owes an extra $55 for March and the agency has overpaid by $55. How that's settled (a tenant payment plan, a credit on the next agency remittance) depends on the program and the agreement. The important thing is that the records show the original charge, the reason for the change, and the adjustment, rather than someone quietly editing March's numbers.
Keep two ledgers, not one
Treat the tenant and the agency as two separate payers for the same unit. Each has its own charges, payments and balance. This makes three things easy that are otherwise hard:
- Arrears are attributed correctly. If the agency's payment is late, the tenant isn't shown as behind, and doesn't get a reminder for money they don't owe.
- Tenants see only their portion. A tenant should never have to understand the agency's side to know what they owe.
- Agency remittances reconcile. Agencies often pay many units in one deposit. With a separate agency ledger, you can match each line of the payment advice to the right unit and month.
Rules for clean subsidy records
- Keep every agency letter, with the date you received it. A photo or scan is fine.
- Record each split with its effective date, not the date you got the letter.
- Never overwrite an old split. Add the new one, so the history shows what applied when.
- Generate each month's charges from the split in effect for that month.
- Reconcile agency remittances monthly, unit by unit.
- Check your agreement before raising rent on a subsidized unit; agency programs have their own rules on rent changes, in addition to provincial tenancy rules.
On the rent roll
A lender or buyer reading your rent roll should see the total contract rent for a subsidized unit, with the tenant and agency portions alongside it, as of the rent roll date. Combining them into one figure hides one of the more stable sources of income in many portfolios. See our guide to building a rent roll your lender will accept.
Management fees on agency payments
If a property manager's fee is a percentage of rent collected, the management agreement should say whether that includes agency payments, and what happens when the agency pays the owner directly rather than the manager. Writing it down avoids an awkward conversation at statement time.
How Propvara handles subsidies
Propvara supports both unit-based and tenant-based subsidy contracts. Each change letter becomes a new dated split with its effective date, the history is kept, and monthly rent charges are generated with the agency and tenant portions on separate ledgers. Agency letters can be captured from a photo or PDF. Tenants see only their own portion, and the rent roll shows both. Matching agency remittances from emailed payment advice is coming soon.
Sources
This article is general information for Canadian landlords and managers, not legal, tax or financial advice. Rules vary by province and change over time.