Thank you so much.
Good afternoon, everyone.
I'm Leilani Farha. I'm the global director of The Shift, an international human rights organization focused on housing. I'm also the former United Nations special rapporteur on the right to housing, a post I held for six years, until April 2020, and I was the executive director of Canada Without Poverty.
It will come as no surprise to you that Canada is in a long-standing housing crisis that has been exacerbated by the pandemic. I'm sure you've heard these stats before: 1.7 million households are in core housing need, and 235,000 people are living in homelessness. New homeless encampments are springing up in every city, big and small. More than 250,000 rental households are in arrears and are now at risk of eviction from their homes.
According to the OECD, Canada has seen a 168% increase in real house prices over the last 20 years. That puts us as the leader in the OECD, with the U.K. next, 70 percentage points below us.
In keeping with the federal government's commitment to the National Housing Strategy Act and to progressively realize the right to housing, budget 2021 includes a number of measures to address aspects of this housing crisis. However, in my opinion, a fundamental blind spot in the budget is its failure to address the monetary and fiscal policies that are heavily implicated in the housing crisis. With a few exceptions, it seems that structural changes to fiscal policy, beyond spending, are somewhat off limits for use in addressing the housing crisis. This blind spot suggests to me that the budget, despite its huge expenditures, might not be as effective as the government would hope.
Let me use affordability as the example, given that affordability is the cornerstone of the right to housing, or a cornerstone, and a key driver of homelessness and housing precarity.
The budget commits to a number of measures to address affordability: more money for the rapid housing initiative, rent supplements for women and children leaving violent relationships, and resources for community-based housing.
While those measures may produce some new affordable housing, Canada's monetary and fiscal policies actually incentivize housing unaffordability. As you know, the Bank of Canada has lowered interest rates and engaged in quantitative easing, which makes money cheap. It allows institutional investors easy access to the loans they need to purchase existing properties, and institutional landlords have a vested interest in raising rents.
It's not surprising, then, that in the last five years, and particularly in recent months, real estate investment trusts have been buying up affordable rental housing stock. For example, in January, I think it was, Ontario-based InterRent and Crestpoint REITs purchased 15 rental apartments, or over 600 units, in Vancouver. Starlight and Timbercreek bought seven buildings in Toronto in August 2020, and CAPREIT purchased 88 units in Halifax in the same month.
Increasing the turnover of tenants and raising rents is part of their business model. It's necessary to securitize loans and to project a solid return for prospective investors. A study out of Toronto from 2012 to 2019 found that financialized and corporate landlords filed 64% of all above-guideline rent increase requests, potentially impacting over 175,000 households.
The rise in REITs in Canada is in part due to fiscal policies that grant them preferential tax treatment. They are the only trusts, as I understand it, that do not pay corporate income tax. ACORN Canada reports that if seven—just seven—of Canada's residential REITs had been taxed at the same rate as non-REIT corporations, the government would have had an extra $1.2 billion in a 10-year period.
I should add that REITs and other corporate landlords also benefit from CMHC lending and mortgage insurance. Michel and I have talked about this on other occasions.
In conclusion, if the government had really examined the drivers of unaffordability and looked at its own fiscal policy, it would have been impossible to completely leave out measures in budget 2021 to protect tenants in arrears.
Really, for me it's the result of this omission that doesn't make sense. There are 250,000 rental households facing eviction, and as some of the most vulnerable low-income households, they are at real risk of homelessness. To me, that creates a zero-sum game for the government—addressing homelessness with one hand, and then creating it, potentially, with the other.