Thank you, and good afternoon.
I'm Leilani Farha. I'm the director of The Shift, a human rights organization focused on housing and finance. I'm also the former United Nations special rapporteur on the right to adequate housing.
Before my substantive comments, I would like to say that I come here with a very heavy heart. As an Arab Canadian and an expert in international law, I am disturbed by the human rights violations occurring in the occupied Palestinian territories and in Israel. To prevent any more innocent lives from being lost and to retain Canada's historic reputation of upholding human rights, I ask you to consider signing the ceasefire letter that your colleagues have put forward, if you haven't already.
This committee has heard from witnesses who've diagnosed that the housing crisis in Canada is attributable to a lack of supply, suggesting that we need to build around 2 million units in the upcoming years to solve the housing crisis. I want to challenge this econ-101 approach, because without significant fine tuning it risks producing more of the same: a lot of too-expensive housing and a whole lot of profits for a few, without meaningfully contributing to solving the actual crisis. We have to address the fact that the wrong demands have been driving housing supply, and supply models are currently designed to satisfy the wrong demands.
Don't get me wrong. I do think Canada needs more truly affordable rental housing in particular that meets actual need, and, yes, some of this will have to be newly built. However, it's wrong to think that Canada can build its way out of this crisis without stronger tenant protections, the harnessing of existing resources, addressing short-term rentals, and a radical change in the relationship between governments and housing providers.
Evidence shows that the rental housing market has been distorted by institutional and other investors using their outsized resources to leverage profits from housing. Because of that, households are being squeezed and priced out. StatsCan recently reported that more than 50% of the total value of purpose-built rentals was held by institutional investors and for-profit businesses like REITs. We know that purpose-built rentals that are owned by institutional investors are based in a business model that seeks the highest possible valuation of a property. To support that valuation is a mathematical equation that requires that rents and fees be raised, whether existing tenants can afford it or not. Profit-seeking of this nature means weak tenant protections like vacancy decontrol and above-guideline rent increases are exploited. It means rental housing is being demolished at alarming rates and replaced with more expensive buildings.
In 2022 more rental units were built than in the previous three decades, yet rents continue to increase in pretty much every jurisdiction across Canada. This suggests that while what's being built may satisfy investor and business interests, it is not meeting the needs of tenants.
In these supply-side debates, I find myself wondering whether there is a magic number of newbuilds that will result in rent decreases to levels that households on low income can afford. How long will this take, and what should low-income tenants do while they're waiting for this very uncertain future?
I propose that a supply-side response needs to be situated within legislative and policy conditions that will produce the right kind of outcome, an outcome that ensures that those in housing need can access any of the new units, that rents are set at levels people can actually afford, that newbuilds don't displace existing tenants through demovictions, and that housing be used for its primary purpose: as a home.
This can be achieved only through new economic thinking that recognizes that governments have a lot to do with how markets operate. There's a real need for governments to step in and shape economies. Rather than being led, governments need to lead the private sector and develop coresponsibility for solving the crisis. They need to ensure that, where public money is spent, it produces real public value. For example, when you give a GST rebate to builders, conditions are attached to require that they build housing that is affordable to those most in need.
I'll close with this question: What if I am correct that just building more rentals doesn't result in the trickle-down you're expecting? Wouldn't it be better to put in place the legislative and policy conditions to make sure that it does?
Thank you.