Evidence of meeting #67 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.
A recording is available from Parliament.
Liberal
The Chair (Mr. Robert Morrissey (Egmont, Lib.)) Liberal Bobby Morrissey
Committee members, welcome to meeting number 67 of the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, October 17, 2022, the committee will begin its study on the financialization of housing.
Beginning our first panel is Madam Marie-Josée Houle.
You have the floor, Madam Houle.
Marie-Josée Houle Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
Thank you very much.
Good afternoon, Mr. Chair, Madam Vice‑Chairs, and honourable committee members.
My name is Marie‑Josée Houle and I am honoured to be here with all of you as Canada's first federal housing advocate. I'm honoured to be here to discuss the work we have been doing on the financialization of housing with the knowledgeable team of researchers who are joining us today.
Before I continue, I wish to acknowledge the privilege of speaking with you from the traditional and unceded territory of the Algonquin Anishinaabe Nation.
As we begin our discussions today, I want to emphasize the uniqueness of the federal housing advocate position, not only within Canada but globally. It's my job to be a watchdog for housing and homelessness in Canada. My position is independent and non-partisan. This is new territory for all of us, and I welcome the opportunity to work together.
Ultimately, I'm here to drive system-wide change so that government legislation, policies and programs uphold the human right to adequate housing. A big part of that, of course, is the need to address the financialization of housing in Canada.
Today, I would like to talk about how the financialization of housing—otherwise described as corporate investment in housing—is a serious human rights issue that must be addressed as we seek to correct Canada's housing crisis. I will explain why, in three key points.
First, the financialization of housing is a widespread issue that has negatively shaped Canada's housing system. Second, the financialization of housing is harming people in Canada and is a serious human rights issue. Finally, curbing the financialization of housing is a key way governments can help address Canada's larger housing crisis.
To my first point about how the financialization of housing is a widespread issue that has negatively shaped Canada's housing system, to understand this exactly we have to understand the financialization of housing. It is essentially the process of treating housing as a financial commodity and an asset for profit.
The financialization of housing works in various ways, but the motive is always profit-driven. The main actors are financial entities such as real estate investment trusts—known as REITs—as well as pension funds, asset managers and private equity funds.
Corporations turn housing into a financial product in a few ways. In one, they raise the price of rental units to extract maximum profits. Another way is to package housing into investment funds whose shares are traded on global markets. We're also seeing the growing role of for-profit operators in the long-term care sector.
It's not new that these buildings are privately owned. What is new is that they are now increasingly owned by large institutional investors and financial firms whose focus is making maximum returns for shareholders. Someone's home can become one small part of a giant multi-billion dollar portfolio of assets that's being leveraged to acquire even more assets. This is what I mean when I call this problem widespread.
The scope of financialization of housing in Canada has expanded dramatically since the mid-nineties, when regulatory changes enabled the creation of real estate investment trusts and allowed pension funds to invest in financial markets and instruments. These changes took place just as Canada's federal social housing program was terminated, resulting in a steep decline in the development of new non-profit, affordable co-op and social housing. As a result of these factors, low-income and vulnerable households are finding it increasingly difficult to secure affordable, accessible and adequate rental housing in Canada.
Our research shows that today, an estimated 20 to 30% of Canada's purpose-built rental housing is now owned by institutional investors. Meanwhile, financialized companies make up 15 of the top 20 biggest owners of long-term care and seniors' housing in Canada. I want to highlight that these figures only account for what is traceable. Right now there is very little disaggregated data for comprehensive public reporting on this issue. This lack of transparency is a problem.
Recently, financialization was accelerated by the COVID-19 pandemic as housing was identified as a safe investment during this period of economic instability. Canada will not be able to build our way out of this housing crisis. We are losing affordable housing units faster than we can build them. According to housing researcher Steve Pomeroy, between 2011 and 2016, for every unit of affordable rental that was built in Canada, 15 were lost. Financialization is one major contributor to this loss. If the housing crisis is going to be addressed, we must stop the loss.
When we consider this issue from a bird's eye perspective, we see how the financialization of housing is a widespread issue that has been negatively shaping Canada's housing system with very little oversight. When we look more closely at the individual level, we see how it's also causing real harm to individuals, families and communities. We're talking about people's everyday lives.
This brings me to my second point. Financialization is causing real harm to people in Canada, and it is a serious human rights issue. You've heard me say that housing is a human right, and it's really important to understand what that means. The right to housing is not just a slogan. It's not just an ethereal “nice to have”, something to aspire to. It is a fundamental human right enshrined in international law under the International Covenant on Economic, Social and Cultural Rights, which Canada signed in 1976. Today in Canada the right is also enshrined in our domestic law and reaffirmed under the National Housing Strategy Act of 2019.
This means that every single person in Canada has the right to live in a safe, secure, affordable home that meets their needs and to be free from discrimination or harassment. Under international human rights law, there are seven criteria that define adequate housing, including affordability, security of tenure and habitability. Everyone in Canada has the right to a home that meets all seven criteria.
When we understand that and then consider the detrimental effects of financialization, it's clear that this trend is violating people's right to adequate housing in Canada, it's contributing to housing unaffordability and it's worsening housing conditions. It is leading to evictions and displacement.
Our research found that financial firms often target and acquire rental buildings where rents are below local averages, and they extract maximum revenue by cutting services to tenants, increasing rents and fees or evicting existing tenants in order to dramatically increase rents for new renters. Undermining the affordability, security of tenure and habitability of buildings is not just a by-product of financialization. It is a deliberate strategy that firms use to increase profits.
Once the prices have been raised, these affordable units are forever lost. Meanwhile, the unhealthily low vacancy rates in many cities leave people with no choice than to pay more for these units. People who are evicted from their affordable units are forced to look for housing far from their community, competing for a rapidly dwindling supply of affordable options.
The research confirms that financialization is causing the greatest harm to indigenous and disadvantaged groups, such as vulnerable seniors, low-income tenants, people with disabilities, members of Black communities, recent immigrants and refugees, and lone-parent families. There is also a well-documented connection between financialization and increased morbidity and mortality in long-term care facilities. Not only has this affected residents' human right to adequate housing, but it has also violated their fundamental human right to dignity, security of the person and life.
The key word in all of this is “harm”. This is why Canada needs to treat financialization as a serious human rights issue and also as a key component in addressing the housing crisis overall.
This brings me to my third and final point: Curbing the financialization of housing is a key step for governments to take. It's not just the smart thing for governments to do; it is actually their obligation under international human rights law, and now, in Canadian law, under the National Housing Strategy Act.
Realizing people's right to adequate housing means that governments must act to ensure that all available resources are mobilized toward the most disadvantaged group as a matter of priority; that all appropriate means, including policies and legislation, are taken to ensure adequate housing for these groups; and that a coordinated all-of-government approach is implemented across all levels of government.
First and foremost, any government responses to financialization must be aligned with these obligations. One of my duties as federal housing advocate is to monitor that the right to adequate housing is being fulfilled in Canada.
We know that the financialization of housing is complex, but we also know that a range of effective solutions exist, including those identified by our research.
We can address the financialization of housing with deliberate changes and a recalibration of the national housing strategy. The federal government, with the advice of this committee, can demonstrate federal leadership on the issue and highlight how other levels of government will also need to act.
Financialization is systemic and pervasive and will require a coordinated approach to curb the harm it is causing. It will require immediate actions, followed by long-term, ongoing strategies to ensure adequate housing.
In particular, I invite this committee to look at options such as tracking the ownership of financialized housing stock; better monitoring of tenant rights before, during and after the acquisition of properties to prevent evictions, human rights violations and harassment; expanding the supply of non-market housing; tax reforms that make financialization less profitable, especially for REITs; and regulating the involvement of pension funds that invest in financialization. I also urge the committee to call industry witnesses to account for their practices that undermine housing affordability, security of tenure and habitability, with data about their strategies and their profit margins.
Throughout it all, we trust that the voices of people in Canada and those whose right to adequate housing is being violated will continue to be heard. The bottom line is that addressing the financialization crisis in Canada is integral to addressing the housing crisis in Canada. When we realize the right to adequate housing for all, all of Canada benefits. Our economy benefits, communities benefit and people benefit.
I am here to work with you and with all levels of government to address financialization and realize the right to adequate housing for everyone in Canada.
Thank you for your time—I welcome your questions.
Liberal
The Chair Liberal Bobby Morrissey
Thank you, Madam Houle.
I believe we'll only get one round for this particular panel.
We'll now begin with Mrs. Gray.
Mrs. Gray, you have the floor for six minutes.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
Great. Thank you, Mr. Chair, and thank you to the witness for being here today.
In your opening remarks, you referred a couple of times to the housing crisis. I want to confirm that you believe we're in a housing crisis.
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
Absolutely.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
Okay, great. Thank you so much.
We had the housing minister in here before committee just a few months ago. My Conservative colleague Mr. Aitchison asked him several times whether he believed that we were in a housing crisis, and Minister Hussen refused to acknowledge it as such.
Are you concerned that the government is not formally recognizing the present situation as a crisis?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
I am concerned that when I travel across this country, I'm seeing encampments in some areas for the very first time and people who are unhoused. That is a crisis. People can't afford rents. Again, encampments—which is another project that I'm working on—are a physical manifestation of exactly how broken our housing and homelessness system is in this country.
However, we have a national housing strategy and we have a National Housing Strategy Act. It is about government recognizing housing as a human right. It has done that legally, but it's about acting on it, taking on the responsibilities and ensuring that all resources, as soon as possible, are prioritizing those who need them the most. Those are the people we're seeing in encampments, and those are the people in housing precarity.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
Again, going back to the fact that the minister is not acknowledging we're in a housing crisis, I would assume, as the federal housing advocate, that it would be a concern of yours that the minister is not acknowledging we're in a housing crisis.
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
Our job is to write reports, and our latest report has been sent to the minister. That report, as well as his written response, is expected to be tabled in front of Parliament within 30 days, so hopefully you'll see that soon.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
Hopefully the minister will acknowledge that we're in a housing crisis based on information he is getting.
I just want to tag on to that. You were mentioning encampments. I know that even in my riding of Kelowna—Lake Country, it's something we're seeing more of. Public safety, as well as what's happening, is a big concern right across the country. Thank you for bringing that up. I appreciate that.
One of the other things I wanted to ask you was.... The Liberals have been championing their latest program. It's the so-called first home savings account. It's a tool for solving the gap in home ownership for first-time homebuyers, yet many Canadians already can't afford a home and are struggling just to make ends meet, to pay for rent and to afford groceries, let alone save money for a down payment on a home.
Do you believe this savings account will actually make a difference for first-time homebuyers?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
We're here today to talk about the financialization of housing, and it's important to look at the housing system as a whole. People's inability to access home ownership certainly has an impact on the rental market, but today we're here to talk about the research that was commissioned by my office and to talk about the impacts of the financialization of housing. The financialization of housing has also targeted homes, so this question is relevant to what we're talking about.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
You have referenced that we can't build our way out of this crisis, and you have acknowledged that we're in a housing crisis. Everything being equal, if the amount of a product increases, its market price will tend to fall. Would you agree that part of the situation is that we need to build more houses in order to bring prices down at some point?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
This is not how housing works. We're talking about the housing crisis, and the human right to housing is about those who need it the most. For any new housing that's built, whether it's a rental or single detached home, mortgages will cost more than for something that's already built. New constructions, unless they come with subsidies, will not create the affordability needed.
The market needs to be regulated. In Canada, we have a market-driven economy, and it's the role of government to put protections in place to protect people from harm. It's the same way for minimum wage in this country. The market will not address that in itself out of its benevolence, especially when we have financialized actors who are beholden to their shareholders and people get bonuses when they get maximum profit.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
Thank you. I have the chance for just one more quick question. I'm sorry to have cut you off.
Statistics from CMHC show we need 5.8 million new homes by 2030 to restore affordability. Do you believe the federal government is meeting its roles and responsibilities in getting to that number?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
There are investment programs in housing through the national housing strategy. It's $8.2 billion over 10 years. We're five years in and the results are not meeting the goal of addressing the housing crisis and decreasing chronic homelessness by 50%. These new builds are not accessible by people who need them the most. Those are the people outlined and named in the national housing strategy itself. That is not helping Canada move toward the progressive realization of the human right to housing.
Liberal
The Chair Liberal Bobby Morrissey
Thank you, Madam Houle and Mrs. Gray.
Ms. Martinez Ferrada, you have the floor for six minutes.
Liberal
Soraya Martinez Ferrada Liberal Hochelaga, QC
Thank you, Mr. Chair.
First, I'd like to correct my colleague: The minister has said that there is a housing crisis on several occasions, including in press releases.
Mrs. Houle, I am more concerned about the parties that do not recognize the human right to housing. I'd like to hear your comments on that. Why is it so important to recognize it?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
The right to housing is a central element.
First, the law of the marketplace doesn't work. We've let the market and the economy lead, but the economy is not people. I'll be very direct: Economically speaking, vulnerable people with precarious access to housing or who are experiencing homelessness are costing society a fortune. In addition, we pay a price in human terms, because these individuals are losing their dignity.
To build an adequate housing system, we must not only have regulations, but also funds and programs. The right to housing must always be kept in mind when creating them.
Liberal
Soraya Martinez Ferrada Liberal Hochelaga, QC
As you know, the government has legislated on the issue of housing rights. In fact, you are living proof of that as the first housing advocate.
In your opinion, will stopping foreigners from buying properties and instituting policies that will, in some ways, curb speculation, lead to more housing and affordability?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
I know that in the 2022 budget they talked about investing in financialization, but only for projects abroad. The reason we're here today is also to show that financialization is not just about investors outside Canada; it's happening a lot here and having a very detrimental effect on the entire housing system, but also on people gradually coming to the realization that housing is a human right.
Liberal
Soraya Martinez Ferrada Liberal Hochelaga, QC
Were you happy to see that the government has committed to initiating tax reform in the budget?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
Yes.
Liberal
Soraya Martinez Ferrada Liberal Hochelaga, QC
That should address some of your concerns and provide a solution to counter the effects of financialization.
You made several suggestions. As you know, we have different levels of government in this great country and housing is primarily a provincial jurisdiction. You have said a few times that the federal government should fully occupy those areas of jurisdiction that are exclusive to it.
Would you agree that the federal government will not be able to solve the housing crisis on its own?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
Yes, absolutely.
Liberal
Soraya Martinez Ferrada Liberal Hochelaga, QC
In that case, how do we ensure that the provinces and other levels of government are also at the table?