Evidence of meeting #69 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 financialization.
A recording is available from Parliament.
Bloc
Bloc
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
No need for interpretation to understand that.
Let's get back on track.
I want to sincerely thank all the witnesses for coming.
As I was saying, the financialization of housing is a major issue. Let's talk about it.
Ms. August, in your study on the financialization of rental housing, you recommend that we stop providing direct or indirect public assistance services to companies that are involved in the financialization of housing.
Earlier, I was telling another witness about a study that I once read. According to the study, the federal government stopped investing in housing in 1993. From about 1996 onward, financialization was observed to increase in Canada from 0% to 22%, which is the current level. Since then, the federal government decided to reinvest in housing over six or seven years, which overlaps with the period during which the national housing strategy has been in effect. However, it is clear that the strategy has not solved all the problems.
What main programs under the national housing strategy could you name now that are contributing to this financialization of housing?
Associate Professor, School of Planning, University of Waterloo, As an Individual
Thank you for the question.
The rental construction financing initiative, RCFI, is one of the programs where there has been support given to financial firms, so there's an example there.
In terms of what the federal government could do to better prevent this, I think that the National Housing Strategy Act programs could better support the construction of non-market housing, as the advocate mentioned, such as subsidized housing, including co-ops, non-profits and social housing. This would build the kind of supply that provides deeply affordable housing, which we really need in Canada to meaningfully address the housing crisis.
In terms of providing support for private sector developers to build housing, this is an interesting question. I think it's possible to use federal support or subsidy for this, if you can be guaranteed that this housing will be affordable in perpetuity and that we won't have violations of the right to housing that affect people's security of tenure.
I think it's great to support the creation of new housing, if we can be sure that it's going to be affordable. It's going to be Canadian taxpayers who are putting that money in and it should be achieving the social goals that we have for housing in this country.
Bloc
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
Thank you so much.
According to a National Housing Council report, between 2011 and 2021, we lost 550,000 affordable housing units in Canada. Did you know that?
What do you think is the main reason we lost those units?
Associate Professor, School of Planning, University of Waterloo, As an Individual
I don't have the figure itself in front of me.
However, it is the case that researchers Steve Pomeroy and Duncan Maclennan have done research looking into the loss of affordable units. They associate this with financialization of housing. What we're seeing is that financial firms are buying existing multi-family housing and driving up the prices of that housing in the way that I and the other panellists have discussed.
Because that housing is becoming more expensive, we're losing affordable units and our existing stock is being consolidated. Ownership is being consolidated by financial firms whose business strategy is to make that housing more profitable for their investors, which has the effect of making that housing less affordable for Canadians and of losing affordable housing stock.
We've heard reference to this request for an acquisition program that would allow the government to support non-profits in acquiring existing multi-family housing to stop that loss of affordable housing as it's being bought up by financial firms and being made less affordable as their business strategy.
Bloc
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
When the federal government was creating social housing prior to 1993, it signed agreements. In fact, presumably, one of the reasons why we lost those affordable housing units is that the agreements about the rental housing stock that was built at that time are now expiring. They were signed for 20, 25, 30 or 35 years. Would you recommend that the federal government keep this stock, which already exists?
One of the problems right now is that it's hard to build housing quickly because of construction costs and labour shortages. You touched on it briefly, but this is housing into which the federal government has already invested public money. If the federal government decided to continue to invest in this stock, to safeguard its affordability, do you think that would be a good tool?
Associate Professor, School of Planning, University of Waterloo, As an Individual
Absolutely. I think that's a crucial tool.
We have such an important, valuable stock of social housing, albeit a small proportion of Canada's housing stock, that is underfunded and been under-maintained ever since the federal government withdrew support for social housing in this country. Preserving and maintaining that super important, very affordable, crucial element of the stock is key. Preventing more housing from being lost, as I just spoke about, is also key, and then building new affordable supply that is deeply affordable in perpetuity. It's all of those things.
To use the language of the advocate, this is a bit of a multipronged approach, which would meaningfully work towards addressing the housing crisis in Canada.
Liberal
NDP
Jenny Kwan NDP Vancouver East, BC
Thank you very much.
We saw the financialized landlords come into the market after the national affordable housing program was cancelled in 1993. Subsequent Liberal and Conservative governments have allowed for financialized landlords to continue to flourish.
Dr. August, you mentioned that one key issue is also preventing the loss of stock.
Would you support the call for a moratorium to be put in place on the acquisition of housing stock by financialized landlords?
Associate Professor, School of Planning, University of Waterloo, As an Individual
Yes, I would support that.
Unless financialized landlords can indicate that they plan to pursue affordable housing, to not raise rents, to not pursue evictions at higher rates than other types of landlords, to ensure security of tenure for people and to basically not work toward a violation of the right to adequate housing, there shouldn't be support for these firms to acquire and to consolidate ownership of our very important rental housing stock in Canada.
NDP
Jenny Kwan NDP Vancouver East, BC
Thank you.
On the issue around financialized landlords, we see that quite often, actually, in apartments and multi-unit complexes. Can you share with the committee how pervasive this is in single-family homes and in condos?
Associate Professor, School of Planning, University of Waterloo, As an Individual
That's actually a very difficult question to answer.
We've tried to look into it just a little bit in the report. We've seen that early indication of some institutional firms that are investing in single-family rentals. For example, Core Development Group is a real estate investment trust, or REIT, that was launched in order to acquire single-family homes in Canada. There are some other small companies I'm aware of that are doing the same thing. However, it's hard to know the full scope of this. It's less advanced in Canada than in other countries where we're seeing a massive consolidation of single-family rentals. That's something that Dr. Lewis knows about from having done substantial research on it in the United States.
NDP
Jenny Kwan NDP Vancouver East, BC
Thank you very much.
Perhaps, Mr. Chair, I could ask the witnesses to present any data they may have in that regard to the committee for the committee's information.
I'd like to turn to the question around evictions. We heard from ACORN, which has lived experience of how impactful and how significant it has been in terms of these financialized landlords going in and renovicting people, demovicting people and, in fact, letting the apartments fall apart to force people out. There's data that's been provided about the issue around evictions.
How much of that is related to the financialized landlords jacking up the rent and creating unaffordability for the tenants? As a result, they're faced with evictions.
I'm not sure who's best to answer that question.
NDP
Assistant Professor, School of Urban and Regional Planning, Toronto Metropolitan University, As an Individual
I definitely think there's a correlation. I provided an example of one particular property that is located in North Etobicoke, which was acquired by Starlight Investments in 2018. In 2019, Starlight filed approximately 480 evictions on this property, which has just over 740 units. Then, the year after, we saw that rents increased by just over a 25% year-on-year average. We've calculated the cumulative aggregate growth rate for rents at this particular property since 2012, and rents have increased at an annual basis of about 10%.
NDP
Jenny Kwan NDP Vancouver East, BC
How can we stop this practice from happening? Do you have any suggestions or recommendations for the committee?
Assistant Professor, School of Urban and Regional Planning, Toronto Metropolitan University, As an Individual
I think the member previous to you had suggested a moratorium in terms of putting a cap on the number of properties these particular entities can acquire. One big issue as well—I know there was a question posed—is that the private sector can play a role, but I think we have to keep in mind that these private sector corporations have a legal and fiduciary responsibility to maximize their returns. As such, that undermines the federal government's efforts with respect to realizing a right-to-housing approach for all Canadians.
Assistant Professor, School of Urban and Regional Planning, Toronto Metropolitan University, As an Individual
I think putting in a no-displacement policy would certainly help, but the question that remains is whether these particular landlords would neglect the maintenance of the particular property and, in turn, pressure some of those folks to actually move out and to find new accommodations. Then they would come in and reinvest in and renovate these particular properties to attract more affluent and more high-income households.
Leader, ACORN Canada
I can add to what Nemoy has spoken about.
Absolutely, put a hard limit on the number of units REITs can purchase or own, and block any public funding or benefit that REITs receive. Those should be tied to a no-displacement guarantee. If a REIT wants CMHC funding, then it has to guarantee CMHC that it's not going to displace tenants.
Part of it should be making sure that REITs maintain their units. The tenant conditions we live in are just abysmal. Their profit model relies solely on, basically, putting us in conditions that are not livable.
Taxing REITs.... I think the best way to hit a financial corporation is the bottom line, so a tax of 38% is a great number.
