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.
Liberal
Tony Van Bynen Liberal Newmarket—Aurora, ON
Are there any recommendations that the federal government could implement quickly?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
Yes. Through the national housing strategy, create more non-profits and housing co-ops and more non-market housing, as well as an acquisition fund. An acquisition fund for non-market actors will take housing that is existing and affordable and keep it affordable in perpetuity, as opposed to having it fall into the hands of financialized actors, which have been shown to compromise the affordability.
Once that affordability is lost, we can't ever get it back, so now is the moment to act.
Liberal
Tony Van Bynen Liberal Newmarket—Aurora, ON
Which of those would have the greatest impact? There is speed for implementation. The other one is the effect and impact.
What recommendation do you have, or which one are you suggesting would have the greatest impact for the government to consider?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
That's a good question. I think it's a multipronged approach. Stop the loss, curb the financialization, make it less profitable and give opportunities for non-market actors to acquire.
Liberal
Tony Van Bynen Liberal Newmarket—Aurora, ON
There was a project some time ago called MURBs, multi-unit residential buildings, which provided incentives for people who had the ability to invest. It provided incentives for them to invest in what was a priority, which was housing at that time.
Have you explored programs like that as part of the recommendations you would consider putting forward?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
I'm going to admit that I don't know this program very well, but many of the buildings built by MURBs are now being financialized. Once the mortgage is done, there are no more restrictions.
That's why, for non-profits and housing co-ops, because it's in their mandate to keep things affordable, it is an investment that will keep the affordability in perpetuity, which is what we want.
Liberal
The Chair Liberal Bobby Morrissey
Thank you.
Mr. Trudel, you have the floor for two and a half minutes.
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
Thank you, Mr. Chair.
Thank you, Ms. Houle, for being here today. We are studying a really important issue.
Interestingly enough, before the federal government stopped investing in housing in 1993, the financialization of housing did not exist. This phenomenon was not observed in Quebec or in Canada. I read a study about what ensued, but I do not remember the date of the study because there are many studies on housing. According to the study, in 1996, 0% of housing stock in Canada belonged to large national and international groups, whereas in 2021, 22% did.
So there's an issue. There appears to be a correlation between the federal government's disengagement from housing and the sudden involvement of large corporations in this matter. We also know that the draw for these people is not the right to housing, but rather greed.
There is the national housing strategy. Are there many programs that you think are not as effective as they should be? The National Housing Council produced a study indicating that we had built only 115,000 housing units since the strategy was launched, but had lost 550,000 units of affordable housing over that same period. That means the strategy is not working.
Let's just talk about financialization. What programs do you think are ultimately not helping us get out of this financialization? Programs include the co‑investment fund, the housing accelerator fund and other federal programs. In the five years since the strategy was launched, it has clearly not stopped this phenomenon.
So, to help us, what programs should be cut?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
Thank you for the question.
Rather than talking about which programs should be cut, we should talk about the ones the government is no longer investing in. For example, this year there was no investment in the rapid housing initiative, yet that program was part of the national housing strategy, and has been very successful. In addition, we are eagerly awaiting the implementation of a program to build new co-operative housing units.
I would like to elaborate on the programs that are indeed working. There have been investments in building affordable housing, but there has been a failure to adequately define what affordability is.
We hope that the programs where there are problems will be revised to include better definitions and achieve better long-term results.
Liberal
The Chair Liberal Bobby Morrissey
Thank you, Mr. Trudel.
Ms. Kwan, you have two and a half minutes to conclude this round.
NDP
Jenny Kwan NDP Vancouver East, BC
Thank you, Mr. Chair.
Yesterday, in the committee of the whole, in the questioning of the minister about this, he seemed to think that the 1% tax on the value of vacant residential real estate not owned by Canadians or Canadian residents, as well as the two-year ban on foreign investment in Canadian residential properties, is sufficient to address the housing crisis, especially as it relates to the financialization of housing.
The press asked him whether he would support and call for a moratorium on the acquisition of affordable housing from the private corporate sector or for a non-profit fund to be put in place, but he didn't answer any of those questions.
Can you advise the committee whether those two measures the government has acted on are sufficient?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
First off, the foreign investment in housing in Canada represents a very small percentage. It's not hard for a foreign investor to set up a shell corporation in Canada. To point fingers at international investment in Canada as the cause of financialization is one that is dangerous and short-sighted.
The vast majority of financialization happens here in Canada by companies in Canada. That is the first issue that I have with this. It's only addressing a small percentage and it's not going to stop the loss. The loss has continued since those changes have come into effect after they were announced in the budget last year.
NDP
Jenny Kwan NDP Vancouver East, BC
The minister also cited supply. As you've indicated, and I wholeheartedly agree, it's not just about supply; it's about the affordability of supply and accessibility of supply to those most in need. The national housing strategy has a target of removing 530,000 households from core housing need. They have not achieved that.
From that perspective, when we're talking about supply, can you say specifically what the government needs to do to address the supply question?
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
First of all, specifically, let's not look at it like a housing model and not assume that people are out to purposely spend 30% of their total household income on their home and will move on if they suddenly make more money. That's a fallacy and that's dangerous.
This is where we really need to focus and this is an important time to do it. We have an $80-billion strategy on the table right now—we're halfway into it—that can make a huge difference. It needs to be targeted correctly at the right kind of supply. The supply margins are directed at those who need it the most, because there's no building any housing supply that will trickle down to address those in poor housing need.
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
That's right.
Liberal
The Chair Liberal Bobby Morrissey
Thank you, Madam Houle.
We will now suspend for a few minutes while we transition the witnesses.
You're welcome to stay, Madam Houle.
Liberal
The Chair Liberal Bobby Morrissey
Committee members, we'll now resume.
We have the second panel of witnesses.
Appearing in the room is Dr. Lewis. Virtually we have Dr. August, Jackie Brown and Manuel Gabarre. Speaking for ACORN Canada is Tanya Burkart.
We're going directly to questions from committee members.
We'll begin with Mr. Aitchison for six minutes.
This is a full six-minute round.
Conservative
Scott Aitchison Conservative Parry Sound—Muskoka, ON
Thank you, Mr. Chair.
I'd like to start with Ms. August.
On page 4 of your report, you stated, “Nationwide, there is a pattern in which REITs invest more in provinces with weak or no rent controls than in provinces with stronger rent controls.”
I'm wondering if that's anecdotal or if there are some statistical numbers you have to demonstrate that.
Dr. Martine August Associate Professor, School of Planning, University of Waterloo, As an Individual
I calculated the number of units owned by real estate investment trusts per province and then compared that to the national share of apartment units in that province to see if they owned more than what you would expect, given the share of apartments in that province. I found that provinces that had stronger rent control had lower proportion of REIT ownership compared to what you would expect, and provinces with weaker rent control were the opposite.
The indication there was that rent control can play a role in reducing the financialization of housing or, indeed, can play a role in preventing firms from wanting to acquire properties in those jurisdictions.
With reference to your question about anecdotal evidence, it's also the case that these firms make it very clear that they are not in favour of rent control. You can read their documents, and you can listen to comments that REIT executives make. They're all very opposed to rent control of any form.
Conservative
Scott Aitchison Conservative Parry Sound—Muskoka, ON
Just to clarify and make sure I understand, did this analysis include only purpose-built rentals?
Associate Professor, School of Planning, University of Waterloo, As an Individual
Yes, it's purpose-built rental housing. I was looking at rental housing over six units, larger rental housing construction, not secondary units.
Conservative
Scott Aitchison Conservative Parry Sound—Muskoka, ON
Besides the 2.5 million purpose-built rentals, there are close to two million rentals that are single-family homes, kind of like the mom-and-pop doubles, duplexes and even condos, I guess, held by investors. When you take them into account as well, it means that the smaller, non-financialized firms hold between 80% to 90% of the purpose-built rental supply. That doesn't seem quite so concentrated when you include that.
Would you agree that the mom and pops who buy a second place and rent it out are helping? They're providing rental units.
Associate Professor, School of Planning, University of Waterloo, As an Individual
No, I wouldn't agree with that.
I would say that this is a common strategy to try to downplay the concentration of ownership by financial firms.
If we're looking at purpose-built rentals, they have acquired an enormous number. We don't even know the full extent, because it's very difficult to get the full details. A lot of the ownership is concealed by the fact that we don't have high-quality data on beneficial ownership in this country, but what we do know is that approximately 20% to 30% of multi-family rental housing, purpose built, is owned by financial firms, and that's just what we do know about. Like I said, the data is questionable.
It's also the case if you look at condos. For example, there is definitely a lot of investor ownership of condos. Positioning that as mom-and-pop ownership and something that is positive, I don't agree with that. I think there are problems with a lot of the rental housing in condos in that it's not as well protected, and tenant protections don't extend to condos so much.