Human Resources Committee on June 9th, 2023

[Joshua Barndt]

So my participation is not allowed even though I followed all your instructions.

[The Chair, Liberal, Bobby Morrissey]

That's correct. The translators have advised me that they cannot translate what you're saying due to the sound quality.

[Joshua Barndt]

Can you hear me, sir?

[The Chair, Liberal, Bobby Morrissey]

I can hear you, Mr. Barndt. The translators cannot.

I have to suspend you, unfortunately. I'll have the clerk reconnect with you.

I will move to the first round of questioning, beginning with Mr. Aitchison for six minutes.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thanks, Mr. Chair.

That's frustrating, Mr. Barndt. I'm sorry it's not working.

Krish, I wanted you to speak a little bit more about what the federal government can do to help stimulate more supply. We've heard from a number of witnesses now that we require the private sector and not-for-profit sector to all be in on this business and to all work together to provide more housing.

What can the federal government do specifically to help ensure that organizations like yours can build more units and ensure that a certain percentage of those are affordable or attainable rates for people in greater need?

[Krish Vadivale]

That's a great question. I think it aptly covers the main issue at hand.

I don't think I have a better answer than the answer that was provided to this panel previously by Tony Irwin—that is, look at the MLI Select program and just lower the threshold a bit so that building what in effect would be mixed-use with some affordable components would be made more economically viable to builders.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

During our recent study of the national housing strategy, the chief economist from the Canada Mortgage and Housing Corporation made this statement, which I'd like you to speak about and expand on:

The reality in Canada is that about 95% of the rental market is provided by the private sector, so financialization is something that exists by design in our rental market. In an environment of a growing population and more demand for more rental units, we need more financialization in order to get more supply to meet the needs of a growing population.

I'm wondering if you can give your thoughts on those comments.

[Krish Vadivale]

My short answer is that I agree with that 100%. To expand on that, as to why I agree that strongly, the REIT space, which is where we operate, really is a platform from which everyday Canadian investors, not necessarily the ultrawealthy, can invest in Canadian real estate to earn a return, and in so doing help support the building of housing across Canada.

As I think you would see from both Skyline's treatment of tenants and many in our peer group, it's not really the large REIT players that are performing renovictions or are in a landlord-tenant board situation trying to evict tenants en masse. We're very much operators who value our tenants and value keeping them in place for the long haul. We value the steady return we get from monthly rents that are achievable with our tenant base. I think having more participants of size that have professional property management is to Canada's benefit rather than to its detriment.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

There are a few of my colleagues in this place here in Ottawa who don't like REITs and who think REITs get some kind of outrageously special treatment by the government and that we should do more to tax them—and, of course, they're big evil corporations. I'm wondering why a big evil corporation like yours would have a tenant relief program. Why do you have that program?

[Krish Vadivale]

Again, it's because we value our tenants. It takes a lot of effort to put our tenants in place and we understand that everyone has moments in time in their lives where times are difficult, so we created this relief program to effectively allow for the ability to keep our tenants in place. I think a happy tenant environment is good for business.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Mike Brooks from REALPAC was here on Tuesday. One of the recommendations he presented to the committee was this concept of creating a code of conduct or best practices code for the industry. Would you support something like that? Could you speak about how something like that might work?

[Krish Vadivale]

Yes, absolutely.

I would think there would be some critical covenants one would want to include in there. I think one that at least most large operators would agree to would be that we should not have any renovictions completed. To what extent other similarly styled codes would be incorporated would yet to be determined, but I would suggest I would be supportive of such a code of conduct being rolled out.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

In terms of the mix of private sector and not-for-profit or public sector housing, can you give us a general sense of what you think that mix should be? How much of our housing mix should be provided by the not-for-profit sector?

[Krish Vadivale]

I happened to view the hearings. I think it was on Tuesday, June 6, that you had Ray Sullivan on board as well, whose target profile of somewhere between 6% to10% is probably the right mix for community housing.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

I have 15 seconds left, so I think I'll be moving on.

Thank you very much.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison.

Ms. Martinez Ferrada, you have six minutes.

[Soraya Martinez Ferrada, Liberal, Hochelaga, QC]

Thank you, Mr. Chair.

I would also like to thank Mr. Laporte of Comité logement Rosemont for being here.

Since Mr. Vadivale has answered several questions, I would like to address my questions to Mr. Laporte.

My questions will focus on the document submitted to the Committee. Mr. Laporte, in your brief, you talk about the discrepancy between data published by the Canada Mortgage and Housing Corporation, CMHC, and the data compiled by the Regroupement des comités logement et associations de locataires du Québec regarding rent increases.

Could you briefly explain the difference between the two?

[Jean-Claude Laporte]

Thank you for the question.

The CMHC data is good and reliable, but it relates to dwellings that are occupied. It gives us the current picture when it comes to occupied housing.

The study by the Regroupement des comités logement et associations de locataires du Québec was based on 45,000 or 60,000 rental units on platforms like Kijiji. This provided a picture of the number of units available for rent. That is where we see a gap in terms of rent increases.

Both profiles are good, but the one from the Groupement des comités logement gives the true picture of rent increases for rental units. That’s what gives us a sense of the state of the market.

[Soraya Martinez Ferrada, Liberal, Hochelaga, QC]

Thank you, Mr. Laporte.

You also mentioned the issue of law and the fact that, as part of the national housing strategy, the government had adopted an approach based on the right to housing, considered a human right. As you know, housing falls under provincial jurisdiction. In my opinion, this calls for everyone’s collaboration.

In your opinion, what concrete measures would ensure the protection of tenants in the context of market speculation, but also against the financialization of the rental market? How might we work with the provinces in this regard?

[Jean-Claude Laporte]

I’m not a constitutionalist, but I think there are always challenges when it comes to areas like health, housing or the environment. Notwithstanding the fact that housing normally falls under provincial jurisdiction, the funding and initiative for social housing programs came from the federal government from the 1970s until 1993. I don’t think anything has changed since then.

Of course, that would involve good faith on both sides, but, personally, I believe that rather than undertaking specific programs as it did back then, the federal government could set aside sums of money for the development of social housing before negotiating with the provinces. It could ask them if they want their share of this money for development. If they said yes, that money would be earmarked for social housing, and nothing else. The same could be true for many other areas as well.

[Soraya Martinez Ferrada, Liberal, Hochelaga, QC]

Mr. Laporte, I understand that your answer concerns the financing of social housing projects.

But let’s talk about legislative measures taken by the federal government, including banning foreign buyers to reduce the effects of speculation on the market. It also wants to work on a landlord registry, but also on tax reform aimed at commercial entities that manage rental properties. How do you see the provinces collaborating on this approach to housing rights?

[Jean-Claude Laporte]

In the housing sector, bans or restrictions on foreign investors is a useful measure that I believe should be extended beyond the two-year period.

Another possible measure would be to stop renovictions. I don't know who has jurisdiction here, but the idea would be to penalize owners who purchase a rental property and sell it after six months, one year or two years. In a renoviction, the new owners pressure renters to move out, then more or less renovate the property and ultimately sell it. If they don't sell it, which is rare, rents are doubled or even tripled.

[Soraya Martinez Ferrada, Liberal, Hochelaga, QC]

You're saying that the government needs to strengthen the rule on property flipping so as not to encourage people to make money on the backs of renters of those units.

[Jean-Claude Laporte]

Exactly.

[Soraya Martinez Ferrada, Liberal, Hochelaga, QC]

Thank you, Mr. Laporte.

I'm sorry, but I need to be quick because I only have 15 seconds left.

Mr. Vadivale, you talked about wanting to be part of the solution. You probably don't have time to answer this now, but if you could do that in writing, what are the measures that the private sector could take to contribute to the housing supply?