Canada's once-stable rental market is facing a growing threat: Financialization. A recent report by the National Housing Council (NHC), "The Financialization of Purpose-Built Rental Housing," paints a concerning picture of a system prioritizing profit over affordability.
What's the Problem?
Financialization involves large financial institutions like REITs and private equity firms buying existing rental buildings. These entities view housing as an investment, aiming to maximize returns for shareholders. This often clashes with the needs of tenants, leading to:
- Skyrocketing Rents: A relentless focus on profit margins translates to rent increases that outpace income growth. The report highlights a telling statistic: a one-bedroom apartment renting for $888 in 2005 now commands a staggering $1,537 in. This exponential rise pushes low-income tenants out, straining already stretched budgets.
- Renovictions and Evictions: Financialized landlords may embark on renovations to justify even higher rents. This often disrupts existing tenants, forcing them to relocate or face financial strain. The report acknowledges the human cost of such practices, citing cases where families are displaced due to renovations or redevelopment.
- Deferred Maintenance: Cost-cutting measures can lead to deferred maintenance, creating unhealthy and unsafe living conditions. Leaky roofs, malfunctioning heating systems, and inadequate pest control are just some of the issues tenants may face in financially owned buildings.
The Human Cost
The report underscores that access to safe and adequate housing is a fundamental human right enshrined in international law and increasingly recognized domestically. However, the financialization of rental housing directly challenges this right by shrinking the pool of affordable options.
The NHC review panel heard from countless Canadians struggling due to financialization. These included:
- Tenants facing rent increases that eat up a significant portion of their income, leaving them with difficult choices between housing and other necessities.
- Individuals and families at risk of eviction due to renovations or redevelopment, facing the prospect of homelessness or unaffordable alternatives.
- People who are already homeless or inadequately housed due to a lack of truly affordable rental options.
Numbers Don't Lie
The report provides concerning figures on the pervasiveness of financialization in Canada's rental market:
- REIT Bonanza: From 1996 to 2021, REITs alone saw their rental suite holdings explode from zero to nearly 200,000. This rapid growth reflects a significant shift in the ownership landscape.
- Financial Dominance: Financial firms now comprise 17 of the top 25 biggest landlords in Canada. These top players alone hold over 344,000 suites, translating to roughly 20% of the entire purpose-built rental stock. Industry experts estimate the true figure could be even higher, reaching up to 30%.
Recommendations from the NHC
The NHC report doesn't shy away from offering solutions. Here's a breakdown of their key recommendations for the Minister of Housing, Infrastructure and Communities:
- Boosting Affordable Housing Supply: The panel calls for a significant government investment in developing new, non-market rental housing. These are units owned and managed by non-profit or government entities, with rents kept below market rates to ensure affordability.
- Protecting Existing Stock: The report proposes a national program to acquire and preserve existing affordable rental buildings. This would prevent them from falling into the hands of private entities likely to raise rents.
- Supporting Tenants: The NHC emphasizes the need for immediate interventions to help tenants facing eviction or struggling to afford rent increases. Additionally, they recommend establishing national standards for tenant protections to ensure renters' rights are upheld consistently across Canada.
A National Housing Strategy is Needed
The financialization of rental housing is a complex issue demanding a multifaceted solution. The NHC report serves as a blueprint for action, urging the government to take a leadership role. By implementing these recommendations and prioritizing a national housing strategy focused on affordability and human rights, Canada can work towards a future where everyone has access to a safe and secure place to call home.
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