Human Resources Committee on May 16th, 2023
Evidence of meeting #69 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 44th Parliament, 1st Session.
Jenny Kwan Vancouver East, BC
NDP
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?
Marie-Josée Houle
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights CommissionFirst 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.
Jenny Kwan Vancouver East, BC
NDP
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?
Marie-Josée Houle
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights CommissionFirst 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.
Jenny Kwan Vancouver East, BC
NDP
Would that be for people in core need?
Marie-Josée Houle
Federal Housing Advocate, Office of the Federal Housing Advocate, Canadian Human Rights Commission
That's right.
Jenny Kwan Vancouver East, BC
NDP
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?
Dr. Martine August
Associate Professor, School of Planning, University of Waterloo, As an IndividualYes, 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.
Jenny Kwan Vancouver East, BC
NDP
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?
Dr. Martine August
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.
Jenny Kwan Vancouver East, BC
NDP
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.
The Chair Bobby Morrissey
Liberal
Do you want to direct it to Dr. Lewis?
Jenny Kwan Vancouver East, BC
NDP
Maybe I'll direct it to Dr. Lewis. I saw him nodding.
Dr. Nemoy Lewis
Assistant Professor, School of Urban and Regional Planning, Toronto Metropolitan University, As an IndividualI 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%.
Jenny Kwan Vancouver East, BC
NDP
How can we stop this practice from happening? Do you have any suggestions or recommendations for the committee?
Dr. Nemoy Lewis
Assistant Professor, School of Urban and Regional Planning, Toronto Metropolitan University, As an IndividualI 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.
Jenny Kwan Vancouver East, BC
NDP
How about putting forward a no-displacement policy?
Dr. Nemoy Lewis
Assistant Professor, School of Urban and Regional Planning, Toronto Metropolitan University, As an IndividualI 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.
Jenny Kwan Vancouver East, BC
NDP
I wonder if ACORN has anything to add.
Tanya Burkart
Leader, ACORN CanadaI 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.
The Chair Bobby Morrissey
Liberal
Thank you, Ms. Kwan.
We don't have enough time to start another round, but we do have a few moments. Mr. Morrice has asked if he could get a question in. Do we have consent? If we have consent, we have enough time to give a few minutes to Mr. Morrice.
Some hon. members
Agreed.
Jenny Kwan Vancouver East, BC
NDP
Mr. Chair, before we let the witnesses go, I wonder if they could provide the data that they may have available to indicate how pervasive the financialized landlord issue is, whether it be in corporations, in REITs or in asset management companies. Could it be broken down by provinces and cities, if they have that? I think it would be very telling to indicate how pervasive and problematic this situation is.
The Chair Bobby Morrissey
Liberal
Thank you, Ms. Kwan.
I would ask all the witnesses that if they have information that addresses the issue Ms. Kwan put to the committee, provide it to the committee clerk so it will frame part of this particular study.
With that, we have concluded the first hour.
Thank you, witnesses, for coming back again and giving testimony on this important topic.
We will suspend for five minutes while we go in camera to resume consideration of version one of the CMHC report.
Again, thank you, committee members.
[Proceedings continue in camera]