Over 20 per cent of Canada’s apartment buildings are now owned by just 25 financial landlords. Private equity firms, real estate investment trusts (REITs), asset managers—these associations of capitalists use their combined wealth to buy up entire neighbourhoods.
These financial landlords are not responsible to residents, but to investors. Their goal is to increase profitability by increasing rents. And nowhere is there more room for rent increases than in the poorest neighbourhoods. For example, 71 per cent of rental apartments in Parkdale, Toronto, are owned by financial behemoths like Hazelview Properties, MetCap Living and Starlight Investments.
To make the most out of their investments, financial landlords need to find a way to get around rent controls. One way of justifying above-guideline rent increases is with cosmetic “repairs”. But the highest increases in rent are only possible when rent-controlled units change tenants. CAPREIT, Canada’s biggest REIT has openly stated that their increase in profit comes from “a record 24.3 per cent average rent increase on turnover.” On average, tenants in Toronto and Vancouver face 20 per cent higher rents when they move.
Financial landlords drive this turnover by finding reasons to evict long-time, low-income tenants. They will use renovictions, claiming to need to clear out units to carry out renovations, and then jacking up rents for the next resident. Sometimes this means a blatant ruse, when renovations are minimal. Sometimes it means tearing down affordable housing to replace it with luxury units. In 2018, 500 residents were evicted from Heron Gate, a predominantly immigrant community in Ottawa. Their homes were demolished to make way for a mega-landlord’s new development.
In any case, “renovictions” are systematic. When banks lend to a firm to finance the purchase of a building, they don’t do so based on the current value of the property, but on the expectation that future returns will be two or even three times higher. Then, when the renter protests their eviction at the tenancy tribunal, they are confronted by an army of lawyers at the firm’s disposal.
These landlords are utterly parasitic. Of course they don’t use their wealth to build new housing to rent out, they just buy up existing affordable housing and make it unaffordable. CAPREIT alone removes 14,000 units from the stock of Canada’s affordable housing each year by flipping them. This shrinking supply then drives up rent in general.
This is all the logical outcome of housing being built and managed for profit, rather than for the purpose of providing homes for workers.
The housing crisis will never be solved as long as a few greedy parasites control the housing supply. The capitalists can extort us because they know we can’t live without a roof over our heads. Their attitude was revealed by comments made in 2019 by the CEO of Starlight Investments, Canada’s biggest real estate firm, “We think there is a definite housing shortage, or almost crisis level in Canada… and the good news for investors is there is no easy solution in sight.”
Indeed, there is no solution which respects their right to extract an ever increasing tribute from tenants just so their stock value can increase.
Under socialism, every single REIT would be expropriated and brought into public ownership. In this way rent could be reduced to one third of income. The corporate managers could be replaced by committees elected by renters who could democratically manage their own apartment buildings. The massive wealth of these REITs could be used to make improvements and end slum-like conditions of many buildings.
Only with socialist measures can we defeat these financial landlords and guarantee quality, affordable housing to all.
