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Condo buildings are pictured by the waterfront in Toronto on February 14, 2024 (Laura Proctor/The Globe and Mail)Laura Proctor/The Globe and Mail

Hossein Maleki is founder and chief executive of Satel Creative.

This past December, Toronto-based developer Core Development Group announced its intent to add 10,000 single-family houses to its initial plan to buy up $1-billion worth of properties for renting. The company’s proposal is an attempt to make housing available to the increasing proportion of Canadian families who cannot afford to buy a home. But this type of corporate investment in Canadian housing is, in fact, harmful, and the plan infuriated me enough to start a petition asking the federal government to pass legislation to ban such commoditization.

My advocacy is partly motivated by my personal experience growing up in Iran. Over the past 30 years, because of high inflation and interest rates, it hardly ever made sense for anyone to start a legitimate business and employ people. Any profit in a time of rampant inflation paled in comparison with the 20 per cent a bank would pay for parking money in a savings account. Only people with close ties to Iran’s corrupt and authoritarian government made money, and it was often stored safely in the housing market or laundered through countries such as Canada. This, along with sanctions, led to an astronomical rise in housing prices and constant devaluation of the currency, the rial.

This extreme case is eerily similar in one important aspect to Canada’s housing problem. Most of the capital contributing to the rapid housing price increases and hot demand is generated externally rather than within the Canadian economy, disrupting the long-standing balance between family incomes and housing costs that has now vanished.

Governments across Canada, including at the federal level, are addressing these issues with measures such as a foreign-buyer ban, empty-homes taxes and stricter money-laundering laws. However, these efforts do not seem to have resolved the problem.

Core Development Group’s subsidiary, Avanew, aims to “pioneer the fast-growing Single Family Rental asset class in Canada.” Leaving aside the description of family homes as an “asset class,” allowing this type of investment in Canada seems to leave the door open for commoditization of housing, exacerbating the issue further.

This is a double whammy for Canadian families looking for homes to live in: It will lead to higher rent prices, while the capital gains in real estate will flow to wealthy global and local investors. This is akin to what I call the Uber effect: The price of ordering food from local restaurants can go over $100 for just two people, while about 30 per cent of all of the revenue is sent to the Silicon Valley investors of Uber.

There is some political will south of the border to ban such investments, notably in a measure dubbed the Stop Wall Street Landlords Act after the Jeff Bezos-backed investing app, Arrived, made headlines, causing concern about further commoditization of U.S. housing. We need similar action from our politicians here in Canada, but much like other important issues, we are already seeing political football with the future of our homes.

For decades, financing the Canadian housing market has relied on a blend of household incomes and private investment. Households have contributed through mortgage payments for home ownership and rents, while the private sector has played a role in investing in mortgages and funding the development of both ownership and rental properties. In response to external challenges posed by this traditional model, governments have supported households by subsidizing housing.

We need our leaders to go further by banning speculative corporate investments into housing.

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