Leilani Farha is a former UN special rapporteur on the right to housing and the global director of the Shift. Julieta Perucca is the deputy director of the Shift.
Core Development Group Ltd. announced this week that it intends to spend $1-billion over the next five years to purchase thousands of single-family homes across Ontario, Quebec, Atlantic Canada and British Columbia and offer them as rentals. The Toronto-based company says it is looking to fill what it sees as a hole in the housing market, taking advantage of red-hot real-estate prices that have put homes beyond average family budgets, the competitive rental market and new work-from-home needs.
Core intends to convert the properties into multiunit dwellings by adding basement apartments. The company asserts this will create 4,000 affordable rental units for families, immigrants and residents who want more space but cannot afford to buy a home.
But don’t confuse this immense financial opportunity for Core as an altruistic attempt to fill a so-called hole in our housing market. The project capitalizes on a crisis: Inexorably rising housing prices, unaffordable rentals and low vacancy rates, all part of a housing market that is closed off to a growing segment of our population – first-time home buyers, low-income Canadians and marginalized communities. The plan is being marketed as an attempt to assist Canada’s undersupplied rental market for families and middle-income households, but in fact it will likely only contribute to the scarcity in the homeownership market for that very cohort, converting their paycheques and monthly rent into Core Development equity.
The company’s entry into the rental market in no way addresses Canada’s housing crisis; in fact, it may fuel it. The business model behind Core’s plan treats homes as underperforming assets, squeezing every last cent from every square foot of property. It pits a multimillion-dollar company and the wealth it can leverage against individual home buyers. To date, the so-called affordable rents set by the corporation in the communities where it is already active are above what the Canada Mortgage and Housing Corporation tracks as average prices – and, unnervingly, because they are new rentals on the market in Ontario, they can be priced at any level.
While there may be good reason to be outraged at Core for its gumption, it would be myopic to be so focused; after all, they are merely working within an environment created and sustained by governments in Canada. Federal and provincial legislation and policies enable investors and real-estate developers to increase supply for their own benefit, lauding them as saviours without adequately scrutinizing whether they are truly helping those in need.
Private actors no doubt have a role to play in addressing Canada’s housing crisis. However, it’s hard to see how they will meaningfully do so if they are working predominantly for the bottom line – and if governments continue to stand idly by, “monitoring” their actions but failing to regulate them. Governments are obliged to ensure that companies such as Core concretely contribute to national commitments to the human right to housing, which entails ending homelessness, prohibiting evictions into homelessness and ensuring access to adequate, affordable housing for the 1.6 million households in core housing need.
At the end of the day, Core’s plan is yet more proof that Canada’s housing landscape is becoming increasingly dominated by corporate landlords and financial actors seeking only to extract phenomenal returns on investment. It’s hard to view this as a good thing.
This financialization of housing has not had positive results for tenants or marginalized communities here or elsewhere. In Canada, individual landlords with small to medium-sized holdings are increasingly being rivalled by real-estate investment trusts (REITs), which raise rents and file evictions at disproportionately higher rates. In the United States, single-family homes have fallen prey to the interests of private-equity investors, who scoop up foreclosed homes at low prices and then, after minor renovations, charge steep rents, turning a class of homeowners into beleaguered renters. The pandemic and its resulting economic downturn have demonstrated the importance of flexibility and compassion for tenants; this is hard to attain with faceless corporate landlords.
The alarm bells have long been ringing loud and clear. Reports have been issued, documentaries screened, media attention garnered, letters to politicians written. It’s time for Canada’s governments to decide on their vision for the housing sector: Will it be one guided by the interests and profit-making whims of investors and developers, or one that concretely embraces and acts on the knowledge that access to adequate, affordable housing is the key to greater equality and a happier society?
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