The development of new, high-end rental apartments in Calgary’s inner-city neighbourhoods is putting pressure on rents in existing buildings and leading to calls for more tenant protections.
“This is part of a pattern of gentrification when you start to get new developments in an area because land rent is sufficiently low,” says Ms. Kate Jacobson, a member of the Renters Action Movement (RAM), an activist organization that aims to expand the scope of laws that protect tenant rights.
With the arrival on the market of new buildings charging premium rents, the owners of some existing buildings see an opportunity to increase the rents they charge and boost their profits, she says.
“While we consider apartments to be a home, landlords consider apartments and other properties they rent out to be financial investments and they treat them like financial investments. When you can get a higher return on your investment by making the rent go up by five, 10, 15, 20 per cent, you are going to take that opportunity,” says Ms. Jacobson, who rents her home in and older building in downtown Calgary.
“In Alberta we have no form of provincial rent control, which means that your rent can go up as long as your landlord gives you sufficient notice. It can go up by any amount. My landlord could call me on the phone tomorrow and as long as they gave me sufficient notice, they could triple my rent.
“That is completely ridiculous because it removes the ability for tenants to plan long term and to actually invest themselves in their communities, in their schools, in their workplaces, because their housing is so precarious.”
A total of 2,236 purpose-built rental units came onto the market in Calgary so far in 2019, says Andie Daggett, manager, rental market date (Alberta) for Urban Analytics. The average rent is about $2 a square foot, but can be up to $2.44 a sq. ft., which is higher than most older legacy buildings, because these ones are new, with high-end finishings and extra amenities.
“What we’re finding happening is obviously the brand new purpose-built rental buildings are achieving market-leading rents, so they are pushing the boundaries on what renters are willing to spend per month on rental rates,” Ms. Daggett says.
While this may be good news for the developers, it can be bad news for tenants of legacy buildings, often dating back 40 or 50 years, who are seeing their rents go up faster than inflation, according to Anne Landry, who has a background in strategic planning, data analytics and project management.
She recently received a rent-increase demand of more than 17 per cent from Boardwalk REIT, the owner of the apartment in Calgary’s Beltline neighbourhood where she has lived for 21 years. Last year, the landlord wanted to increase her rent by 19.5 per cent.
Parts of these increases were attributed to the end of previous rent incentives and parts to raises in the normal rental rate, but to Ms. Landry, they amount to more than she says she can afford as an unemployed soon-to-be-senior citizen suffering from Post-Traumatic Stress Disorder (PTSD).
Each year, she has pushed back and had the original demand reduced – last year to four per cent and this year to a rate still to be negotiated, but the landlord’s latest offer is six per cent.
She considers the demands to be excessive considering that a raise matching the Consumer Price Index (CPI) this year would have been 1.42 per cent.
A spokesman for Boardwalk REIT said the company negotiates potential increases with residents and considers financial hardship. He said this year’s increase was 5.8 per cent because she chose not to renegotiate, instead going on a month by month basis. He noted that her rent is still less than it was in 2015.
In a recent presentation to Calgary City Council, she said: “I will soon be a senior and I can’t afford these exorbitant rent increases or the mental stress of the repeated rent negotiations.”
She called on city council to transform its affordable housing strategy to provide protection against soaring rents. “We need to change direction at the City of Calgary immediately, because we’re past crisis, we’re into an emergency.”
To support up her claim, Ms. Landry cites the city’s own statistics. These show that about 89,000 Calgary households, or 21 per cent, earn less than $45,000 a year and do not have sufficient income to afford an average rental apartment. Among major Canadian cities, Calgary has the highest rents in the bottom tier of rentals, with 68 per cent of low-income renters over-spending on shelter.
Meanwhile, the City’s affordable housing strategy is focused on the tiny proportion of homes supplied by non-market, public-subsidized housing, not on the much larger private sector, where most renters live, she says.
Only 3.6 per cent of Calgary’s housing stock is publicly owned and subsidized, compared with the national average of six per cent. The city says that 15,000 of these non-market homes are needed and wants to increase to the national average. However, that would require between 2,000 and 2,500 non-market units to be added every year. The city has averaged about 300 per year and in 2018 the figure was 120, she says.
Ms. Landry called on the city to look for inspiration to Vancouver City Council and municipal authorities in Burnaby, B.C., and Banff, Alta., where plans are in place focusing on how to accommodate those earning low to moderate incomes.
Vancouver has a plan to provide 72,000 homes over the next 10 years in the private and non-market sectors, but with 20 per cent of the floor area of these homes to be set aside for renters on incomes of $30,000 to $80,000 a year. Rent increases for these moderate-income units are capped, she says.
The Vancouver affordable housing strategy has the support of some landlords and developers, including the group Landlord BC, which represents 3,300 members.
Ms. Landry has called on Calgary to expand its strategy to include the private sector because its plans for public housing will never be able to meet demand. She’d like to see some form of rent control, such as a tenant-loyalty program that restricts rent increases to CPI, plus a reasonable extra amount for capital improvements.
“There has to be … a conscious and intentional decision by the City of Calgary, it needs to happen, regarding what level of rent increase is appropriate and, by intimation, needing to consider what level of capital return is appropriate.”
If a landlord is making $600 to $1,000 a month in profit from rent, how much is it appropriate for the rent to be increased, she asks.
Ms. Jacobson says that “rent caps are absolutely a good idea, rent controls are absolutely a good idea,” but may not be enough. If the market place is fundamentally unable to meet the affordable housing needs of citizens, the role the state plays can be expanded.
For example, restrictions can be placed on how long landlords can leave housing units vacant. Cities can be given the authority to take over properties from negligent landlords, as happened recently in Vancouver where two buildings were expropriated for $5 each.
“We believe housing is a human right and we believe it should be available to everyone. … we believe that the best way to ensure that housing is seen as a human right is to ensure large proportions of your society live in de-commoditized housing,” Ms. Jacobson says.
“In cities like, say, Vienna, almost 50 per cent of people … live in social housing. That means that social housing is not something that is stigmatized, it’s not only for people who are poor, vulnerable, in a moment of crisis, it is something that is very ordinary and average to live in and it creates really strong communities.”
Editor’s note: (Jan. 24, 2020): An earlier version of this article did not include Boardwalk REIT's response.