The Hill Times: Tenants describe ‘dramatic erosion’ of existing affordable housing, call on feds to take action

A House Human Resources Committee report called for a fund to help non-profits acquire affordable housing. The Nov. 21 fiscal update did not include such a fund, but advocates call for one to be created in the next federal budget.

Following warnings from researchers and a House committee that the country is losing far more affordable housing units than it is creating, long-term tenants in two of Canada’s fastest growing cities are describing what it looks like when large landlords look to ‘reposition’ older rental buildings by moving them further upmarket.

According to Statistics Canada, rent prices are among the fastest growing components of the consumer price index. While the overall year-over-year inflation rate slowed to 3.1 per cent in October, rent prices increased by 8.2 per cent in October, and 7.3 per cent in September.

Long-term tenants Tanya Burkart and Marcia Bryan told The Hill Times on Nov. 17 and Nov. 20, respectively, about their experiences with these rising rents. Burkart and Bryan are both members of ACORN Canada—the Association of Community Organizations for Reform Now—a national organization of low- and moderate-income people. Many of its members are tenants in purpose-built rental buildings from the 1960s and 1970s which form a major component of Canada’s stock of affordable housing.

Burkart said units at her townhouse complex in Brampton, Ont., are now being listed for rent at almost twice what they were listed at five years ago. “I rented my townhouse for $1,500 in 2018,” she said. “The same three-bedroom townhouse is now renting for $2,600.”

Her eight-building townhouse complex was acquired in April 2022 by an Alberta-based, publicly traded real estate investmenttrust (REIT) named Boardwalk REIT that owns more than 33,000 residential suites across Canada.

Bryan has lived in the same apartment building in Mississauga, Ont., for more than 30 years. She said she is currently paying $1,300 for a two-bedroom apartment while new tenants in the building are paying between $1,700 and $1,900 for a one-bedroom apartment, and up to $2,800—plus utilities—for a two-bedroom unit.

Her building was acquired in November 2020 by one of the largest landlords in Canada- Starlight Investments, a privately held global real estate and asset management firm that owns more than 73,000 multi-residential suites, and more than 8-million square feet of commercial property space.

Researchers such as McMaster University professor Steve Pomeroy have warned about a “dramatic erosion” of existing affordable housing units as older rental buildings are redeveloped, or as landlords increase rents. Pomeroy told the House Human Resources Committee on June 9 that Canada lost more than 550,000 low-end rental units between 2011 and 2021, while adding only about 70,000 units through new builds. That represents a net loss of approximately eight existing units for every new one added.

ACORN has called on the federal government to take steps to protect existing affordable housing, including by establishing an acquisition fund to help nonprofit and co-operative housing providers purchase rental properties when they go on the market.

The Human Resources Committee’s Oct. 26 report on the financialization of housing—defined as “the treatment of housing as a financial commodity and an asset for profit”—highlighted the loss of affordable rental housing and called for the establishment of an acquisition fund.

Finance Minister Chrystia Freeland’s (University—Rosedale, Ont.) Nov. 21 fiscal update did not establish such a fund, and advocates are now calling for one to be included in the next federal budget.

Financial reports lay out strategies for repositioning low-rent buildings

Burkart and Bryan said large corporate landlords are actively working to “reposition” selected older rental properties at higher price points. They described a range of approaches, many of which frustrate long-term tenants living in rent-controlled apartments.

Burkart said landlords or property managers looking to reposition a building might ignore maintenance or repair requests in favour of “cosmetic” improvements to facades or common areas. She also described buyout offers of $10,000 or $15,000 to vacate a unit, no-fault evictions, and the use of above-guideline rent increases to cover regular upkeep.

Bryan added that tenants also complain about elevator break-downs, frequent water shutoffs, flooding caused by neglected plumbing, out-of-order trash compactors leading to a build-up of garbage and pests, loss of electricity, and the introduction of new or higher fees for lockers and parking.

Affordable housing advocates say financial reports from publicly-traded landlords lay out a broad strategy to increase rental revenues by acquiring low-rent buildings and repositioning them further upmarket to appeal to higher-income tenants who have been shut out of home ownership.

Boardwalk’s most recent quarterly report includes sections on “brand diversification” and a “suite renovation program” that describe a process of “repositioning and rebranding” its existing rental portfolio in order to increase rental revenue, and therefore maximize returns to investors.

The financial report breaks down Boardwalk’s rental properties into three tiers based on price. The “affordable value” group currently makes up 49 percent of the overall portfolio. The “enhanced value” group makes up 45 per cent. And the “affordable luxury” group makes up six percent.

Boyd Belisle, vice president of community and culture at Boardwalk REIT, said in a Nov. 27 statement to The Hill Times that “the sole purpose of our investments is to improve the living experience of our Resident Members.” He added later that “these improvements can require adjustments in pricing.”

“We do not support or practice renovictions,” added Belisle. “Any suggestion to the contrary is categorically false. There is no strategy whatsoever to replace current Residents.”

Belisle added that Boardwalk supports “all strategies that will increase affordable housing supply, including an acquisition fund to help non-profit and co-op housing providers purchase existing rental properties from private landlords.”

Executives for publicly-traded REITs such as Boardwalk say their business practices are unfairly singled out for scrutiny because their financial reports are open to the public. Advocates say they have a point, and that Starlight and other privately-held real estate firms are able to keep their financial reports private, despite following similar repositioning strategies.

Mississauga activist describes ‘revolving door’ of new tenants paying high rents out of desperation

Bryan said many long-term tenants are “fed up” with conditions in her Starlight Investments building in Mississauga. “Those who can move, move,” she said, while others are “digging their heels in” because they cannot afford a new place, or because “this is where their families grew up.”

“If I move, where would I go?” she asked, referring to the much higher rents she would have to pay if she gave up her rent-controlled apartment. “You’re stuck in a situation whether you like it or not.”

Despite describing what repositioning can look like in buildings where landlords think they can attract higher-income tenants, Bryan said that’s not necessarily what is happening in her building. Instead, she said, vacancies are largely filled by new immigrants who agree to pay higher rents because they are desperate to find a home quickly.

She described “a revolving door” where these new tenants “get fed up and leave” in a matter of months because the conditions in the building don’t match the “exorbitant rent” they are paying, but where there is always a supply of prospective tenants.

Bryan said that along with setting up an acquisition fund, she also wanted to see the federal government introduce regulations to stop banks, the Canada Mortgage and Housing Corporation, and public sector pension funds from financing corporate landlords that purchase affordable rental buildings “with the intent to increase rents and displace people.”

Penny Colomvakos, vice-president of residential operations for Starlight Investments, told The Hill Times in a Nov. 28 statement that Starlight is “one of the most active developers in Canada,” and that it is committed to building homes and “increasing the supply of high-quality attainable rental housing suites on the market.”

In response to the specific concerns Bryan raised about her apartment building in Mississauga, Ont., the statement said Starlight has invested more than $2.2-million in capital improvements to the aging building “to maintain its structural integrity and for environmental energy savings.”

Colomvakos’ statement, delivered through the public affairs firm Crestview Strategy, added that residents who are having trouble paying their rent because of financial difficulties can apply for rent relief on an individual basis.

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Article by Kevin Philipupillai for The Hill Times