Researchers represented by the Canadian Housing Evidence Collaborative (CHEC) played a major role in the recent parliamentary committee report on the financialization of housing.
Parliament’s Standing Committee On Human Resources, Skills and Social Development and the Status of Persons with Disabilities (HUMA) presented its report to the House of Commons on Oct. 26 after hearing presentations from more than 20 housing experts, and receiving more than 40 briefs.
Both CHEC Executive Advisor Steve Pomeroy and University of Waterloo Assistant Professor Martine August, part of the Balanced Supply of Housing node in the Canadian Housing Research Network (CHRN), got a dozen mentions in the report.
The report noted that the average rent increase in 2022 for a two-bedroom apartment was 5.6%, double the average annual increase from 1990 to 2022. Renters entering into a new lease experienced the largest increase in rent, with the average rent growth for two-bedroom apartments that turned over to a new tenant in 2022 at 18.3%, significantly higher than the growth for units without tenant turnover (2.9%).
It also noted that increased rental costs are resulting in more households (33%) living in housing that is unaffordable (costing 30% or more of gross income). Renters in Ontario (38.4%) and British Columbia (37.8%) had proportionately the most tenant households living in unaffordable housing. Almost 40% of Non‑Status and Status First Nations renter households living off reserve lived in unaffordable housing, as did about 35% of Métis renters and 20% of Inuit renters.
The committee heard that financialization of housing, or the treatment of housing as a financial commodity and an asset for profit, was negatively impacting affordability, with increased eviction rates and other challenges.
August told the committee that financialized firms prioritize profits above other goals, such as affordability or tenant quality of life. “In her view, they often use aggressive property management strategies, such as removing or displacing tenants, charging more for amenities, adding fees and raising rents, all of which reduce affordability.” She urged the removal of the “preferential tax treatment” received by Real Estate Investment Trusts (REITs).
“I think there’s no social justification for providing tax breaks to real estate investment trusts in housing,” August told the committee. “These firms are making their money by making housing less affordable and affecting security of tenure, things that are running counter to the right to adequate housing. It makes a lot of sense to tax them like other corporations.”
Pomeroy indicated that the government should encourage the private sector, and REITs in particular, to invest further in creating new rental supply.
The committee made eight recommendations “to address some of the impacts of financialization of housing and the loss of affordable rental housing.”
Recommendation 1
That the Government of Canada, as soon as possible and in partnership and cooperation with the provinces and territories, develop an acquisition fund to be made available to non-profit and cooperative housing organizations and governments to preserve and expand affordable housing stock.
Recommendation 2
That the Canada Mortgage and Housing Corporation work with provincial and territorial partners to increase the amount of capital funding available to non-profit and public housing providers, with the goal of boosting the affordable housing supply as quickly as possible.
Recommendation 3
That the Canada Mortgage and Housing Corporation increase requirements relating to the level and duration of affordability for funding delivered through National Housing Strategy programs.
Recommendation 4
That the Government of Canada examine the social and economic costs and benefits of the current tax treatment of Real Estate Investment Trusts (REITs) and assess the option of taxing REITs like other corporations, including the potential impact on the supply of affordable rental housing, as well as rental housing as a whole. That it design tax treatment options to ensure it encourages creating new affordable housing units.
Recommendation 5
That the Government of Canada implement tax measures to incentivize private sector and non-profit investment in the construction of affordable rental housing, including through tools such as, but not limited to, tax credits, tax exemptions or deferrals.
Recommendation 6
That the Government of Canada immediately investigate providing tenant support resources to municipalities, provinces and non-profit tenant support stakeholders to address eviction and affordability matters for those residing in private market rental housing.
Recommendation 7
That the Government of Canada assess the current suite of federal benefits supporting low-income renters to ensure they have the income supports they need, including through the Canada Housing Benefit.
Recommendation 8
That the Government of Canada strengthen reporting requirements for the beneficial ownership of property, including by proceeding with the implementation of a publicly available beneficial ownership registry as soon is feasible, in partnership with the provinces and territories.