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Blame landlords for Canada’s skyrocketing rents

Massive rental housing monopolies are proliferating across the country

Economic CrisisHousingCanadian Business

Airplane visible between two Distillery District condo towers, Toronto. Photo by Lori Whelan/Flickr.

While pundits and corporate media outlets delight in describing Canada’s skyrocketing rental rates as an accident of nature, the crisis actually typifies the “business model” of for-profit landlords.

The crunch

Canada’s housing crisis is visible in every major centre.

In Displacement City, activist, author and filmmaker Cathay Crowe describes the realities of the housing crisis through the pandemic: “Mass homelessness, tortuous deprivation of the human spirit and real physical consequences that include chronic health conditions, malnutrition and hunger, actual plagues such as tuberculosis, Norwalk virus and Strep A outbreaks and an epidemic of deaths.”

The statistics need no elaboration: homelessness inflates the risk of hepatitis C 28 times, heart disease five times, cancer four times, and cuts life expectancy by 50 percent.

Many of those who aren’t yet homeless, however, are also squeezed.

Nearly 20 percent of renters in Toronto, 21 percent in Mississauga, 11 percent in Montréal, 13 percent in Edmonton, and 11 percent in Vancouver are forced into overcrowded housing units “not suitable for their household size.”

Many others face thousands of dollars in rent arrears while already paying half their income to their landlord.

An unequal relation

As always, the other side of increasing poverty is ever-increasing wealth for a tiny few.

With five million renters competing for two million purpose-built rental units, Canada’s rental housing business is a sellers market. But the problem goes well beyond supply and demand. As rent and housing prices have inflated, this dynamic has given a base to massive rental housing monopolies across Canada’s cities.

In his new book, The Tenant Class, economist Ricardo Tranjan breaks the rental supply down into four segments: 12 percent of renters occupy non-market housing, 38 percent rent non-purpose-built units from private landlords, and the remaining half rent from corporate and financial landlords—all of whom reap enormous profits from their tenants.

The private rental market generally refers to individual landlords who own one or a few rental properties. Units in this segment account for roughly 38 percent of the overall rental market. Tranjan estimates that multiple property owners have an average net worth of around $1.7 million—in short, they are by no means “scraping to get by.”

Statistics Canada estimates that those who own multiple units account for nearly one-third of total home ownership. While the data set is imperfect, this is a small share of homeowners in most major areas.

In Toronto, for example, these multiple property owners accounted for 396,150 of Toronto’s 2,295,505 homeowners. In Vancouver they accounted for 153,850 of the city’s 946,995 owners. This is borne out by province-wide statistics. In Ontario, these investors account for 15.5 percent of home owners. In BC and New Brunswick, the figure is 15 and 19 percent, respectively.

Nationally, this small layer of investors manage to obtain 30 percent increases in the value of their assets by renting them out to desperate tenants.

Canada is not alone in this trend. Across the world, housing bubbles have fueled a huge concentration in private rental ownership.

In Britain, a London School of Economics study of the private rental and buy-to-let sector found that the seven percent of landlords who owned more than five properties accounted for nearly 40 percent of rented dwellings.

In the United States, geographer Samuel Stein noted in his book Capital City: Gentrification and the Real Estate State that “homes are changing hands at a rapid pace, but home ownership is at a 50-year low.” Across the country, as average rents more than doubled over two decades, private landlords entered the market to gouge tenants. All told, he observes, in 2016 a record 37 percent of US home sales were made by these “absentee investors.”

Photo by Christian Koval/Torontoist/Flickr

The purpose-built market concentration

Beyond the private market, Canada Mortgage and Housing Corporation economist Gustavo Durango noted in 2017 that “Roughly 90 percent of purpose-built rental apartment units in Canada are owned by individual investors and private corporations.”

According to the Canadian Journal of Urban Affairs, Canada’s 25 largest landlords held about 330,000 units in 2020—nearly 20 percent of the country’s private purpose-built rental housing stock.

Since 2020, while Canadian workers suffered, real estate and rental housing has only boomed further. During the pandemic, a representative of Morguard Real Estate told Canadian Apartment the only concerns landlords faced were doubts about “the ability of tenants to pay rent.”

As capital has moved to further inflate the real estate bubble, there is every reason to believe that the concentration of rental housing has intensified.

According to the June 2022 edition of Canadian Apartment’s “Who’s Who” listing, Canada’s top 10 rental owners and managers saw their stock of rental units grow from 2020-2022. All told, the top 10 last year alone accounted for over 261,800 units.

Starlight Investments saw a market increase from 31,303 units in 2020 to 61,904 in 2022. CAPREIT’s holdings increased from 45,129 in 2020 to 47,419 in 2022. Boardwalk increased its stock from 33,263 in 2020 to 33,264 in 2022. While Real Star’s holdings declined slightly from 28,328 to 26,768, Hazelview’s holdings rose from 22,000 to 22,329. Skyline’s increased from 18,000 to 21,139. Killam’s rose from 16,000 to 18,685. Mainstreet’s portfolio too rose from 11,000 to 18,685 and Centurion also saw its stock of units rise from 11,786 to 14,840 last year.

‘Monopolies over the local market’

In 2021, professor Martine August observed for Policy Options that the country’s top 25 landlords increasingly dominate the rental housing markets of whole cities. “In some communities,” she wrote, “financial firms have effective monopolies over the local market.”

Montréal, for example, has the highest share of renter-occupied housing of any large or mid-sized city in North America. Ownership of its rental units is also highly concentrated. As a February 2023 study for the Journal of the American Planning Association found, just 0.46 percent of Montréal’s 129,960 residential property owners owned 31.7 percent of its 566,582 rental units. While each of these top landlords owned 300 rental units on average, the city’s largest private landlord owned 5,680 units.

These landlords have been making a killing for decades. The Québec Landlords Association itself observed in an eye-opening 2006 statement that just 548 buildings accounting for 21,639 rental units across Montréal generated more than $50 million in revenue for the city’s landlords and, by accounts, far more since.

In 2020 the Vancouver Sun observed: “Real estate investment trusts, and other financial companies that make investments so they can pay shareholders, are increasingly looking at buying rental apartment buildings.” In the first half of 2020, BC saw a near-record 30 purchases of old multi-family buildings, worth over $5 million each—totalling $620 million. Commenting on the purchase, Goodman Commercial Inc. partner Mark Goodman said they were led by “buyers who are looking for a long-term play, not for wealth creation, but wealth preservation.”

In particular, Goodman told Western Investor, these landlords are eager to take advantage of “decades,” of “price appreciation,” in land values across BC.

Across the province, by the end of the year, Avison Young found: “While private investors made up the majority of vendors and purchasers in the first half of 2020, real estate investment trusts, or REITs and institutions are likely to increasingly emerge as buyers, particularly on larger deals, in the back half of the year and into early 2021.”

This trend was captured in turn by the Globe and Mail, which ran a headline reading: “Sophisticated investors are desperate to buy Canada’s apartment buildings; values soar despite COVID-19.”

Landlords are big business and that business, everywhere, comes from rent—from their monopoly over the land in Canada’s major centres.

The more they own, the more power they have to set the highest floor possible and squeeze as much as they can from their tenants. This is bigger than supply and demand, it’s a question of power—the power a tiny layer of capitalists have to gouge ordinary workers. It’s power that must be taken away.

Mitchell Thompson is a writer, editor and occasional radio producer based in Toronto.

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