Large corporate institutional landlords, known at real estate investment trusts (REIT), are purchasing rental apartments at a shocking rate.
In many cases, they are renovicting the tenants and dramatically increasing rents. This is another example of the financialization of housing and it is putting many renters housing at risk.
These companies must put profits for their shareholders ahead of housing affordability. As Michael Brooks, CEO of RealPac, an association representing the largest REITs in Canada says,
“Everyone in the private sector is self-interested in maintaining and growing their income, and they all want to be seen as contributing to the solution and not being part of the problem. However, they’ve got their own obligations. They’ve got their own investors, their own pensioners to fund. They’ve got to manage costs. Deeply affordable housing is a public good. The private sector is not primarily in the business of providing a public good.”
This is a growing problem facing tens of thousands of British Columbians. I asked Minister David Eby what he was doing about this looming threat? You will be interested with his answer.
[Transcript]
A. Olsen:
This B.C. NDP government hopes that corporations like Telus will step in and fix the growing primary health care crisis through their efforts that they frame as social capitalism — really just profiteering from the delivery of health care.
Now let’s look at another crisis that’s facing British Columbians: housing. Renters are suffering. B.C. has the highest rents in Canada. In Vancouver and Victoria, rent has jumped 20 percent just in the last six months. There is not enough supply, and what is available is excruciatingly expensive.
[10:35 a.m.]
I was stunned to find an article that assured me that if I can’t afford housing, I should just buy into a REIT. A REIT stands for real estate investment trust. It’s a corporation that owns and operates “income producing real estate.” Articles pumping REIT state that shareholders can have all the profits of being a landlord without any of the inconveniences, such as “hard to please tenants.”
Here’s the kicker. Investors who purchased Canadian residential REITs since 2012 have received a 220 percent return.
To the Minister of Finance or the Minister of Housing: real estate investment trusts are generating huge returns for their shareholders by financializing our housing stock, making housing more and more unaffordable. What is this government doing to remedy this problem?
Hon. D. Eby:
Thank you to the member for raising this important issue. We’ve seen really escalated REIT activity in the CRD, in the Victoria area. We expect to see that accelerating in different parts of the province. REITs have unfair tax benefits that other British Columbians don’t enjoy when it comes to buying housing.
These are tax benefits that are provided by the federal government. I’ve expressed my concern directly to the federal housing minister about this issue. He says that the federal government is going to be addressing that issue, and I encouraged them to do it quickly.
The financialization of our housing market — we know where that goes. We’ve seen it in 2008 in the United States, when investment in housing gets out of hand and it’s not adequately policed. What we need to be investing in is in the building of affordable housing which is what our government is doing. We can’t have it undermined by federal tax benefits for these investment vehicles that make life less affordable for British Columbians.
Mr. Speaker:
Member for Saanich North and the Islands, supplemental.
A. Olsen:
It becomes problematic when we’re building more housing supply and yet that housing supply is vulnerable to corporations purchasing it and driving the cost of rent up for British Columbians.
Researchers at the University of Waterloo estimate that between 20 to 30 percent of Canada’s rental apartment market is owned by institutional landlords — REITs. They own nearly 200,000 rental units countrywide.
CBC’s The Fifth Estate reported on the devastating impact that REITs are having for renters. There was story after story of people losing their homes due to these corporations buying aging apartment blocks and renovicting them. One quote stuck with me, and it goes back to the so-called social capitalism that I raised yesterday in question period and this morning.
Michael Brooks, CEO of REALPAC, an association representing the largest institutional landlords across the country, was willing to be more honest about what the business model actually is.
“Everyone in the private sector is self-interested in maintaining and growing their income, and they all want to be seen as contributing to the solution and not being part of the problem. However, they’ve got their own obligations. They’ve got their own investors, their own pensioners to fund. They’ve got to manage costs. Deeply affordable housing is a public good. The private sector is not primarily in the business of providing a public good.”
To the Minister of Housing: it is one step to talk to the federal government about changing the tax laws. What is this provincial government doing with the authorities that we have to ensure that REITs, as the minister said, do not continue to buy up rental blocks here in the greater Victoria area, the capital region, the Lower Mainland and across British Columbia?
Hon. D. Eby:
In his preamble, the member made a number of assertions about the Minister of Health and Telus. I just want to remind the member and all members of this House that the Minister of Health has been on the front lines of ensuring our public health care system is protected from profiteering. He’s been a champion. He’s brought into force rules around private delivery of health care and charging additional fees that were not enforced before. I just wanted to address that issue.
I couldn’t agree more with the member’s concern about speculation, financialization of our housing market. It also complicates our job at the provincial level when we’re looking at partnering.
[10:40 a.m.]
Part of my mandate letter is to work with the non-profit housing associations to find opportunities to acquire privately-owned rental housing and to ensure affordability and where it needs to be redeveloped that it’s redeveloped in a way that protects tenants and increases the number of units available on sites. That makes it harder for the province when we’re competing with money from around the world. We started this conversation in 2016.
That makes it harder for the province when we’re competing with money from around the world. We started this conversation in 2016 around international money coming into our housing market. I know the opposition at the time was concerned about it. They seem less interested now about speculation in the housing market than they used to be, but we remain concerned about it. It’s not just international money coming in through individual buyers, it’s money from across North America through REITs. We need the federal government to step up on this, and we will continue to pressure them.
But we’re also putting in place rules that landlords that operate in B.C., whether they’re REITs or anyone else, restricting their ability to evict people for renovictions, demovictions…. We put an enforcement team in place at the residential tenancy branch to ensure the rules are followed, and we will keep doing that work to protect tenants.
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