Some topics are just too big to be covered in one column. That’s why, over the next two weeks, Max Fawcett will tackle the housing crisis and the ways we could address it in a series of them. For more on this series, read the first, second, third and fifth instalments.
Few people are as powerful as the aspiring homeowner in Canada. After all, the banks and financial institutions will compete for your business and cater to your needs. Governments will subsidize your purchase, either through direct financial incentives or programs that allow you to borrow at low or no cost. Politicians will prioritize your interests and privilege your opinions and ideas. And parents and well-meaning relatives will often give you the money you need to make a down payment, with the average gift reaching $80,000 in 2020 according to CIBC.
If you’re a renter, on the other hand? You might as well be invisible. Take the Ontario government’s Housing Affordability Task Force, which was announced in December and stacked with CEOs and senior executives from the housing-industrial complex. It’s led by Jake Lawrence, the CEO and group head of global banking and markets for Scotiabank, and he’s joined by the CEO of the Ontario Real Estate Board, the presidents of two different real estate development companies, and the president of the Building Industry and Land Development association.
There is the obvious issue of asking the fox how best to guard the henhouse here. But the bigger problem might be just how unimportant the needs and interests of renters will be to this group. And while renters don’t make up nearly as big of a potential political constituency as homeowners, we have to start shifting the balance of power back in their direction. After all, if we want to cool off the housing market, we need to find ways to both increase supply and reduce demand. Taxes can do a lot of the heavy lifting on the latter, but they can’t do all of it. That’s why a renaissance for renters, and renting, needs to happen.
Provincial governments can help by strengthening the legal rights of renters, banning renovictions, and curtailing proposed conversions from apartment buildings into condominiums. Cities can play their part by strictly enforcing rules on short-term rentals that prevent the cannibalization of rental units by sites like Airbnb. The federal government can introduce new incentives for new purpose-built affordable rental buildings. And Canada’s banks can be encouraged — or required — to lend money on more advantageous terms to groups looking to build new co-operative housing projects.
But we also have to find ways to make renting more lucrative for renters, not just their landlords. As Winnipeg real estate broker Wendy Peters told the CBC, “Real estate is like the rising tide that lifts all boats. But you have to have a boat to begin with. If you're renting, you don't have a boat.”
It’s time to give renters their own boat and show them how to float it. The federal government could do that, for example, by creating a tax-friendly savings vehicle geared specifically to renters. The provinces could enhance their existing tax credits or subsidies for renters. And banks, if they’re feeling creative, could offer products that serve as forced savings vehicles for renters.
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All of these efforts must be in the pursuit of the same broader goal: changing the way we look at renting and renters. In Canada, as in most of the western world, homeownership is treated like some kind of secular faith. It both establishes and enhances one’s virtue and makes the homeowner a more respectable and valuable member of society.
This is hardly a new idea. As U.S. Sen. Charles Percy said in 1966, “A man who owns his home acquires with it a new dignity. He begins to take pride in what is his own, and pride in conserving and improving it for his children. He becomes a more steadfast and concerned citizen of his community.”
Renting, on the other hand, is often seen as a threat to those virtues and the communities that personify them. At best, it’s considered a stage in life that one naturally and necessarily moves through, and it has few natural allies. There are no television stations or magazines dedicated to glamorizing the lifestyles of renters, and there aren’t thousands of contractors and small businesses who make a living by renovating people’s rental units.
Our obsession with the owned home, and its outsized role in our economy, paints us all into a very dangerous corner. The only way out is by giving people another option, one that has financial and cultural rewards that make it a viable alternative to the path most of us have been shepherded down.
It won’t be easy, given how much we’ve collectively invested in the idea that buying a house is the correct course in life. But if we want to actually address Canada’s housing crisis, it’s time to think bigger.
Next up: Why it’s time to spread the housing wealth in this country.
Many of the homeowners I knew
Many of the homeowners I knew in BC had yet another boost - renting an illegal suite. Those lack even the feeble protections of other rental units.
We could probably put downward pressure on rents just by making it easy and legal to sleep in vehicles or secure tent neighbourhoods.
If a suite is illegal in BC,
If a suite is illegal in BC, it doesn't mean the tenancy is illegal. A tenant of an illegal suite has the same rights as a tenant of a legal suite.
Renters are well cared for in
Renters are well cared for in B.C., looking from my vantage point. With all costs rising including property taxes (6.5% this year) the provincial government restricts the owner from increasing rents to match. This has owner-renters selling out and thus creating a reduction in available rental accommodations. It seems odd to me that the writer is suggesting that Renters should be given the housing they deserve. In many cases that would be a home nobody would wish to live in. There are really great and wonderful renters but there are also many that deserve the lash.
Lash in hand, your vantage
Lash in hand, your vantage point appears to be that of the slave-owner. As for your idea that the BC government restricts rent increases, this is true only for occupied units. Once vacancy occurs, the sky is the limit.
We have to attack the supply
We have to attack the supply problem first--we need to build rent-geared-to-income accommodation. The feds have a big role to play here by offering money to municipalities directly if they incorporate more rent-geared-to-income housing in their municipal plans, plus by taking a direct role in financing projects. If people have options to rent housing they can afford that also meet the needs of their family, it is going to take the pressure off the housing market. But the size of the investment required is substantial!
I don't know the situation in
I don't know the situation in other provinces, but in Ontario, the province provides a sweet housing credit to renters, based on total rent paid. Rent in Ontario generally includes a contribution to the landlord's mortgage, taxes *and* often the entire amount of the heating and electricity bills. Owners, OTOH, have a credit calculated exactly the same, on the basis of the proerty tax they pay.
The people I hear complaining about not being able to afford a house are the same people as those who couldn't afford a house when I was their age. Except they all believe they need to live in an apartment with amenities, go on vacations, start a family ... (with very generous government support not dependent on need, I might add, compared to when I was that age).
At their age, I worked 2 jobs, timing holidays at the employer's discretion, lived in bed-sitters (eventually graduating from a shared bathroom) and when I could afford to, visiting my parents every 5 years or so. That was what it took to save a downpayment. That, determination, and 20 years.
And then the interest rates were on the order of 13-17%. Carrying costs were higher in relation to wages than they are now, FWIW.
Yes, there were ppl whose parents gave them a downpayment when they graduated university, or when they got married, not a few of them working class kids, who lived at home and turned their pay over to their parents until they could afford to get married.
If renters want their "choices" to be "lucrative" -- which is a bizarre proposition to me -- then getting a condo is the answer: they buy cheap, avoid maintenance and structural insurance costs, and pay condo fees (another name for rent) as long as they stay there. On top of that, they "get" bulk-metred electricity, which is a whole lot cheaper than the kind available to home owners.
There are two sides to every story, and the story differs depending upon location.
I find Mr. Fawcett's comments and proposals to be not atypical of those of young folk, generally -- and I was probably an awful lot like that at their age, but didn't assume I knew best -- and that is that they present assumptions as historical fact, cherry-pick data, and always err on the side that fits their own personal situation. Unfortunately. Because the quality of their conclusions would be vastly improved if they didn't.
Not to mention the lot of, say, people with disabilities, on government income maintenance programs, many of whom at this point are unable to access even the basics.
Not very long ago, the "bright young singles" population were crowing about how much better it was to rent than to own. It cost them less over their life-span, allowed them much more "mobility" and provided all manner of amenities.
The tables have turned for exactly one reason: landlords. To bring housing costs down, there needs to be public housing with rent-geared-to-income, and a bar to residential properties being other than owner-occupied. I've watched the whole scenario unfold over a period of roughly 50 years. I know the way the legal requirements changed, over time, at every step of the way increasing the cost of shelter. Most of those changes were related to housing as investment, pure and simple.
I knew a couple who lived in bedsitters, like I did, and rented out their newly-purchased home to recoup the downpayment, then used that to renovate before moving in. Then they lived "sparely" and put every penny into paying more on the mortgage than the minimum required.
What I'm saying is that there have always been difficulties for most people. Most people in order to own had to really bite the bullet, work really hard, and do without. In a time when government supports to parents, geared to raising children, were minimal, and amounted to what would now be termed a "non-refundable tax credit."
It's not lack of support for renters that's the problem: it's the outrageous commodification of shelter, and properties being used as income-generating vehicles, and for speculation.
I find it odd that governments are more than willing to expropriate properties for any number of reasons, but somehow or other can't see their way to telling landlords to divest. And placing profit caps on the whole schlmozzle.
The actual problem in Ontario
The actual problem in Ontario is the availability of units/apartments/suites to rent. Many renters in larger cities in the lower income brackets tend towards renting places that are not quite up to par. And, because the rent is affordable for them, there is no way they are going to rock the boat to report issues that, under normal circumstances, would not be allowed. One example is a young woman who, as a part-time teaching assistant, now out of work due to COVID but with some CERB is renting a unit above a store in a large city. Due to a plumbing problem that arose in the toilet, it came to light that the kitchen sink & toilet were on the same drain. Now, after 10 years living there and with very few vacancies, there is no way she will report this incident - she can't afford to. There is nothing available to rent, neither within the city itself, nor affordable. Another young man moved to a big city as there were & still are no jobs available in the small town he came from but rents a basement bachelor that for the most part works well for him. He doesn't mind the leaky windows when it rains - soaks it up with old towels. When the temperatures drop, he wraps himself up as his landlord covers the hydro of which he pays a portion but buying & using a heater costs extra for which he's already received a complaint. He doesn't mind the fact that he cannot afford internet - when the weather is amenable, he can go to the local Timmies, or such and work with his phone. He lost his job at a restaurant recently that after a few years of COVID finally had to close. His CERB ends shortly but many restaurant & service jobs are limited with poor pay & even poorer working hours. He will take what he can get, he's used to it but where in the world is his life taking him & into what kind of future. These two are not alone, they make up more than 40% of the population of most large cities. I'm sure many readers can offer many more examples. As you mentioned, our governments, specifically in Ontario, are more interested in helping investors and shareholders gain the last dollar these people have than in providing means and ways of allowing people to look after themselves reasonably well. Capitalism can be a good thing but when it becomes the 'god' of our governments, then we are all in trouble.
I’m going to pass this
I’m going to pass this article on to my four tenants and ask them to specifically see the comments below the article as well.
As a landlord I have advised my tenants that I won’t raise the rent as long as they occupy the premises and I start off with a very reasonable rent to begin with. Some of my tenants have been there for 5 up to 10 years while they struggle with jobs to try to buy their own homes.
The basic problem, of course, is with the time required by the tenant to take care of the unit. This means that I sometimes have to make regular home inspections. I can usually tell from the appearance of the yards what the inside of the house will be like.
I’ve been renting out homes over 50 years, gradually building up the number, so I’ve had a great variety of tenants. Only a few times have I had to evict a tenant, and that process is so tenant-oriented I can understand the comments of friends saying that they would never get into the landlord-tenant business. The lengthy process I go through to find tenants generally pays off though.
As for Max Fawcett's idea of
As for Max Fawcett's idea of a "renaissance for renters," what's missing is vacancy control. So long as landlords can raise rents any amount upon vacancy, eviction is incentivized and renters are brutalized. To put that in objective terms, when the CMHC finally began to report rent differentials between occupied and unoccupied rental units in January 2021, we learned, for example, that the average rent for unoccupied units in Vancouver was 21 per cent higher than occupied units, and in Victoria and Nanaimo, 28 per cent higher. It's not enough for the government to report such policy failure. There needs to be federal intervention, federal protections for renters against this crass exploitation by the property class.
Re: Fawcett's idea that the problem is really our perception of renters, a problem easily fixed were the government to offer renters "a tax-friendly savings vehicle," this is completely ludicrous. The problem is that renters actually can't afford rent, never mind being able to afford to save. 1.8 million Canadians spend more than 30 per cent of their household income on rent, and 800,000 spend more than 50 per cent. A large part of the reason renters can't afford rent has to do with income levels. In BC, one out of five BC renter households spends more than 50 per cent of income on rent, and this rises to 83 per cent of households with the lowest incomes, those below $46,000. By and large it's women who earn these lowest incomes. In 2019, the median income for females in BC was $33,200, whereas it was $46,400 for males. The much higher average income for females, $42,200, was still very low compared to the average for males, $59,100. The federal government needs to guarantee livable incomes or it needs to tie rents to actual household incomes, observing the CMHC affordability standard: housing costs, including utilities, must be less than 30 per cent of household incomes.
Setting aside as exceptional
Setting aside as exceptional the landlord who has 4 rental homes rented for reasonable amounts (above), from these statistics, and the comments preceding, the underlying problem is wealth distribution and the support of the capitalist status quo by most governments. So the solution for renters would be to vote for political parties that promise more social housing, more coop housing, more subsidized accommodation and/or a basic annual income.
So why, if 50% plus people are disbarred from suitable housing by capitalist economics, do people keep electing Conservative or Neo-conservative governments? Is it because only the well off vote? Or is it a question of who has the most effective propaganda?
This was just published. The
This was just published. The lede says it all. Renters don't need savings plans, they have no money for savings plans.
Vancouver's homeless situation is notorious. So it is in most Canadian cities. These are the "renters" who must be addressed first and foremost. And so it goes with a mushrooming supply of homes for the homeless, addicted and those with mental illness.
Decent homes create stability where there is chaos, especially those that come with the appropriate attendant services (on-site nurses, regularly visiting doctors and social workers) and amenities (a group kitchen that serves a couple of full meals a day, lounges, security).
The recent supply of homes for the homeless in Vancouver has assumed several physical forms. One is affordably-constructed modular units. These are quickly manufactured and placed on a site in the form of low rise buildings, usually centrally located and near transit. They are sturdy and don't break public bank accounts. Another is the public sector taking over decrepit single room occupancy hotels formerly run by slumlords. This could get expensive when seismic upgrading is added to all the other upgrading costs, and when the slumlords take the overtaking city or province to court in years of appeals. But no one is complaining yet.
The third is unique because it is the highest quality, usually a brand new mid-rise reinforced concrete structure with longevity built-in. The city of Vancouver struck a deal with the former provincial Liberals government, a provincial party that is in fact full of conservative right wingers in disguise. What is unique is that the progressive city donated 14 sites on city-owned land and the conservative province funded the construction of dedicated high quality homes for the homeless.
The buildings are actually decently designed and evenly distributed. The architect of one of them mentioned that taking out the cost of land lowered the overall construction cost substantially. He also iterated that the exterior wall panels were prefabricated in shops then delivered to the site and bolted in place. The panels are very energy efficient and went up quickly. Moreover, the interior wall configurations can be re-organized should the building's social purpose ever be fulfilled (i.e. an end to homelessness) and a change of use to other forms of residential or even offices was justified in future.
It is the latter model I think has a lot of potential to affect positive change and help tone down the national urban affordability crisis. Cities, regional governments, provinces and the feds could, if they co-ordinated their resources, build hundreds of thousands of affordable rental units across the nation using only public money. Incentivized opportunities have been in place for decades for the private real estate industry to build rentals, but the fact is that they are falling horribly short of the supply needed to make a difference in the residential economy because there just ain't enough profit in them compared to condos. So, take the profit out already and start fresh.
There are 21 cities and one regional government in Metro Vancouver, all with very significant land resources, but no cash. Provinces and the feds take 92% of all tax revenue from cities and have lots of cash but not a lot of land, so they can very well give a modicum back by funding rental and social housing directly on 'free' municipal land. Land and cash ... they haven't come together yet in the public sector for non-market housing to the extent needed to stabilize the market, or at least provide a huge counterweight to it.
A city donates a site to senior governments, a senior government then designs and builds a flexible mid-rise (8-15 storeys) for pure rental, sans land and permit fee costs. Every third or fourth building comprises a mix of subsidized social or supportive housing units based on demand (1/5th to 1/3rd of the total built), and they are eventually dotted all over the city regardless of neighbourhood income levels.
The underground and ground levels are built with reduced-carbon reinforced concrete (current technology allows up to a 35% reduction in Portland cement; future concrete and steel would be made with zero emission electricity), and the upper floors are built from more affordable and sustainable mass timber framing and prefab wall panels. The buildings are zero emission and have very healthy indoor air quality in operations, and are extremely energy efficient.
The rents are set at a break even point without land costs or profits ever registered on the books. Construction costs could, at least in part, be recouped through rents, as would maintenance, depreciation, replacement and property management. This is the non-profit model that could set the standard for decades of action on housing affordability. Applying varying subsidies to this model should address most levels of need.
Canada is a wealthy country and there is no excuse for its current housing affordability crisis, especially when joined up thinking offers solutions that are perfectly within reach in the public sector.