Tenants with large corporate landlords more likely to face poor living conditions, survey suggests

A new survey involving hundreds of Canadian tenants suggests that renters in financialized housing, or units owned by large, publicly-traded corporations, were more likely to face poor living conditions compared to those in housing owned by families or private companies.

Conducted by Acorn Canada, an independent organization representing low and moderate-income families across the country, the survey revealed that nearly 80 per cent of tenants with financialized landlords said their building or unit requires urgent repair. This is compared to about 65 per cent of tenants with private or family-owned companies as landlords. The survey also showed that more tenants with corporate landlords reported pest problems and other issues with their buildings, including the presence of roaches, feces or urine in stairwells, and dirty or damaged elevators.

With a higher percentage of these renters experiencing maintenance issues within their homes, this lack of care is often used to drive out existing tenants in an attempt to hike up rent prices, said Alejandra Ruiz-Vergas, the chair of Acorn’s East York branch in Toronto.

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“The financialization of rental housing is a predatory system that [can affect] low-income and moderate-income renters,” Ruiz-Vergas told CTVNews.ca in a telephone interview on July 11. “Housing becomes a commodity.”

The financialization of housing can occur when large companies, such as real estate investment trusts (REITs), purchase buildings in order to rent out units as a form of financial investment, said Ruiz-Vergas. A common result, she said, is landlords will be slow or inconsistent with unit repairs. In provinces such as Ontario, where there are no limitations on rental prices for vacant units, this is done in an effort to drive out long-standing tenants, she said.

“What they immediately start to do is they stop the repairs and pest control, and become extremely rude with tenants,” Ruiz-Vergas said. “They find a way to make these people get out of the buildings, and this is what they have been doing for years now.”

Mark Kenney is the president and chief executive officer of Canadian Apartment Properties REIT, or CAPREIT. In his view, the survey results are not reflective of the behaviour of REITs as a whole when it comes to building maintenance and repairs.

“[The survey] absolutely is not valid because they don't have our data,” Kenney told CTVNews.ca in a telephone interview on Wednesday. “When we make broad-based statements from a survey of apartment REITs versus private [landlords], you can't take anecdotal complaints and call it a survey.”

According to Kenney, data collected by CAPREIT contradicts the survey results produced by Acorn Canada. Based on survey results following maintenance and repair work done on its units, CAPREIT residents have given the company an 85 per cent approval rating for its service, Kenney said. CAPREIT currently owns 41,000 units across the country.

Most of the bad behaviour in the rental market is at the hands of private landlords rather than corporate ones, said Kenney. With many REITs being publicly traded companies, they face more scrutiny than individual players who are only accountable to legal authorities, he said.

“Amongst my peers, the responsibility of these housing providers is at the highest rate,” Kenney said. “There are bad actors in this country, we are not one of them.”

THE RISE OF FINANCIALIZED LANDLORDS

According to research conducted by Martine August, an assistant professor in the school of planning at the University of Waterloo in Ontario, a rising number of multi-family apartment homes have come under the ownership of financialized landlords in Canada over the last 30 years.

REITs, for example, have gone from owning zero units in apartment buildings in 1996 to owning nearly 200,000 units in 2020. More than 290,000 units were owned by the 25 largest financial landlords in Canada in 2020 – this represents nearly 20 per cent of the country’s private, purpose-built rental apartments.

In provinces such as Ontario and British Columbia, these companies are also able to raise rent prices by applying for increases that are above provincial guidelines in order to cover the costs of significant renovations or repairs, said Dallas Alderson, director of public affairs and policy with the Co-operative Housing Federation of Canada.

“Undertaking a renovation can then lead to an allowable increase in the rental rate, but that doesn’t mean it’s affordable any longer for the tenant who was there,” Alderson told CTVNews.ca on Tuesday in a telephone interview.

Landlords have also attempted to evict tenants in order to perform these renovations, a practice called “renoviction,” Ruiz-Vergas said. This would allow them to lease the unit to a new tenant at a higher price following a renovation, she said. While Ruiz-Vergas said renovictions are common among financialized landlords such as REITs, Kenney said this is not the case.

“In CAPREIT’s 25-year history, we have never done one single renoviction,” he said. “I consulted with our apartment peers [and] there's not a practice of renoviction, it's a private landlord behaviour. It's illegal behaviour [and] it's not one that we partake in.”

Requests for above-guideline increases, along with the growing financialization of rental housing, is ultimately “destroying affordable housing in Canada," said Ruiz-Vergas.

“It deepens the [crisis] because it creates more increases on rent and makes it more difficult for low and middle-income [renters] to find affordable housing,” she said. “Everybody who is [renting] affordable housing right now is a target.”

Between 2011 and 2016, Canada lost more than 320,000 private rental units that would have been affordable to households making less than $30,000 per year, according to research conducted by Steve Pomeroy, a senior research fellow at Ottawa’s Carleton University.

Today, tenants continue to struggle to afford their rent. A recent survey conducted by the Angus Reid Institute shows that only 26 per cent of renters in Canada said they can comfortably afford their rent payments, with money left over. Nearly 30 per cent said their rent payment either forces them to curb their lifestyle or leads them to struggle to make ends meet. This comes as Canada’s rising inflation rate is expected to send rent prices through the roof in the months to come.

“People are really suffering, and we see the suffering,” said Ruiz-Vergas. “It’s traumatic when you live in a place … but your complaints are totally dismissed.

TENANTS FACING ‘SUBSTANDARD WORK’

According to the survey conducted by Acorn Canada, nearly 40 per cent of tenants in financialized housing saw their landlord change within the last five years – Tanya Burkart is one of them. Burkart is a resident of 55 Ardglen Dr. in Brampton, Ont. and a member of Acorn’s Peel branch.

Burkart said her building has been experiencing maintenance and repair issues since 2018, when she first moved in. That year, the property was taken over by Starlight Investments, one of Canada’s biggest landlords, before it was sold to Boardwalk REIT earlier this year.

To this day, her unit still has mould in the bathroom due to inadequate ventilation, and her toilet continues to leak, she said. Additionally, holes exist between the ceiling and roof in the unit next to hers, where birds have built a nest, Burkart said. 

“Corporate landlords, do substandard work when required in units and are slow to make repairs,” Burkart told CTVNews.ca in a telephone interview on July 7. “The work that is done is not adequate for homes to be healthy and safe for tenants.”

Most times, the only way Starlight Investments would repair her unit was if she called the city’s bylaw enforcement team, or fire and emergency services, Burkart said.

“They try to get away with whatever they can … and they leave it up to tenants to hold them accountable,” she said. “They’ll leave conditions as they are and when tenants speak up, that's when they tend to respond or … when there's a fine from the city.”

Danny Roth, a spokesperson for Starlight Investments, told CTVNews.ca in an email statement on July 7 that, “while we do not comment on properties we do not currently own … Starlight Investments is committed to maintaining the structural and operational integrity of our properties and their life-safety systems.” 

Between December 2021 and March 2022, Burkart said she left her unit for a period of time so that her landlord could perform repairs. While workers did fix her floors and remove some of the mould around her windows, other issues persist.

“When Boardwalk [REIT] took over, they assumed control the unit and I still have mould and ventilation issues in my bathroom that I'm dealing with today,” she said. “Boardwalk is aware and has not fixed it yet.”

Burkart maintains open work orders with Boardwalk REIT in writing, but said the company has been slow to respond. In an email statement to CTVNews.ca on July 18, Boyd Belisle, vice-president of community and culture for Boardwalk REIT, said the company has “made a list of work to be completed and hired three full-time maintenance associates to assist,” following its acquisition of 55 Ardglen Dr.

“In acquiring the property there was much work to be done of varying scope and complexity,” the statement read.

Despite consistently poor living conditions, Burkart said the price of rent in her building has steadily increased. The price to rent a unit identical to hers was about $1,500 per month when she first moved in, in May 2018. Now, Boardwalk REIT is renting the same unit for about $2,500 per month, she said. 

According to Belisle, “existing residents’ rent has not increased outside provincial guidelines,” and vacant units are rented at market value within provincial guidelines. Additionally, not all units are identical and prices will vary, he said.

WHAT’S THE SOLUTION?

In order to create more affordable housing in Canada, Ruiz-Vergas said Acorn Canada would like to see different levels of government band together to develop a moratorium to prevent financialized landlords from purchasing affordable rental properties in the first place.

Additionally, Burkart said the organization hopes to see a non-profit acquisition strategy developed by the federal government in the form of a Canada Mortgage and Housing Corporation acquisitions fund, with the goal of granting non-profit, co-op and land trust organizations the first opportunities to purchase rental buildings when they come on the market.

“We want to stop any public benefit to corporate landlords that isn't conditional on creating or maintaining affordable housing … with safe standards,” she said.

Co-op housing in particular is different from financialized housing as there’s no profit motivation, Alderson said. As a form of non-market housing, co-op housing units are controlled by those who live in them through a board of elected members. Alderson said her organization has seen an increase in the number of inquiries it receives from people looking to access co-op housing in the last few years.

“People and decision-makers are looking for secure and affordably priced rental housing in the current context, and co-op housing really fits that bill,” Alderson said.

The key to more affordability and stability within Canada’s housing market lies in increasing the share of non-market housing, said Alderson. This refers to housing owned by a government agency or non-profit organization, as opposed to homes sold on the market. Early research conducted by the organization she works for shows that average rental rates for co-op housing units tend to be lower over time compared to similar buildings not enrolled in co-op housing.

“Yes, of course, housing charges in co-ops do go up, but at a much more modest pace compared to similar market rental buildings,” she said.