‘Financial landlords’ driving up rent prices in Toronto faster than other types of landlords: study

Condominiums are seen under construction in front of the skyline in Toronto, Ont., on Tuesday October 31, 2017. THE CANADIAN PRESS/Mark Blinch

A group known as “financial landlords” are driving up the cost of rental housing in the city, worsening affordability, according to a new study by researchers at the University of Waterloo.

Financial firms, including private equity, asset managers, and real estate investment trusts (REITs), have been snapping up rental housing stock in Toronto for decades and according to the study, these groups charge monthly rents that are 44 per cent higher than the average neighbourhood price in Canada’s largest city. This represents about $670 more on average per month, according to the researchers.

“Most people can’t afford the housing they are living in, and these firms are in part responsible for pushing that change,” Martine August, one of the authors of the study and professor of planning at the University of Waterloo’s Faculty of Environment, said in a news release.

“They are buying up buildings and turning them into investment products, raising the rents and making communities less affordable for people.”

The study notes that the premium being charged by financial landlords is “much higher” than other landlord types, which include “chain” and “chain managed” landlords, landlords who own multiple properties, single owners, and non-profits.

According to the study, “chain” and “chain managed” landlords charge about 30 per cent more than average neighbourhood rents, while owners of multiple properties charge a premium of about 15 per cent. Single owners charge a premium of 22 per cent and non-profits actually charge about one per cent less than average rents.

Financial landlords raised rents faster than any other landlord type and increased rents “more sharply” in areas predominantly housing low-income and racialized people, according to the study.

The study, which the authors say is the first of its kind, involved researchers developing a new dataset from “a range of sources” to evaluate rents in Toronto by property, landlord, and landlord type.

“Until now, no one had been able to prove that housing financialization was driving up rents,” a news release accompanying the study read.

“Financial firms are leading the industry in raising rents and worsening housing affordability. This matters because they continue to dominate in apartment ownership, acquiring almost all suites sold in Toronto in recent years. Our findings suggest that the more they own, the worse affordability will get.”

The researchers note that their findings back up recommendations from community advocates who want to “rein in financial firms.”

“The government has goals to improve housing affordability, but their programs give funding to organizations who eviscerate housing affordability,” August said.

“We don’t think that they should be accessing support from the Canada Mortgage and Housing Corporation or Canada’s National Housing Strategy.”