Toronto mayoral candidate Jennifer Keesmaat unveiled Thursday morning her new rent-to-own proposal as a way to help more young Torontonians own a home.
The program, if enacted, would see qualifying applicants rent properties from the city for up to five years. The unit can then be sold to the tenant, whose previous payments count as a down payment on a mortgage. Or the city (or one of its non-profit partners) can co-own the unit with the tenant to help lower the mortgage price.
“It’s a no brainer,” Keesmaat said in an interview with VICE News. “This is about the future of our city. We’re losing too many young people because of unaffordability and the city has to find a way to stop that.”
Keesmaat, who served as Toronto’s chief urban planner from 2012 to 2017, wants to fund this potential program by charging a 0.4 percent surtax to homeowners with properties worth $4 million or more.
“We’re talking about literally 0.001 percent of all homeowners in the city,” Keesmaat said. “The surtax should result in about 10,000 new, affordable homes that will be put into this program. The goal is to provide as much as possible.”
She notes that the City of Toronto currently owns about 8,000 parcels of land, many of which are sold off to be developed for luxury condos.
“That’s simply wrong,” she said. “My proposal is that we should be unlocking the land by going to our city’s staff, asking for the most developable parcels, and put it out to market for the industry to bid on.”
“We’re losing too many young people because of unaffordability and the city has to find a way to stop that.”
Most public opinion surveys place Keesmaat, who jumped into the mayoral race the day after Premier Doug Ford announced he was slashing Toronto city council’s in about half, well behind the incumbent, John Tory. The most recent poll, at the end of September by Mainstreet Research, showed Tory at around 64 percent support among decided voters, while Keesmaat secured 30 percent.
Before this term of city council ended, Tory’s executive committee approved the building of 1,000 new affordable homes. As part of his re-election platform, he’s promising to build 40,000 rental units over 12 years — substantially less than Keesmaat's offer.
The 10,000 new units Keesmaat promises to generate for rent-to-own make up 10 percent of her previous commitment to build 100,000 affordable units over ten years — a central part of her campaign platform.
“Somebody is going to have to build these houses, and it has to make sense of them to commit to that,” said Mark Weisleder, a real-estate lawyer who has written at length on rent-to-own ideas.
“The city has to make guarantees to convince developers to go ahead and build these units — guarantees that someone will pay off the rest of the mortgages when the time comes,” he explained.
Keesmaat argues that developers across the board would jump at the opportunity to build for her program because many of them can’t access land due to rising prices.
“The industry’s been very clear,” she said. “They’re saying, ‘If you offer this then we will build it.’ Otherwise they’re running out of space to build on since the price of land has sky-rocketed.”
Keesmaat also noted that similar proposals in New York City and Amsterdam have resulted in large amounts of affordable housing. B.C. has slapped surtaxes on luxury homes to pay for school facilities. The rent-to-own model has also been a big part of London Mayor Sadeq Khan’s overall plans to increase affordability.
Right now, Toronto doesn’t have a significant public rent-to-own program. It’s also rare to find private organizations that offer such options to aspiring homeowners.
Still, Canadian Centre for Policy Alternatives Senior Researcher Ricardo Tranjan says that Keesmaat’s plan would only go so far in fixing Toronto’s worsening housing crisis.
“To address the crisis as a whole requires investment and policy interventions in the entire housing spectrum,” said Tranjan, “from making ownership more accessible to making sure that there are enough beds for the homeless.”
"Will it provide some much needed relief? Yes… Will it truly address the housing crisis as a whole? No."
“Keesmaat’s program would be a good policy, but it addresses one particular part of the entire siutation. Will it provide some much needed relief? Yes, a portion of Torontonians will welcome it. Will it truly address the housing crisis as a whole? No, because that requires a bigger, more complex response.”
Tranjan praised Keesmaat’s proposed surtax idea, noting that the city has long been losing money due to capped property taxes for the past eight years.
“The 0.4 percent surcharge is very reasonable and astute because it can be quickly implemented to generate some much needed revenue for the city,” he said.
“This program is all about the municipality taking the access that we already have and using it to deliver housing where we need it most,” Keesmaat emphasized.
“This is one of the most important roles that the city can play — it can’t be overstated. We have to ensure that young people are afforded the same opportunities as previous generations.”
Cover image of Jennifer Keesmaat launching her bid to become mayor of Toronto on Thursday, Aug. 23, 2018. Photo by Colin Perkel/The Canadian Press