News

Don't Worry About Paying Rent, Your Landlord Is Likely a Big Business

Contrary to backlash against the Keep Your Rent movement, Canada’s largest landlords are real estate investment firms.
April 1, 2020, 7:23pm
Despite backlash against the Keep Your Rent movement Canada's biggest landlords are REITs
Photo by Erik Mclean courtesy of Unsplash

April 1 marks the first day during the coronavirus crisis that rent is due. People who are uneasy about the “Keep Your Rent” campaign may not realize that most landlords in Canada are not struggling homeowners who have bills to pay too, they’re big businesses.

According to Ricardo Tranjan, an economist and senior researcher at the Canadian Centre for Policy Alternatives (CCPA), the “typical landlord” is increasingly a large, highly profitable investment company, known as a Real Estate Investment Trust (REIT).

“They’re a financial vehicle and an asset management company. They manage large and growing numbers of units across the country,” he said. “They like to boast about the high performance of their portfolio.”

When he talks about landlords, he gets pushback from people who cite the exception, not the rule. “People think about the nice widow down the street who is living on a fixed income and rents a room in her house and has her own bills and financial obligations,” he said.

But based on data from Statistics Canada, only a small percent of the 5.9 million tenants across Canada are renting from a homeowner who also lives on the property and has no other property. They represent 4 percent of homeowners.

Homeowners have options to help them survive the COVID-19 crisis, in the form of mortgage deferrals. But the lack of help specifically for renters, many of whom live paycheque to paycheque, has given rise to the grassroots Keep Your Rent movement calling on all tenants to withhold rent this month.

Ontario premier Doug Ford mentioned it during his press conference on Thursday. “I heard there was a petition going around—just don’t pay rent. That’s wrong; that’s hurting people across the board,” he said.

Politicians and the business community have suggested that renters who need a break should talk to their landlord and explain their situation. The Ontario government’s website says (in bold letters): “We encourage landlords and tenants to work together during this difficult time to establish fair arrangements to keep tenants in their homes.”

But that isn’t so easy or straightforward when you consider who the biggest landlords in the country are. A study by the University of Waterloo shows that in 2017 the 20 largest landlords in Canada owned one out of every five rental suites. Most of the super-sized landlords are Real Estate Investment Trusts (REITs), which are financial vehicles that manage assets on behalf of investors. In the past couple of years, they have gotten bigger, and are buying more residential rental suites as they increase their profits.

Tranjan’s research shows that not only are these REITs benefiting from the rental housing crisis, but they’re not helping the situation the way that other private developers who are building new housing do. He said that’s because they don’t add to the supply of housing—they often buy existing units and fix them up to increase rental rates. And they get tax breaks because they’re set up as an investment firm.

“REITs don’t even pay corporate taxes. What they’re doing is buying the asset and outsourcing the management of it. The manager is tasked with collecting rent and paying back to the investment trust which then sends the profit straight to investors,” he said.

Getting in touch with this type of landlord if you’re having trouble making rent during the COVID-19 emergency is difficult because tenants are dealing with a management company that is the middle man. It’s not a simple conversation with a person that you know.

Time is a factor as well. Emergency money for people who are suddenly jobless in the midst of an unemployment crisis of epic proportions won't be delivered until later this month. British Columbia is the only province offering a $500 rent subsidy but applications don’t start until mid-April.

If you can't make rent, evictions have been halted across Canada with very few exceptions for public health reasons, so by law, you can’t be kicked out for not paying.

All of this is why Tranjan says rent forgiveness is needed—now.

“Housing has been for too many years an extremely lucrative business in this country and that’s due to the low supply of affordable rental units and new financialization mechanisms that allow for REITs to emerge and grow,” said Tranjan. “But this is also an opportunity to question the entire approach to housing people and in a crisis like this calls our attention to the absurdity of it.”

Follow Anne Gaviola on Twitter.

Advertisement