According to data from Rentals.ca, rents across the country have risen by 22% in 2 years
Posted: September 9th, 2024, 1:58 pm
Khalil Alibi and dozens of other tenants from his and two adjacent buildings in north Toronto have joined forces in a rent strike since May 2023 to protest the Above Guideline Increases (AGI) after the second one was issued to tenants earlier that year. (CBC)
Khalil Alibi is facing his Goliath.
Starlight Investments is Canada's largest landlord, with more than 54,000 units nationwide and 68,000 globally. Starlight was granted approval by Ontario's Landlord and Tenant Board to raise the rent above provincial guidelines twice in the last two years. Alibi says this makes his unit no longer affordable for him.
"They should not be allowed to get away with this. They just keep coming to take and take and take," he said.
Alibi, who lives with his wife and three children, says the rent for his three-bedroom unit is now $1,761 per month, up from $1,472 in December 2019, the year Starlight purchased the building. One-bedroom units that have since become vacant are starting at $2,428 a month.
Alibi says he has to fight back.
He and dozens of other tenants from his and two adjacent buildings — including 71, 75 and 79 Thorncliffe Park Drive in north Toronto — have joined forces in a rent strike since May 2023 to protest the Above Guideline Increases (AGIs) after the second one was issued to tenants earlier that year.
What Alibi and the others are going through is hardly an anomaly. According to data from Rentals.ca, rents have risen across Canada by 22 per cent in just two years.
WATCH | Affordable housing is vanishing. Are these landlords to blame?
Affordable housing is vanishing. Are these landlords to blame?
1 day ago
Duration14:58
Canada lost more than half a million affordable rental units in a decade, and experts say it’s because 'financialized landlords' are turning housing into investments. CBC The National investigates the impact of the growing industry and what it means for renters.
Starlight Investments is also part of a growing trend across Canada: the "financialized landlord," whose business model allows outside investors to share in the profit of rental housing.
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Some tenants and housing experts believe this model is leading to higher rents across Canada, as the pressure to increase shareholder value becomes the top priority and these companies expand their share of the country's rental stock.
Rising rents
According to research by Martine August, a housing expert at the University of Waterloo, the biggest financial firms now collectively own close to 400,000 suites — nearly 20 per cent of the purpose-built multi-family rental units in Canada. That's up from zero in the mid-'90s.
A chart of REIT ownership of apartments from 1996 to 2021
This chart demonstrates the extent to which financialized landlords have bought up apartment units in Canada since 1996. (Submitted by Martine August)
August says the business model often leads these landlords to cut costs on buildings and find ways to raise rents through AGIs or evictions. Because of vacancy decontrol rules, once a unit is vacant, the landlord can raise the rent as much as they want to.
"Financial firms are raising rents higher than other types of landlords. On average, after a financial firm acquires a building, they increase the eviction-filing rate by three," August said. "They triple it."
According to August's research, financialized landlords purchased 90 per cent of all rental stock that came up for sale in Toronto in 2020.
"They are really consolidating ownership. And as a result, rents are rising," she said.
In a statement, Penny Colomvakos, vice-president of residential operations at Starlight, said the company's units "account for only a fraction of the total of purpose-built rental market, and a majority of our suites are rented at or below [the Canadian Mortgage and Housing Corporation's] average rents for purpose-built apartments."
The industry says providing deeply affordable housing is not its job.
"We're not tasked with building deeply affordable or social housing. We can't be there. We're in business. Let's draw a line between these two," said Michael Brooks, president of Realpac, an organization that represents many of Canada's biggest landlords, including Starlight.
AnalysisThe dirty secret of the housing crisis? Homeowners like high prices
How it works
People can invest in companies like Starlight through pension funds, such as PSP Investments, and other private equity. Starlight owns a lot of commercial space across Canada and around the world, but most of its real estate business is in residential, so a large chunk of the profit comes from rental income.
WATCH | Martine August describes business model of financialized landlords:
The rise of financialized landlords
Martine August, a housing expert at the University of Waterloo, says financial firms are increasingly buying up purpose-built multi-family rental units in Canada.
August says these landlords often like to buy older buildings, because it's cheaper than new construction and the potential for profit is higher, especially if the buildings are full of tenants paying below-market rents.
Starlight's own literature for shareholders describes a model where they seek out "older stock" and in some cases have seen rents rise "up to $411 per unit."
According to research done by Steve Pomeroy, a professor and special advisor to the Canadian Housing Evidence Collaborative at McMaster University in Hamilton, between 2011 and 2021, Canada lost more than 550,000 affordable rental units.
Where did they go?
"They are still there, for the most part, but they are no longer affordable. The rents have just gone up beyond that affordability threshold," Pomeroy said.
Over 100,000 short-term rentals could be homes: StatsCan report
This is what Alibi sees happening in his building.
"This building used to be affordable. It doesn't have anything, you know, special about it," he said. "It is not [affordable] anymore."
Last June, the Ontario Landlord and Tenant Board ruled in favour of Starlight Investments' application to raise rents above provincial guidelines, which currently permit a 2.5 per cent hike each year.
The company says it's following all provincial laws in pursuing the AGIs, which help cover costs related to combatting its buildings' aging infrastructure.
https://www.cbc.ca/news/financialized-l ... -1.7307015