According to the Victorian Housing Strategy Review, there were about 4,000 new housing units on the way to be added to the rental market this year, and more than half of these units are aimed at people with low to middle incomes.
However, the report also shows an increase in sales of older buildings to real estate investment trusts (REITs) – which own and finance income-producing properties – or other large institutional investors.
Jeremy Loveday, a member of the Victorian Council and president of the Capital Region Housing Authority, told CBC’s on the island.
Loveday explained that REITs raise the capital of many investors and are able to buy old properties above their market value.
According to the report, Victoria’s multi-family sector set a record year with investment sales of $761 million in 2021, double the sales of 2020. The previous record of $478 million was in 2019.
The report said the residential land, which has also attracted a lot of interest, was primarily purchased for the development of multi-family housing across Greater Victoria.
“We can’t compete with them,” Loveday said. “They have a lot of money and great access to capital.”
“The problem is that we are losing affordability faster than we can get it going. We need to maintain current affordability if we are to have a chance to turn this housing crisis around.”
Loveday said the profits from buying old real estate should be reinvested in affordable, cooperative housing.
He said the federal government should put pre-emption on public and non-profit agencies, allowing them to make an offer to buy old housing stock first.
Vacancy Control Policy Needed, Defender Says
Advocates say the increase in sales of older buildings to REITs means rents and home prices are rising. Under current BC laws, if the lease agreement expires, the landlord can set a new rent rate – even if the tenant hasn’t changed.
“We are seeing shocking increases in rents,” Douglas King, executive director of Together Against Poverty in Victoria, told CBC News.
“One thing we’re seeing is a lot of renters taking agreements or paying landlords to move, to have some kind of cash on hand assuming they’ll have to move in anyway.”
Most of the tenants in these buildings have lived there for more than 30 years, he said, paying rent as low as $800 to $900 for a one-bedroom unit in Greater Victoria.
“The running rent for a one-bedroom apartment is twice that amount, so we’ve seen a 50 percent to 100 percent rent increase for some of these older tenants.”
King added that tenants are facing rising rents and uncertainty – a problem that building affordable rental units will not solve.
He said the county needs to implement a vacancy control policy to control large rent increases and ensure that people are not forced to leave their homes.
“So a change in tenant does not give you the opportunity to increase the rent as much as you can,” King said. “So it isolates us from that kind of rapid increases when the market is hot or demand is high.”
In an emailed statement to CBC News, the Department of Housing said the province is aware of people’s concerns about REITs’ participation in the rental market across Canada.
She said the province is working with all levels of government to look into the tax treatment of large companies that invest in residential property.
“We know that things are particularly difficult right now for people. Canada is experiencing the highest levels of inflation in decades, especially when it comes to housing costs, and we are reviewing policy options to continue to support British Columbians,” the department said.
In April 2018, Prime Minister John Horgan appointed a Rental Housing Task Force to examine changes to British Columbia’s tenancy laws.
During county-wide consultations, the task force said it heard from tenants, seniors and advocates who were concerned about rent affordability and their desire to control vacancies. The task force also heard from landlords and developers who opposed the idea.
The ministry said the task force decided that controlling vacant positions could act as a disincentive for property owners to carry out necessary repairs and maintenance.
“[It] determined that rent control associated with the unit would have the unintended consequences of reducing the stock of affordable rent or reducing investment in needed repairs.”