In June of this year, the Federal Housing Advocate, Marie-Josée Houle, submitted her written representations to the first review panel to be held under the National Housing Strategy Act (NHSA). This panel is dealing with the urgent, nationwide issue of the financialization of rental housing, which refers to the purchase of rental housing by financial firms such as private equity funds, real estate investment trusts (REITs), or even public pension funds. These firms then manage the rental housing like any other financial asset, trying to generate maximum profits, with often disastrous impacts on the human rights of tenants.
Before summarizing the Advocate’s comments, though, we need to define a few key terms.
Key Terms
These review panels are held at the request of the Advocate to investigate systemic housing issues: “A systemic housing issue is an issue which inhibits the full and equal enjoyment of the right to adequate housing in Canada and is rooted in the housing system or other public and private-market systems.”
Recognition of the right to adequate housing is a crucial element of the NHSA. Although Canada is a signatory to various international agreements that recognize the right to housing, the NHSA was the first document to include that right in Canadian domestic law. The NHSA commits to the progressive realization of the right to housing, and the Advocate’s position is one accountability mechanism to make sure the government is on the right track.
In a report created for the Advocate, Martine August defined financialization as “a process in which finance capital has come to dominate the economy and everyday life, and in which money is increasingly made through financial channels rather than by making things.” The financialization of housing refers to “the growing dominance of financial actors in the housing sector, which is transforming the primary function of housing from a place to live into a financial asset and tool for investor profits.”
The financialization of rental housing—and especially affordable, purpose-built rental housing—is one manifestation of this broader trend.
Financialization is a Federal Responsibility
The purpose of the review panel hearings is to create recommendations for the federal Minister of Housing, so the Advocate’s comments are primarily directed at the federal government. However, she argues that, although housing is typically a provincial issue, when it comes to financialization, it is Parliament that in fact has the most power. Its authority includes federal taxation, the regulation of the finance and banking sectors, the Canada Mortgage and Housing Corporation (CMHC), and the National Housing Strategy (NHS).
All of these areas play a role in the financialization of rental housing. For instance, REITs are given preferential tax treatment, which has led to their explosive growth in recent decades, and as landlords, they are associated with particularly aggressive practices in their pursuit of profit.
Negative Impacts on the Right to Adequate Housing
The financialization of rental housing affects every aspect of the right to housing. These are:
- affordability
- habitability
- security of tenure
- accessibility
- location
- cultural adequacy
One example highlighted by the Advocate is the issue of forced evictions when tenants are made to leave their homes without their consent. It is well established that financialization drives forced eviction, and this negatively impacts tenants’ security of tenure. The Advocate focuses here on renovictions, where renovations to rental units are used as a pretext to force tenants out, allowing landlords to increase the rent.
The Advocate highlights that the financialization of rental housing has the biggest impact on groups that experience intersecting forms of discrimination. Notably, financialization worsens gender discrimination, leaving women and Two-Spirit and gender-diverse people overrepresented in core housing need, especially those who are members of another marginalized group. Notably, in addition to the six aspects of the right to housing above, financialization has a negative impact on Indigenous land rights, contrary to the United Nations Declaration on the Rights of Indigenous Peoples.
Human Rights-Based Solutions
The government has an obligation to progressively realize the right to adequate housing, which means all levels of government must act as quickly and effectively as possible to fulfill the human right to adequate housing, especially for those most in need. “Progressive realization” involves a number of responsibilities, such as the need to:
- take immediate steps,
- use the maximum available resources,
- use all appropriate means,
- ensure that disadvantaged groups are prioritized,
- respect Indigenous rights,
- avoid discrimination,
- create mechanisms for accountability around the right to housing, and
- engage with communities before creating policies that affect them.
The next step in the review panel process will be an oral hearing, slated for October and November 2023, during which the review panel will hear from rights holders, experts in human rights and housing, and other stakeholders. During the hearing, the Advocate will present proposals for recommendations, which will be based on the human rights framework described above. The panel will then issue a report with recommendations for the Minister.
It will then fall to the government to adopt the recommendations and begin addressing the problem of financialization in the rental housing sector. This is critical because existing housing measures may be making the problem worse.
Problems with Existing Measures
According to Martine August, the government has contributed to the increase of financialization in three main ways:
- neoliberal policies, including reductions to the welfare state (especially the cancellation of social housing),
- the deregulation of rent control and tenant protections, and
- policies that enable financialization, such as the introduction of REITs.
As well, current measures intended to protect the right to housing have significant gaps. For instance, provincial landlord-tenant legislation allows financialized landlords to abuse above-guideline rent increases, own-use evictions, and eviction for renovation. Further, federal mortgage insurance from the CMHC does not come with adequate affordability or rights-based conditions, the largest projects under the NHS are producing relatively high rent buildings, and the new Housing Accelerator Fund does not contain sufficient provisions around the right to housing. We can expect the review panel’s recommendations to address all this and more.
What Can We Do?
Although the launch of the review panel on the financialization of rental housing is a major step forward, without the political will to act, nothing will change. The Advocate emphasizes in her remarks that financial firms actively lobby the government for legislation that benefits them—without pressure in the opposite direction, the problem may just continue to worsen.
The work of the Federal Housing Advocate is one important piece, but ultimately, we can all be part of the solution. Grassroots pressure for change can take many forms. It can mean direct action: tenants organizing with their neighbours to stand up for their rights. Even if you’re not a tenant, you have a stake in the issue and can vote for housing to push the government to act.
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To read the Federal Housing Advocate’s full representations or to check out a four-page summary, visit the Homeless Hub. To make a submission to the review panel before August 31, 2023, visit the National Right to Housing Network’s website.