As well as continuing to provide mortgage insurance and rental market reporting, CMHC is reorienting its work and operations to focus more on affordable housing. CMHC’s new goal is that “by 2030, everyone in Canada will have a home they can afford and that meets their needs.”
In November 2018, CMHC held a large two day Housing Conference, covering a broad range of housing topics, including numerous speakers who offered progressive views on many important issues related to rental housing. Many for-profit rental housing providers would take issue with some of the ideas the invited speakers put forward, or with some of the facts they assumed or reported. However, some of the issues can potentially be turned to the rental industry’s advantage.
CMHC recently released a summary of the information about the key themes of that conference:
- Housing is the key financialized asset
- Supply is a continuum (of multiple problems)
- Climate change is affecting supply and demand
- One size doesn’t fit all
- Good policy won’t come from bad (or no) evidence
- Social inclusion is a process
- Nothing is a panacea
- Everything (new and old) will help
- Collaboration is key to success
- We need to rethink rental in the 21st century
The summary, and videos of many of the talks, are available by google searching “CMHC” and “national housing conference 2018”.
This article sets out some of the issues on which a very progressive view was presented at the CMHC Conference. For the remainder of this article, for sake of clarity, the perspectives of rental housing providers appear in bold italics, like this sentence.
At the CMHC Housing Conference, several speakers said, “Lack of supply is frequently cited as a major contributing factor in housing affordability problems.” Yet, according to many speakers, supply is not a single problem, but a continuum of multiple problems that suggest numerous different solutions are needed.
Many speakers focused on issues peripheral to the key supply issue, such as landlord discrimination in rental markets and evictions due to “rental poverty” and “fuel poverty”. There are calls to address landlord discrimination, racism, evictions, and
other barriers to housing.
Rental housing providers and apartment associations believe the laws already address those problems. All provinces have Human Rights Codes that apply to rental housing. Those codes prohibit discrimination. They trump other laws, including rental laws. In Ontario and other provinces, renters can and do invoke human rights rules in disputes at the Landlord and Tenant Board. Low-income tenants are supported in making claims, or in defending landlord claims, at the Board.
Major rental providers already have processes in place to make sure they comply with human rights law in tenant selection, and in dealing with tenants. Landlords have to accommodate tenants even when the tenants in question are disturbing the other tenants who are their neighbours. Code-protected tenants are one of the best protected groups in society, whereas landlords often feel attacked and blamed for things they do not control, such as problems caused by inadequate income support or mental health problems.
Other CMHC Conference speakers addressed what they called the wrong mix of supply, “in which the secondary market overwhelmingly comprises smaller units (bachelor; one- and two bedrooms) and not enough larger units (three bedrooms+) for families and people living with children.” Here, the secondary market is being confused with the condo market. In most cases across Canada, the condo rental market is only a small part of the secondary market, and the rest of the secondary market consists mostly of two, three, and even four bedroom ground-oriented houses, which are ideal for families.
Lack of affordability of supply was said to arise from the rise of the condo rental market, which is more expensive than the primary market, and has virtually replaced purpose built rental construction over the last few decades.
The suggested solutions lean to yet more governmental regulation and intervention, such as rental-only zoning, mandatory inclusionary zoning, and governments as developers “to increase construction aligned with goals of affordability, accessibility, mix, and safety.”
Rental housing providers and apartment associations hold the opposite view. Increased federal focus on rental housing and rent control discouraged investment in purpose-built rental housing (PBR). Fortunately for governments and renters, the supply shortfall was largely met by investors purchasing condo units, and renting them out. The units that were bought would not have been built otherwise. Far from harming the housing markets, condo investors saved the day for renters, and meant that the counterproductive government policies just led to a change in the composition of rental housing, rather than a decrease in the overall supply.
If, for reasons of security of tenure and quality of management, policy makers now want to shift the composition back to a higher proportion of PBR, then the way to do that is to roll back the federal tax increases on PBR, and to roll back the rent control limits, that have become more onerous over the years (or better yet to eliminate rent control entirely). That should draw out more rental supply of the type that is preferred.
The CMHC Conference speakers said social inclusion is a key issue of our time. While often thought of as an outcome, social inclusion is a process, working through the tension between professional wisdom and community or resident wisdom, and ensuring community members have meaningful roles in the design, planning, implementation, and even construction stages of a project. This approach is particularly useful for underrepresented and vulnerable populations, including people with lived experience. The challenges developers face in finding ways through multiple road blocks were not much recognized or addressed in general.
However, speakers recognized that including people in the planning process for housing projects can create opportunities for people to voice NIMBY attitudes. As one panelist noted, “since every construction project is located near somebody, NIMBYism often results in little housing getting built anywhere.”
Speakers noted that NIMBY opposition can change or be reduced over time. For example, secondary suites are a far more politically palatable affordable housing option today than they were 20 years ago. This change is attributed in part to the fact that secondary suites are now viewed as a form of “gentle density” and not as intrusive or objectionable as other forms of density, such as tall towers.
Instead of seeing condo investors as having saved past and current government policies from having even worse effects than they have had, condo investors are characterized as amateurs. According to CMHC conference speaker Nathanael Lauster, in “Building an affordable future for rental housing”,
… While the financialization of housing and the rise of the secondary (condo) market in Canada has led to an overall increase in the number of amateur landlords, very little is known about who these people are, what their motivations for becoming landlords are, and what types of tenancies and rents are being offered (or for how long). (Summary, page 17.)
Some speakers suggested measures to limit further increases in the number of amateur landlords, and to ensure landlord practices become “more responsible”. For the former, suggested measures included increased taxes on private landlords (to limit the acquisition of further units). For the latter, landlord education and training measures were cited.
The approach of raising taxes on condo rentals and burdening investors would also change the composition of the rental stock, but at the cost of reduced supply, shortages and increased rents. Rental housing providers believe that small (or “amateur”) landlords can provide an important source of new rental supply especially in constrained markets, but apparently that is not seen as enough of a contribution.
On the other hand, other speakers suggested offering tax concessions to private landlords (reduced tax bills) to incentivize renting to tenants of low income. The summary indicated that this practice is apparently used widely in France, the USA, and Germany.
Most rental housing providers usually see government as getting in the way of their operations or development. However, many progressives see government as saviour. The rental industry can oppose the government as saviour mentality, but that strategy has its limits.
Often, a more successful approach is to take advantage of whatever help can be obtained, such as the suggested help in overcoming NIMBYism. Rental providers and apartment associations usually do better for themselves and their members by evaluating each issue, and choosing carefully what to oppose, and what to support or play a leadership role on, while working with different allies on different issues.
We can safely say the rental housing industry is in for interesting times.
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