Affordable Housing in Canada: What are REITs doing to combat this housing crisis?

Did you know that Boardwalk is part of a group called the Canadian Rental Housing Providers for Affordable Housing? This group is made up of five of Canada's largest publicly traded Real Estate Investment Trusts (REITs), including Boardwalk REIT, Canadian Apartment Properties REIT (CAPREIT), Killam Apartment REIT, InterRent REIT, and Minto Apartment REIT.

Critics claim that REITs have become overly financialized, a term that is nebulous and often unfairly applied to private housing solution providers. It's important to note that publicly traded REITs account for less than 6% of the purpose-built rental stock, which itself comprises less than 3% of the total rental market in Canada. Therefore, the assertion that REITs dominate the market lacks mathematical support.

As REITs, we understand the critical importance of affordable housing to the communities we serve all across Canada. We believe in fostering vibrant, inclusive neighbourhoods where everyone has access to safe, and decent affordable housing options. That's why we prioritize affordable housing initiatives within our portfolio. Not only does it align with our commitment to social responsibility, but it also makes sound business sense. 

Affordable housing provides a steady stream of rental income, ensuring the stability and growth of our investments over the long term. By investing in affordable housing, we not only address housing inequality but also contribute to the overall well-being and prosperity of the communities we operate in. It's a win-win scenario that underscores our dedication to creating value for both our shareholders and society as a whole.

What does affordable housing mean in Canada?

As many Canadians know, we are in the midst of a housing crisis, with a lack of supply and a lack of affordability. Right now, Canada offers approximately 434 housing units for 1000 residents, this is amongst the lowest out of any G7 country. The G7 (Group of Seven) is an informal grouping of the world's seven most advanced economies, including Canada, the United States, the United Kingdom, France, Italy, Germany, Japan as well as the European Union (EU).

The REITs within the Canadian Rental Housing Providers for Affordable Housing consortium are ready and committed to addressing Canada's pressing affordable housing crisis. Collaboratively, we strive to increase the availability of rental properties that align with the financial means of the majority of Canadians, ensuring comfortable living for all. 

However, tackling such a significant challenge necessitates alignment and support from the Canadian government to effectively implement our initiatives.

What are potential solutions to the Canadian rental crisis?

As part of the Canadian Rental Housing Providers for Affordable Housing, we have submitted our proposals to the House of Commons Pre-Budget Consultations for the 2023 Federal Budget. Our recommendations aim to address the escalating housing crisis. Here are our key suggestions:

• Boost affordable housing funding to lower rental rates

Establishing supportive financing and funding for cooperatives and non-profits to acquire affordable housing from REITs and other market-based sources at market prices is crucial. By preserving affordability through community land trusts, we align with the Canadian Housing and Renewal Association's recommendation for the National Housing Strategy.

Modifying CMHC's Mortgage Loan Insurance (MLI) Select program for existing buildings involves lowering the affordability threshold, reducing rates and fees, and/or decreasing debt service coverage requirements. These adjustments would make investing in affordable housing more lucrative than traditional financing and market rents. This approach echoes the success of the Multi-Unit Residential Building program from 1979 to 1984, which significantly increased the supply of affordable homes during the last housing supply crisis.

• Offer more rental support to Canadians by expanding the CHB

We strongly advocate for the expansion of the means-tested Canada Housing Benefit (CHB), which has already provided essential assistance to 1.8 million low-income families renting their homes through a recent one-time top-up. Expanding the CHB would further aid struggling families in meeting their basic needs. Additionally, we support the development of emergency supports aimed at preventing individuals and families from losing their homes during times of crisis. Such measures are crucial in ensuring housing stability for all Canadians.

• Align land-use policies to promote affordable home construction

As Canada's population continues to grow, there is a pressing need for a substantial increase in housing supply to keep pace with demand. To achieve this, the federal government should leverage various funding streams, including Health and Social transfers and infrastructure investments, to encourage provinces, territories (PTs), and municipalities to align their land-use policies. Establishing a national standard in land-use policies would facilitate the efficient creation of housing across the country, addressing the current shortage and ensuring sustainable urban development.

• Remove taxation to promote new construction.

Effective solutions lie in tax policies that incentivize investment and facilitate access to affordable capital. These measures encourage the construction of purpose-built, affordable housing, leading to manageable vacancy rates, heightened competition, and ultimately reduced rents. Targeted rent supplements are crucial, serving those in genuine need rather than being universally distributed. Rent control measures often lack this nuanced approach, resulting in inflexibility and shortcomings.

Read more details on the points above on foraffordable.ca/solutions.

What is rent control and do we need it?

There are a lot of opinions and misconceptions when it comes to rent control. Many are calling for rent control in Canada as we see rent prices spike year over year. But the consequences of rent control far outweigh the benefits. Rent control in the past has not worked, and there is no evidence that it will work in the future.

Basic math reveals that rent controls impede the essential cash flow required by housing providers to adequately maintain their properties. As a result, tenants often find themselves living in substandard conditions. Rent controls also discourage crucial investment and the development of new housing units. Broad, indiscriminate public policies ultimately falter due to their lack of adaptability.

Rent controls have fallen short of their intended goals of curbing rent hikes and expanding access to affordable rental housing. While proponents of rent control often argue that unregulated markets witness erratic spikes in rent, leading to significant rent increases, the reverse is actually true. In rent-regulated markets, we actually see landlords push rents to market or higher when residents move out in an attempt to capture lost revenues imposed by years of rental caps.  

According to the National Rent Ranking report, the highest rents in Canada with a tight housing supply exist in rent-controlled markets. The top 15 highest rent rates in Canada are found in provinces with rent control measures, notably British Columbia and Ontario. Cities such as Vancouver, Toronto, Burnaby, and Mississauga lead the list, with Halifax emerging as one of the latest additions to Canada's increasingly expensive places to live.

The introduction of new housing supply fosters competition, thereby driving down prices—a fundamental principle governed by the law of supply and demand, not mere theory but a law. With over 90 percent of Canada's housing supplied by the private sector, it's notable that provinces like Alberta and Saskatchewan, having repealed rent caps, exhibit the highest per capita investment in apartment development and consequently enjoy more affordable rent rates.

No rent control: 

• The average rent price for a two-bedroom apartment in Calgary, Alberta right now, with no rent control, is $2,280 (up 15% from 2023).
• The average rent price for a two-bedroom apartment in Regina, Saskatchewan right now, with no rent control, is $1,452 (up 16% from 2023).

Rent control:

• The average rent price for a two-bedroom apartment in Toronto, Ontario right now, with rent control, is $3,504 (up 6% from 2023).
• The average rent price for a two-bedroom apartment in Vancouver, British Columbia right now, with rent control, is $4,228 (up 8% from 2023).

“The principles of economics in a free market work. Let them do what they have always done: ensure quality affordable housing for all Canadians.” - Sam Kolias, CEO, Boardwalk REIT

How are the Canadian Rental Housing Providers for Affordable Housing making a difference today?

• More than half of our expansive portfolio, totalling over 120,000 rental units, meets the stringent criteria set by the federal government for affordable housing.
• Over the past decade, rents within our portfolios have experienced a modest average annual growth rate of 2 percent, reflecting our commitment to maintaining affordability for our residents.
• Our dedication to enhancing the quality of our properties and communities is evident through our substantial reinvestment efforts, including energy retrofits, repairs, and safety enhancements, amounting to over $5,000 per unit in the previous year alone.
• We fully endorse the City of Toronto's Renoviction Policy and firmly abstain from engaging in renovations, demonstrating our unwavering commitment to preserving housing stability for our residents.
• We prioritize the needs and safety of our residents, conducting extensive large-scale surveys to gather their feedback on our services, which in turn guides our strategic investments in building and community improvements.
• Our commitment to community well-being extends beyond property management, as evidenced by our involvement in initiatives such as developing and overseeing non-profit housing, cultivating community gardens, tree planting, and providing financial and time support to various organizations.
• Acknowledging our responsibility in mitigating carbon emissions, we are channelling significant investments, totalling hundreds of millions of dollars, into energy efficiency projects, retrofits, and utility upgrades, underscoring our dedication to environmental sustainability.

Why do REITs prioritize affordable housing?

Profit is not found in the mission statement of any housing provider. Why? Ken Blanchard (American author and business professional) tells us why and it’s no secret: “Profit is the applause you get for taking care of your customers and creating a motivating environment for your people.”

Here at Boardwalk REIT, we have a commitment to affordability and annually invest over $100 million back into our communities to not only maintain but enhance the living experience of our residents. We understand the profound influence affordability holds on the health, prosperity, and overall vibrancy of our communities. Anchored by some of the most competitive rental rates in Canada, Boardwalk is steadfast in its dedication to delivering top-tier product quality, service, and resident experience. 

Take, for instance, our primary markets of Edmonton and Calgary, where our average rents represent approximately 20% of the average renter's household income. This remarkable affordability not only exemplifies exceptional value but also ensures the sustainability of housing for our resident members.

Since 1999, Boardwalk has provided its Resident Members with self-imposed rent protection measures, ensuring sustainable limitations on rental rate adjustments for renewing residents. Additionally, Boardwalk is committed to eliminating or reducing rent increases for any Resident Member experiencing financial hardship, upon providing appropriate documentation.

Join the Boardwalk Community

If you're in need of affordable housing and might need rental assistance, reach out to us today to fill out an application form to be reviewed. Our team is here to help you find an apartment for rent in our portfolio that meets you and your family's needs: check out available apartments for rent on Bwalk.com.