United in Struggle

Financialized Landlords and the Monopolization of our Homes – a presentation for the SVNA

In this assembly, we will discuss a tool the ruling class uses to oppress and squeeze tighter. This tool takes the form of financialized landlords known as Real Estate Investment trusts or REITs for short. 

We will discuss the increasing control of our homes by financialized landlords and the effects on working people and our neighbourhoods. But before we start talking about REITs, we need to understand two things, one who constitutes the ruling classes in Canada, and two how they control our lives.

A small number of companies effectively control Canada through monopolies. The largest sectors of our economy are controlled by a small number of people who make up the ruling class! The monopolies include Rogers, Bell and Telus controlling 90% of telecom, Air Canada and WestJet accounting for more than 80% of air travel market share, the top five grocery retailers controlling 75% of the grocery market, and the top six Banks controlling 93% of all financial assets in Canada! 

Remember! Each one of these companies has faces behind them and they have relationships with each other. They are all united against us! For instance, Călin Rovinescu served as the CEO of Air Canada (the largest airline) from 2009 to 2021 and sits on the board of governors of Bell (the largest telecom) and Scotiabank (third largest bank). Similarly, the current CEO of Bell (Mirko Bibic) also sits on the board of governors of RBC (largest bank). There are many many other examples of the relationships between the rich elites in all sectors of the Canadian economy. They even have an organization, the Business Council of Canada, where these elites from the largest Banks and corporations come together to strategize and build their monopolies!  

These monopolies constitute the ruling class. They control and make decisions on what we eat, where we live, what we watch, how much money we get paid, and how much we are left with at the end of the day. They even decide who represents their interest at all three levels of Government! So much for democracy!

Commodification

One way the ruling class maintains their grip on our lives is by turning the things we need to live (food, clothing, housing, technology) into something that can made, bought, and sold. This is known as commodification. You buy your groceries, you pay for a shirt or purchase a phone. All of these things are commodities. And our homes are the same.

Financialization and speculation

To make even more money, the ruling class, with the help of the government, go beyond commodification to turn the basic things we need to live into something that they can gamble and take bets on. This is what we refer to as financialization. 

In the context of housing specifically, financialization refers to turning our homes into an investment for large corporations, banks, and capitalists, in general, to speculate (gamble) on without owning or managing our homes directly. 

Speculation means the purchase of something with the hope of future profits!

For housing, this looks like purchasing our homes or the right to our homes with the hope of future profits! This is speciation!

REITs are Financialized Landlords

Understanding speculation, we can come back to Real Estate Investment Trusts to see how the ruling class uses them to gamble on our homes!

Real Estate Investment Trusts (REITs) are financialized landlords! They own and operate real estate and are often traded on the stock market. This allows the ruling class to earn income from real estate. We call REITs financialized landlords because they primarily make money for their shareholders through speculation. Their speculative behaviour looks like this: 

1. Using the money from their investors to buy up more properties and increase the size of their holdings.
2. Giving their shareholders a guaranteed passive income directly from our rents.
3. Being a place where the financial capitalists can put huge amounts of money to grow over time.

So capitalists purchase shares of REITs in the hopes of making money on our homes. So what?

We will always need shelter and a place to live! REITs take advantage of this human need to make money for capitalists.

REITs want a Monopoly on homes

According to research from the University of Waterloo, REITs and other financial landlords now own nearly 20% of Canada’s purpose-built multi-family homes! That’s up from zero in 30 years when they were initially legalized! Because these corporations are financialized, meaning they rely on investments from large corporations, banks, and capitalists to buy up properties and grow their assets, they have huge reserves of money and are set to become monopolies in the housing sector!

Why is this a problem? These corporations are quickly buying up our homes across Canada and according to one researcher: “On average, after a financial firm acquires a building, they increase the eviction-filing rate by three.” Their business model relies on buying properties in working class neighbourhoods, evicting existing tenants by any means necessary, and raising the rents to accumulate profits through speculation. 

REITs take bets and hike rents

We can understand the strategy of REITs as a four step process:

Step 1) Find and purchase a building where the tenants are paying relatively low, below-market rents betting on future profits.

Step 2) Squeeze more money from the existing tenants using tactics like passing on additional fees for cosmetic and utility changes through Additional Rent Increases for Expenses (ARIEs)

Step 3) bullying, bribing or making it unlivable for existing tenants so they can replace them with higher paying tenants, a process called: “repositioning” 

Step 4) Raising more money from their investors and the stock market to repeat the cycle from step 1.

This is how REITs dramatically increase their rental income: repositioning and raising rents. Combined with the investments from the capitalists, they are on a path to owning more and more!

Meanwhile, their actions cause extreme levels of stress and make our quality of life worse. They don’t restrict themselves to legal methods to push working people out, they will use any means, including illegal tactics such as harassment to make money for their investors.

Let’s look at some examples to understand how they apply this strategy.

REITs have their eyes set on our neighbourhoods

Financial landlords are huge. They make up 17 out of the 25 largest landlords in Canada. Locally, in the 20 years between 1999 and 2021, financialized landlords accounted for 25% of all apartments purchased in Vancouver. 

The two biggest financial landlords are buying up and consolidating fast. For instance, Starlight Investments is Canada’s largest landlord. They own over 54,000 units across Canada (70,000 across the US and Canada). CAPREIT, the largest publicly traded REIT,  has grown from 2,900 homes in Ontario to owning over 47,900 homes across Canada. These two have more than 100,000 homes in Canada! Due to their huge portfolio, they can afford to leave homes empty and thus profit their investors through speculation!

Closer to home, InterRent is a REIT you may have seen around our neighbourhood. Similar to other financialized landlords, they are run by the ruling class and the monopoly capitalists. For instance, Cheryl, a trustee of Interrent is a director for Eastern Ontario and the Atlantic at Scotiabank (remember the third largest bank in Canada).

Their 2023 reports tell us they increased the rents by 7.9% on average in Vancouver. This is through “repositioning”. Owning over 800 homes in Vancouver and five buildings right here in Marpole, they state “The Greater Vancouver area is experiencing higher vacancy as it undergoes the repositioning process”. Again, repositioning is the displacement of working-class tenants with higher-paying, more “desirable” tenants. Now, what do you think makes a tenant more “desirable”? They have five buildings in the neighbourhood and are likely to buy up more!

When speaking to some InterRent tenants in the neighbourhood, we kept hearing very similar stories. One InterRent tenant told us “People think New York is expensive but Vancouver is worse.” Her commute to work is 2hrs but it would be more expensive if she moved closer to work. So she is stuck paying $1750 for a one-bedroom but knows others in the building who are paying a lot more than her.

Another said that “the laundry is poorly maintained yet the prices keep going up.” They are paying $2,300 in rent! They admitted that, as a construction worker, they cannot even afford to live in places they are building!

Many we spoke to noticed numerous unnecessary changes to the building including lighting changes, the announcement of a key fob system, etc. There was one particular example of the Residency Tenancy Branch (RTB) approving a $35/month rent increase for a carpet replacement, which none of the tenants had even asked for! Nevertheless, InterRent went ahead and increased the rent.

This is not unique to Vancouver. InterRent uses these very same tactics in all of their buildings! While they are new to the Vancouver market, REITs like InterRent have been operating in places like Ontario for a long time. In the Stoney Creek towers in Hamilton, where working people struggle to find affordable housing, InterRent increased the rents by 10% in 2018 after making unnecessary cosmetic changes such as painting the exterior of the building!

Obviously, the tenants would not have it! Working people came together, organized themselves and their neighbours to fight back against InterRent’s attack! They demanded that InterRent make genuine repairs, stop the rent increases, and stop with the schemes. Together, they were able to show InterRent what neighbourhood power looked like!

Although the government sided with Interrent on this particular case, they managed to bring their neighbours together, unite and collectively fight back! This shows us we can do the same here!

All these examples demonstrate that financialized landlords such as REITs systematically destroy working class neighbourhoods! They have 20% control but they are spreading to more and more places across Canada. If this continues, our family, our children, and our neighbours WILL HAVE NOWHERE LEFT TO GO!

REITs make our lives worse and the Government is complicit

To conclude, REITs and their government accomplices are allied because the government exists to allow their profits. When corporations are having a hard time, the government makes up new rules to their benefit. For example, Real estate investment trusts do not have to pay any income taxes in Canada. On the other hand, when working people are struggling with inflation, rents, low wages, etc., they are called lazy!

As the very crisis they created is getting worse, the government and the ruling class propose solutions that directly attack us. Calls by these corporations to “sell off public land to private corporations”, simply add to their already massive holdings! It is clear, as they consolidate their ownership, our rents go up!

This is why we say the state’s solution to the housing crisis is corporate profits and the housing monopoly! For corporations, building more means growing the monopolies, not serving the working class. They even tell us this to our face. According to Starlight Investments (Canada’s largest landlord): “providing deeply affordable housing is not [their] job.” Isn’t that crazy?! If that’s not their job, whose is it?

When the government tells us that the solution is to give the growing monopolies more subsidies, who is going to provide homes for the working class? Clearly not the ruling class. They are sucking us dry!

So it is a must that we come together and solve it ourselves. It is a must that we organize ourselves and our neighbours.

This looks like going out into our neighbourhoods, talking with the people in our community and sharing our experiences to unite our struggles.

It is a must that we educate ourselves. It is a must that we build neighbourhood power, AND it is a must that we fight back!  Fight for good homes for the people, while working towards a LARGER VISION that can successfully push back against the elites and their profit-based system. So let’s get to work.