According to figures released by the New Brunswick government in its May 2021 Housing Report, 30% of property purchases were made by businesses outside the province in 2020, up from just 7% five years ago.
Building owners are changing, with more developers from outside the province and property management companies
Can we read in this report.
Pay more or leave
He says the impact is huge on low-income families Matthew HayesD., professor of sociology at the University of New Brunswick, and spokesperson for the New Brunswick Tenant Rights Coalition. Many affordable units are disappearing and renters are faced with a heartbreaking choice: pay more or move and risk not finding a new home.
Mr. Hayes cites the example of the company Killam properties. [Ils ont] Project to return 1,300 units. This repositioning means that they will take buildings or rental units at fairly reasonable rates, and increase them
complain.
The Executive Director the company, Philip FraserHe replies that his company does not evict its tenants to increase rents. I’m sure there are a few who will, but we are very happy to have tenants who want to live in our buildings for as long as they want.
Philip Fraser, CEO of Killam apartment reit, stresses that his company does not evict tenants and then increase rents.
Image source: Killam apartments Reit
However, the Executive Director From killing You realize that about a third of renters leave – of their own volition – each year. In these cases, rent increases may be larger. It’s not that you’re hurting someone by raising the rent.
he thinks.
However, this type of increase also contributes to reducing the amount of affordable housing in a neighborhood, town or village.
Great support for financial institutions
To enhance access to property, the federal government since the 1980s has been offering a financial product that allows banks to offer more mortgage loans. here CMHC Who is responsible for that.
These are securities, made up of mortgage loans, that CMHCsecured and sold to investors. This process is called securitization.
securitization
The CMHC He buys blocks of mortgage loans from banks. These loans are resold in the form of securities to the investors, returns are given to them, which are paid out from the repayments made by the borrowers. This gives banks liquidity, allowing them to provide more mortgages.
From 2001 to 2020, annual securities are issued by CMHC From $8.9 billion to $172 billion.
Thanks to securitization, consumers are buying more homes, yes. But the increase in sales has also created upward pressure on prices, which has grown in recent years, says Steve Pomeroy, who teaches at Carleton University’s School of Public Policy and Management.
” You can say that real estate prices are very high due to government policies. »
Ten years ago, in 2012, the Institute for Social and Economic Research and Information sounded the alarm. In a report, the organization noted that in More than subsidizing real estate development that harms housing affordability, these practices stimulate the growth of family debt
.
Reduced access to property
Consequently, fewer and fewer families can access the property. These families, many of whom have a good income, often have no choice but to rent an apartment. This contributes to an increase in the number of tenants looking for housing.
Access to the property is more difficult.
Photo: Julian Lechashore
We are witnessing a domino effect, warns Willie SchultenFrom the Apartment Owners Association of New Brunswick.
There are not enough units. The pressure means that people who live in more luxurious apartments have to choose more modest apartments, etc. Ultimately, it pushes people onto the streets and creates affordability problems.
thought mr. sholten.
Big tax breaks
The federal government allows real estate investment trusts, REITs, not to pay income tax, unlike other trusts. Shareholders pay tax only when they receive a dividend.
growth for real estate investment funds It was amazing. They didn’t own homes in 1996, and they owned 200,000 in 2020.
These funds receive their funding from investors. One of the growth strategies real estate investment funds It is a “repositioning of housing”, ie, an increase in rents.
Tenants want politicians to act to protect tenants rather than directly subsidizing housing construction by profit-seeking developers.
Photo: Radio Canada
Philip FraserThe Executive Director From Kilam Rit Apartment, is one of the largest owners in Canada. confirms that real estate investment funds Pay more than their share of taxes. He believes that property taxes and taxes paid to governments are too high. According to him, 40% to 50% of his company’s expenses are related to the payment of taxes and fees.
Despite these fees, the net income killing It is experiencing strong growth. In its Q4 2021 report, the company reported a 95.5% increase in net income compared to 2020. It is nearly doubling.
if real estate investment funds The benefits, however, aren’t the only homeowners who benefit from the Canadian tax system, according to Steve Pomeroy: There are many ways to avoid taxes if you have a good accountant and tax attorney
.
What confirms Executive Director From killing. Practically no one pays corporate income tax in Canada for apartments
trust.