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Canadian
Centre for Policy Alternatives
FOR
IMMEDIATE RELEASE
June 11, 2002
Profiting
from a manufactured housing crisis:
New technical report reveals that investors bank
tax-free earnings as tenants struggle to pay rent
TORONTO
-The 4.8 million women, men and children living in rental housing
in Ontario remain mired in the province's worst housing crisis in
more than a decade. But the bad news for millions of renter households
is a virtual goldmine for investors and their financial advisors,
including a former assistant deputy provincial housing minister.
The province's over-heated rental market is showering them with
big returns even as tenants struggle to make their monthly rent.
They are buying up rental buildings with moderate rents in Toronto,
Mississauga, Burlington, St. Catharines, Ottawa, London, Brampton,
Kitchener-Waterloo and other communities, then using weakened tenant
protection laws to drive up rents and bank the profits, a big chunk
tax-free.
These findings
and other details about Ontario's province-wide housing crisis and
homelessness disaster are revealed in a new technical report "Profiting
from a manufactured housing crisis," released today by the
Ontario Alternative Budget Working Group of the Canadian Centre
for Policy Alternatives. The report was written by Michael Shapcott,
a Research Associate at the Centre for Urban and Community Studies
at the University of Toronto.
The study reports
that Dino Chiesa, a former assistant deputy minister in the Ontario
Ministry of Municipal Affairs and Housing, is now Chief Executive
Officer of Residential Equities Real Estate Investment Trust (ResREIT).
He is helping investors take maximum financial advantage of provincial
policy and program changes. Two recent ResREIT acquisitions include:
- 100 Wellesley
Street East in Toronto, a 424-unit apartment building that ResREIT
bought in 1999. Before ResREIT, the average rent was $839. Two
years later, rents had jumped 22% to $1,021. The province's official
rent review guideline was 2.6% in 2000 and 2.9% in 2001. ResREIT
raised the rents four times higher than the guideline amount.
- 2515 Bathurst
Street in Toronto, a 115-unit apartment building bought in 1998,
when the rents
were an average of $660. Ontario's official rent review guideline
was 3% in 1999, 2.6% in 2000 and 2.9% in 2001. ResREIT pushed
up the rents 37% over three years to $902, well over four times
the official rent review guideline.
-30-
The full text
of the technical report is posted at http://www.policyalternatives.ca.
[Editor's Note:
The technical report on CCPA website is only available
as a PDF file which requires Acrobat Reader -- you can view, print,
or download the report in rich text format on the DAWN Ontario website
at this pinpoint URL: http://dawn.thot.net/docs/housing.rtf]
For more information
or to arrange an interview with Michael Shapcott,
contact Erika Shaker at 613-563-1341 ext. 310 or 613-282-7773.
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Profiting
from a manufactured housing crisis
Fact sheet
by Michael Shapcott
- about 4.8
million people live in rental housing in Ontario--that's 1.8 million
renter households or about 40% of the provincial population. The
rental housing market is facing two related crises: a supply crisis
(Ontario's rental vacancy rate is stuck at a dangerously low 1.7%)
and an affordability crisis (average rents are rising at double
the rate of inflation).
- a key cause
of the supply crisis was the decision by the Harris-Eves government
in 1995, when it was first elected, to cancel 17,000 units of
affordable rental housing approved for development and to stop
all funding for new affordable housing. In recent years, the private
sector has built about 2,000 units annually, but those modest
gains are offset by thousands of units that have been demolished
or converted to non-rental uses. Ontario needs 18,400 new rental
units annually, according to financial projections from the Ministry
of Finance.
- the affordability
crisis has grown worse since the Harris-Eves government introduced
its so-called Tenant Protection Act in June of 1998, which weakened
tenant protection laws and created a "fast-track" eviction
process that has forced more than 200,000 households out of their
homes in the past two and one-half years.
- property
developers and financial advisors are taking advantage of the
worst housing crisis in Ontario in more than a decade to deliver
big returns, much of it tax-free, to wealthy investors. They are
using policy and program changes introduced by the Harris-Eves
government to drive up rents and create handsome returns for investors.
- tenants in
two rental properties profiled in the technical report paid rent
increases of 22% over two years and 37% over three years - four
to five times the official rent review guideline - after being
acquired by private property developers.
- the study
calls for provincial spending of $700 million annually to create
15,000 desperately needed new affordable units.
Internal
Links on Housing
Tenants
Hit with 165% Increase in Tribunal Fees - Ontario Rental Housing
Tribunal (ORHT) - Media Release dd June 10, 2002
National
Housing and Homelessness Network - Media
Advisory - May 26, 2002
A
primer on the federal-Ontario housing deal: Three key questions
on the plan for 10,000 new units
Reality
check: The truth about rental housing in Ontario!
by
Michael Shapcott
National
Housing and Homelessness Network Province-by-province update: 9
of 10 fail to make the grade
Feed
the Kids AND Pay the Rent Campaign - Read the FACTS and Get
INVOLVED!
Bill
134 - the Fair Rent Increases Act introduced by David Caplan,
MPP Don Valley East Liberal Housing Critic
Women
& Housing in Canada: Barriers to Equality" Report by CERA - Centre
for Equality Rights in Accommodation Women’s Housing Program
Six
months after Quebec City housing agreement, but... Where's the housing?
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This
page was created/updated on June 11, 2002
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