Advocates of affordable housing in Greater Victoria say they are worried that the increase in the sales of older buildings in the area is contributing to the housing crisis, and are calling on the provincial and federal governments to step in.
According to the Victoria Housing Strategy Review, about 4,000 new residential units were on track to be added to the rental market this year, and more than half of those are targeted for people with low to medium income.
However, the report also shows an increase in sales of older buildings to real estate investment trusts (REITs) — which own and finance income-generating properties — or other large institutional investors.
"All levels of government are stepping up to build new affordable housing, but we are losing it faster than we can build it," said Jeremy Loveday, Victoria councillor and Capital Region Housing Corporation chair, on CBC's On the Island.
REITs pool the capital of numerous investors and are able to purchase old properties above their market value, Loveday explained.
According to the report, Victoria's multi-family sector had a record-setting year with $761 million in investment sales in 2021, double that of 2020. The previous record of $478 million was in 2019.
Residential land, which also attracted a lot of interest, was primarily bought for the development of multi-family housing across Greater Victoria, the report said.
"We just can't compete with them. They have too much money and too much access to capital," Loveday said.
"The issue is we are losing affordability faster than we can gain it. We need to preserve the existing affordability if we're going to have a chance at turning this housing crisis around."
Loveday said profits from purchasing old properties should be re-invested in affordable and co-operative housing.
He said the federal government should also place a right of first refusal for public and non-profit agencies, allowing them to make an offer to buy old housing stock first.
Vacancy control policy needed, says advocate
Advocates say the increase in sales of old buildings to REITs means rising rental rates and home prices. Under current B.C. laws, if a tenancy agreement ends, landlords can set a new rental rate — even if the tenant hasn't changed.
"We're seeing shocking increases in rent," Douglas King, executive director of Together Against Poverty Society in Victoria, told CBC News.
"One thing we see is a lot of tenants taking agreements or payout from landlords to move, to get kind of cash in hand on the assumption that they're going to have to move eventually anyway."
Most tenants in these buildings have been living there for more than 30 years, paying rent as low as $800 to $900 for a one-bedroom unit in Greater Victoria, he said.
"The going rent for a one-bedroom apartment is twice that amount, so we've seen 50 per cent to 100 per cent rent increases for some of these older tenants."
King added that tenants face rent increase and uncertainty — a problem that building more affordable rental units will not fix.
He said the province needs to implement a vacancy control policy to control drastic rent increases and ensure people are not forced out of their homes.
"So a change in tenant doesn't give you the opportunity to raise the rent as much as you possibly can," King said. "So it insulates us from these kind of rapid raises when the market is hot or demand is high."
In an email statement to CBC News, the Housing Ministry said the province is aware of people's concerns about the involvement of REITs in the rental market across Canada.
It said the province is working with all levels of government to look into the tax treatment of large corporations that invest in residential real estate.
"We know that things are especially hard right now for people. Canada is seeing the highest levels of inflation in decades, especially when it comes to housing costs, and we are reviewing policy options to continue to support British Columbians," the ministry said.
In April 2018, Premier John Horgan appointed a Rental Housing Task Force to examine what changes needed to be made to B.C.'s tenancy laws.
During its province-wide consultations, the task force said it heard from renters, seniors and advocates who were concerned about rental housing affordability and their desire for vacancy control. The task force also heard from landlords and developers who opposed the idea.
The task force determined vacancy control could serve as a disincentive for landlords to conduct necessary repairs and maintenance, the ministry said.
"[It] determined that rent control tied to the unit would have the unintended consequence of reducing affordable rental stock or reducing investment in needed repairs," the statement said.