The Financialization of Housing: The Alberta Advantage

The Financialization of Housing: The Alberta Advantage

Why does Edmonton seem to be a magnet for financialized primary or multi-family rental housing?

Like all communities across Canada, Edmonton has a housing problem. And despite many best efforts, this crisis only continues to worsen.

How can we best understand and fix this issue of (in)access to adequate housing?

The key to understanding and effectively addressing our housing crisis is to take a human rights approach (UNHRC 2019).

One way we can apply a rights based approach is by identifying major trends and emerging challenges that negatively impact housing rights (UNHRC 2019, p 20).

One major trend that has been identified as a driver of our prolonged housing crisis, and emerging challenges such as the rise of unacceptable housing, is the financialization of housing.

The Tenant Landscape in Edmonton

Of all tenant households living in private primary rental housing in the city of Edmonton in 2021, the AHSL estimates:

  • 51% live in secondary rental suites (orange pie piece below)
  • 49% live in primary rental housing (green pie piece below)
    • 23% in financialized rental suites (dark blue bar below)
      47% of primary rental tenants
    • 26% in non-financialized rental suites (light blue bar below)
      53% of primary rental tenants
Click on image above to enlarge.
Sources: (CMHC, Statistics Canada)

Note: Primary rental housing means housing that is purpose built to be rental housing, such as apartment buildings or row house complexes (more details here).

As of 2022, the AHSL estimates that 48% of primary rental suites are financialized*.

Nationwide it is thought that 20%** of primary purpose built rental suites are owned by financialized entities.

Sources: AHSL 2023, August 2022 p.iii

The Alberta ‘Advantage’

There are a number of factors that make Alberta, and Edmonton, a highly sought after location for current and future financialized owners:

  1. 31% of current MLAs in Alberta are landlords, or have spouses who are landlords. This is more than double the estimated rate of any other province across Canada (including Ontario, British Colombia, and Saskatchewan (Mastracci 2021).
  2. Alberta is one of the few remaining provinces that has yet to sign an agreement with Statistics Canada for inclusion in the Canadian Housing Statistics Program – a dataset that addresses some significant housing data gaps including the frequency and timeliness of housing data as well as housing characteristics, property owner details, and how ownership is financed.
  3. As of December 2022, Alberta and the Territories are the only regional jurisdictions that have yet to begin any work on creating a beneficial ownership registry. And Alberta is the only region that has been publicly dismissive of the results, and implications for Alberta, from the Expert Panel on Money Laundering in BC Real Estate’s 2019 Report – Combatting Money Laundering.
    Learn more about this here.
  4. In 2021, the provincial government in Alberta created bill 78. This bill makes privatizing and selling off at least 26,100 homes (half of Alberta’s non-market housing) possible. Even though ‘affordable’ rental housing created by private developers is not actually affordable. And tenants reliant on social or non-market housing do not have alternative housing choices (Hearne & Murphy 2018; Farha et al. 2022 p.2). While details have still yet to be provided on the claim that bill 78 will create 25,000 more homes over 10 years, at minimum this would add a further deficit of 1,100 non-market homes (adding to already cumbersome wait lists in Alberta, which include over 6,000 households in Edmonton alone).
  5. There is no land transfer tax in Alberta – only registration fees.
  6. There is no HST in Alberta (only GST) – a draw for acquisitions or new developments, as well as monthly rent collection.
  7. Alberta is the only province in Canada that offers residential mortgages that are non-recourse on a wide scale. Referred to as ‘jingle mail‘, borrowers with mortgage loans with a minimum of a 20%* down payment can walk away from the home the loan was taken out for – after the house is relinquished no other assets can be seized by the lender.
    *Meaning loans uninsured by the Canada Mortgage and Housing Corporation (CMHC).
  8. Tenant laws in Alberta are some of the weakest across Canada and are more protective of landlords – heightening tenants’ vulnerabilities and dependence on landlords for security of tenure.
    • Areas that have weak or no rent control at all, such as the case of Alberta, are highly sought after by housing investors (p.11).
      • Landlords in Alberta cannot increase rents more than once every 12 months, but there are no limits on the amounts of rental increases. Unlike rental subsidies – which are capped.
    • Eviction orders are relatively easy for landlords to access, especially in the case of being unable afford one’s housing–which is in fact, a human rights violation.
      • There are cases where landlords have used rental increases or cancelling a tenant’s direct rent supplement as a tool to passively evict a tenant rather than fulfill their duty to accommodate a resident’s disability/disabilities.
    • It was only in 2018 that age became a protected ground, and condominiums still have until 2032 to address this.
    • There is still no mandatory pet legislation in Alberta – pets are completely up to the discretion of landlords. Where allowed, steep additional fees (large damage deposits or ongoing monthly fees) are often cost prohibitive.
    • Residents in mobile home communities have no tenant security protection under provincial legislation (Lund 2021).
    • Private landlord blacklists of tenants are rampant despite their illegality – due to the misappropriation of private information (Personal Information Protection Act, PIPA) and the clear violation of privacy rights (Freedom of Information and Protection of Privacy Act, FOIP Act). Landlord blacklists are also an additional violation of human rights by also blocking access to adequate housing.
      • PIPA and Alberta’s FOIP Act are regulations that are provincially unique, and should be effective here.
        • However the onus is on renters to know/suspect they are on a list and to file a privacy complaint – and investigations can take up to 12 months.
        • In the meantime private lists can be easily deleted only to then pop up somewhere else on a number of social media platforms.
  9. Compared to other cities across Canada, Edmonton and Calgary rank high in conditions favorable to developers.
  10. Council at the City of Edmonton recently voted to give landlords who own rental buildings with 4 or more suites an 11.7% tax cut over the next 5 years without any regulation or stipulation on tenant affordability.
    • Despite:
      • Multifamily (apartment and row homes) completions intended for the rental market already being the highest proportion of all completions in 2021 and 2022 (39.4% and 43.1%).
      • And even with high vacancy rates in 2021 and 2022 (7.1% and 7.2%) multifamily rental suites had close to the same number of housing starts as single family dwellings in 2022.
    • The AHSL estimates that around half of the recipients of this tax cut, ~48%, will be financialized owners. The remaining 52%, being non-financialized owners (of primary rental housing).

Click on each graph below to enlarge:

Learn more about the financialization of housing and what this means for Edmonton:

The National Housing Advocate also has excellent resources.