A new report from Dal Legal Aid found most of the city’s rental housing is in the hands of large companies, specifically chain landlords and financial landlords.
Analyzing a total of 1,420 properties, consisting of 50,759 units in total (77.2 percent of all registered units in HRM, all with five or more units), they found that 20 landlords own 56 percent of their sample.
Furthermore, 19 owners have ties to more than 1,000 units or more apiece, including individuals with property ownership through multiple companies and other entities.
To community legal worker and report co-author Mark Culligan, this concentration of rental housing ownership presents several massive problems to the city’s renters, tenancy rights and even our democracy.
“When units are owned by financialized landlords, they’re more likely to see increases in rent, in eviction applications and poor housing conditions,” says Culligan in an interview with The Coast.
He says financial landlords, defined as any entity in which third-party investors can benefit from real estate (Real Estate Investment Trusts, publicly-listed companies, banks, asset managers, etc.), typically look for properties that are undervalued so they can acquire the property, flip the tenants and boost the rent to extract revenue. These entities also typically have resources to handle disputes in tenancy court that make it difficult for tenants to enforce their rights.
Financial landlords own 19.2 percent of the rental units in the report’s sample. Out of the nine primary ownership groups identified in the report, eight of them are based outside of Halifax, mostly in Toronto.
In their research, Dal Legal Aid delved into the Registry of Joint Stocks to identify what individuals were involved with which companies. Many landlord companies in Nova Scotia are obscured through a numbered naming system, but by looking at the directors of said companies and cross-referencing their directors with that of larger companies, they were able to identify who has investments in what. They have listed those with ownership over the greatest amount of units in the report, having dubbed them the 1,000 Club. This includes three firms and 16 individuals.
The problem with this concentration on a larger scale is that it can influence policy around rental housing.
“When we have a few big, powerful actors who have a lot of money, it’s a basic tendency of political economy that the small group of concentrated owners are going to be able to exert more influence over regulatory and political processes,” says Culligan.
Their influence could extend as far as Nova Scotia’s Residential Tenancies Act, the guiding document for all tenancies in the province and one that has faced criticism for a lack of renter protections.
This also presents another problem: how money influences the democratic process.
“When you have a few big players, many of whom are donating to political parties at pretty high rates, they are able to influence the development of the regulatory system that’s supposed to be protecting tenants,” Culligan says.
During the on-going housing crisis, the policy of the provincial and federal government has been to build more units to meet demand. This often means low-interest loans or delayed interest loans to private corporations. Culligan calls this a “trickle-down housing policy”.
“What’s going on as part of that (policy) is accelerating existing trends towards growing wealth and income inequality,” he says. “For the future, I think there’s a big question about what that will do for democracy as a whole when we have more and more of this important sector of our economy dominated by fewer and fewer players.”
One of the benefits of this study is the evidence it provides in the argument of extending the provincial 5 percent annual rent cap, which is set to expire in 2027. Culligan says the landlord lobby has argued the rent cap is driving small landlords out of business.
“It raises questions about whether or not they have the interests of small landlords,” says Culligan. “It raises questions about whether or not they have the same interest as the big players in the industry.”
Small landlords are experiencing rising costs due to higher electricity rates, property taxes, water bills, oil prices and insurance costs.
“In a normal, healthy system of rent control, they would be able to pass that on in the form of above-guideline increases,” says Culligan. “Small property owners could do that relatively easily because they know the expenses for their own properties.”
Wide-scale above-guideline increases across the units owned by a large housing company would have serious issues, he says. Not only would it not be as economical, it would likely also clog up the residential tenancy court with disputes, effectively breaking an already stressed system.
Limitations
Since the report only analyzes buildings with five or more units, accounting for its 77.2 percent sample size, there are underrepresented categories that could be studied further with an analysis into the other 22.8 percent. Notably, chain-managed companies, which only made up 3.5 percent of the sample size, single owned rental housing at 2 percent and co-op housing at 0.2 percent,
Chain management companies typically manage properties on behalf of smaller landlords, those who would be more likely to fall within the under-four-units category. However, they also don’t have an obligation to report which properties they are managing which also impacts the data.
“It’s not going to show up on ownership records or the Registry of Joint Stocks,” says Culligan. “We tried to look at their website to see what properties are related to it, but that’s only going to get a small fraction of the total housing stock that they’re managing.”
According to Culligan, it’s likely the remaining housing stock, the approximately 15,000 units not included in the study, does include properties that are managed by chains or have multiple owners. Single owners are also likely included in this percentage, as well as co-ops.
When it comes to co-ops, in particular, Culligan explains they are a great alternative to private sector rental housing. With more funding and the establishment of support services, their prevalence could alleviate the worsening rental housing market in Nova Scotia.
“It’s a proven alternative to private sector ownership,” says Culligan.
