A property rental company that boasted record revenue growth during the last three years of pandemic intends to increase rent for more than 500 High Park tenants. Residents received notice from their landlord Great West Life Realty Advisors (GWLRA) to increase their rent by as much as 14 per cent. However, the tenants stood ground to stop “drastic, unaffordable” rates.
Ben Scott, a single parent living in a two-bedroom apartment with his son, received N2 letter in October 2022 with an 11.6 per cent increase. It meant an additional expense of $3000 a year. “I had to seriously think about changing where I live,” he said in an interview with CBC News. “I happened to get another job that afforded me a little bit more, but the gain that I get from that job is essentially just going to cover my rent.”
Scott was not willing to accept the increase without a fight. With some guidance from local tenant organizers in the Democratic Socialists of Canada, he started inviting his neighbours to form a tenants association. The group sprung forward canvassing their neighbours and growing its organizing base in a few weeks. On March 27, 2023, dozens hand delivered a collective letter to their landlord in response to notices of increase issued the past several months. “GWLRA bleeding us dry!” they chanted.
The rally was held at the downtown Toronto headquarters of GWLRA and organized by members of the Livmore High Park Tenants Association (LHPTA). The budding group represents more than 1000 tenants in two west end towers owned by High Park Bayview Inc. operating as Livmore High Park. The legal owner represents investors including agent GWLRA.
What is GWLRA
GWLRA, through its parent company Canada Life, is a wholly-owned subsidiary of Winnipeg-based insurer Great-West Lifeco, which in turn is part of Power Corporation of Canada‘s group of companies. GWLRA oversees assets and portfolios invested through Great-West Life Canadian Real Estate Investment Fund No. 1 (CREIF) and London Life. The investment fund had 126 properties and $6.6 billion in real estate assets as of March 31. Acting as fund trustee, GWLRA in essence is a financial landlord.
In a fourth quarter of 2022 bulletin, GWLRA stated its revenue from investment properties rose by 7.2 per cent in 2022. Looking back in a 2021 annual report, CREIF generated a gross annual return of 11.6 per cent, which was described as its “strongest annual performance since 2012.”
GWLRA Residential (formerly known as Vertica Resident Services) manages multiple multi-residential properties in the dense neighbourhood of High Park-Swansea. GWL-managed lands include most of the city block bounded by Glenlake Avenue to the north, Bloor Street West to the south, Pacific Avenue to the east and High Park Avenue to the west. It also remains as one of the largest landlords in Toronto by number of units under management.
Livmore High Park welcomed its first move-ins at 55 Quebec Avenue in early 2020, while 50 High Park Avenue was completed in December 2020 and started leasing in February 2021. The purpose-built rentals filled in spaces between existing apartment buildings and added amenity pavilion for the exclusive use of the tenants. Around that time, there was a rent freeze in Ontario due to the COVID-19 pandemic, but as it expired GWLRA, like other landlords, raised rents through the roof.
The provincial government regulates rent by setting guidelines through the Landlord and Tenant Board. For 2022, this amount was fixed at a maximum of 1.2 per cent, and 2.5 per cent this year. The guideline is based on the Ontario Consumer Price Index (CPI), a measure of inflation calculated monthly by Statistics Canada using data that reflects economic conditions over the past year. The Bank of Canada projects inflation to come down quickly to around 3 per cent in the middle of this year because of lower energy prices, improved supply chains and restrictive monetary policy.
Typically, landlords who increase rent will use the maximum amount, so this also reflects the average rent increase from year-to-year. However, rent cap rules only apply if a rental unit was occupied before November 15, 2018 when the province removed rent controls on newly occupied suites like Livmore High Park.
Fair market rent?
On March 24, GWLRA Residential sent a letter to its 55 Quebec and 50 High Park residents. According to its Vice President for National Operations Todd Spencer, the new rates are necessary due to increased overhead costs, such as maintenance, despite the apartments being new-builds. The management runs sponsored ads calling the buildings upscale apartments and offering one month free rent. The letter also said that increased rental rates issued are “below the current market rent,” citing a online post from property rental platform Zumper.
According to the data released by Rentals.ca and research firm Urbanation, apartment rent actually declined across the country in February for a third consecutive month.
“Toronto experienced the second fastest annual rent growth of 22.8 per cent despite recording a 0.9 per cent three-month decline, reaching an average of $2,838,” reads the report, placing Ontario’s capital just behind Calgary, Alberta, for the most change on a yearly basis. “One-bedroom rents in Toronto were well above the national average, with one-bedrooms averaging $2,513, two-bedrooms averaging $3,324, and three-bedrooms averaging $3,843.”
But Toronto rental costs continue to soar. In its latest report, the average cost in purpose-built rental buildings reached the lofty mark of $3,002 per month during the first quarter of 2023. Several factors are driving up the “record high” market, including increased overall population growth, peak interest rates affecting prospects of homeownership, and broader labour market improvement.
Still, simply comparing the rent prices as one navigates the private rental market does little.
Political economist Ricardo Tranjan says that the market is actually a “poorly regulated” one in which landlords extract profit from the tenant class. He writes that there is no housing crisis but that the current model operates in the interest of the “parasitic but powerful economic elite” in Canadian society.
To borrow from Tranjan’s new book The Tenant Class: “Landlords grow wealthy while tenant families experience financial insecurity, just like greedy bosses enrich on the backs of low-wage workers. The dominant ‘housing crisis’ narrative is part of the problem. It exempts landlords and governments from responsibility by suggesting that excessive rents are a new and unexpected problem that requires complex technical solutions. While the experts look for those solutions, the market continues to do its thing.”
Like many large landlords based in North America, GWLRA uses software called YieldStar for de-facto rent calculation based on data analytics. Deployed by a Texas-based company called RealPage, the program incorporates algorithm to suggest daily prices for every available unit. A landlord can then either accept or reject the recommendations. According to its executives GWLRA chose not to adhere to the numbers provided by the rent-setting software but they choose to offer numbers that are “more manageable for tenants.” However in October 2022, independent news outlet ProPublica reported findings that the computer-generated pricing contributes to rising rents in various cities. The investigation caught the attention of some politicians, raising concerns and launching a US Senate probe on potential federal law violations. Some critics said the software’s wide adoption could lead to landlords coordinating prices and what is “characteristic of a cartelized market.” No similar federal inquiry in Ottawa’s Parliament Hill has been conducted.
Bring back rent control
Meanwhile, Ontario New Democrats have been calling for affordable rent to be a priority in the province’s housing plans. MPP Bhutila Karpoche (Parkdale-High Park) stood with Livmore High Park tenants calling once again for measures to control rent for all units in Ontario. The legislation was proposed in 2021 but it didn’t get past second reading in the legislature.
According to Karpoche, Bill 48 would establish new guidelines for the rent that a landlord may charge a prospective tenant. It would also eliminate renovictions, which happen when landlords evict tenants by claiming they must make repairs or renovations.
The proposal includes the creation of a “rent registry” under the Landlord and Tenant Board that would keep track of how much landlords charge in the past. In addition, Karpoche said landlords should not be allowed to raise rents between tenants. The rule, known as vacancy decontrol, contributed to the province’s housing crisis, she added.
Spring also brings the incumbent Ford government to table its new foray to address housing issues: Bill 97, Helping Homebuyers, Protecting Tenants Act. No full rent control, the province says. If either bill passes, the amendments to the Residential Tenancies Act would be the first rewrite of tenancy legislation in decades. For a bill to become law, it must pass through three separate readings in Queen’s Park before being granted royal assent.
Navigating the private rental market is hellish right now. Demand is outstripping supply, with costs continuing to skyrocket. So there’s really no debate whether there is a need to reinstate rent control during and between tenancies. All levels of government need robust investments for public and non-market housing options as well. While the current situation appears to be a hopeless one, tenant organizing as in the case of LHPTA can leverage renters’ collective power to demand important and necessary changes to their homes.
Just as the warm weather comes with the sign of cherry blossoms in High Park, tenants groups are blooming in response to the hot rental market.
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