493
Corporations hoarding homes thank Canadians for enthusiastically blaming immigration
(www.thebeaverton.com)
this post was submitted on 22 Aug 2023
493 points (97.9% liked)
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Blaming corporations is a cop-out. Small "mom and pop" landlords are just as capable of gouging their fellow Canadians for profit. At least there are real-estate corporations that build stuff instead of being purely parasitic.
And at least the corps have to pay tax on their profits. Private owners who bought when things were cheap and are now multimillionaires got all that money effort-free and tax-free thanks to the principal residence exception.
This stinks. I'm not a landlord, I do own my own house.
I wish i payed 15%. I'm not even counting on the rebates they get for setting up shop places, or developing "doing research". Corporations quite often do not pay their fair share. Corporations do buy up swaths of real estate.
Almost nobody got their shit effort-free, you still have to go in with the bank and pay them a shit tonne of money. Principal residence only applies to first residence, and you still have to pay taxes on your residence (I know, because I pay them).
And here's some news for you: housing was always relatively expensive, people who bought gigantic mortgages took on a whole pile of risk, made the banks rich, and sometimes came out richer for it; that doesn't make them bad.
How exactly do they get it tax free due to principle residence exemption?
If you bought your house in 1986 for $60k, and then sold it in 2021 for a $million, and you lived in it for those 25 years as your principal residence, then that is tax-free.
Obviously this is less about landlords than just homeowners who are celebrating their good fortune, but still: blaming corporations is a cop-out.
Corporations are 100% to blame for the rising prices. They are increasingly buying new and old homes (single family, apartments and condos).
According to the CHSP, more than a fifth of all houses in British Columbia, New Brunswick, Nova Scotia and Ontario were owned by investors in 2020. That is a fucking insane number considering the current crisis.
https://www150.statcan.gc.ca/n1/pub/46-28-0001/2023001/article/00001-eng.htm
That is not the only factor, but it is undeniably an issue in the ballooning price of rent and home value.
This does not necessarily mean they're being bought by corporations. Plenty of individual buyers are investors. And remember, investment properties go onto the market to get rented. If there was really a massive glut of investment properties being created, rents would be plummeting. Is that happening? Of course not. And houses are not only 20% too expensive. And if Toronto made 20% more housing would it solve the housing crisis, would it offset the damage done by "investors"? According to the CMHC, Toronto is only hitting half of its target for completions needed to put a dent in this. Mississauga is doing far worse (which is why I'm deeply skeptical of mayor Bonnie Crombie's attempt to take over the OLP -- she got me to register to in the provincial liberals leadership race just to vote against her).
In Toronto, the number of bedrooms per year built peaked in 2001, and went down to below half by 2019. The housing crisis happened because demand went up and supply went down. Nothing more, nothing less. And the reason supply went down isn't "corporation" or "investors", it's municipal governments that made housing illegal and the provinces that enabled them.
https://twitter.com/benmyers29/status/1222613287092785159
Imagine if there was a starvation crisis and it took years to get approvals to plant more farms. That would be insane, right? And it would also be insane if people blamed "farming corporations" for starvation, right? And yet that's where we are right now. People blaming "greedy developers" for the housing crisis that's caused by governments making housing illegal (unless they get a special one-off pardon, like a murder in the USA) combined with rising immigration.
If it really was just investors buying up everything, rents would be cheap. But since it's expensive both to rent and buy, it means there's just not enough stuff for all the people who want it. And if you can make a million dollars for putting up a unit, why wouldn't you? Well, if somebody was stopping you.
Your point is that blaming corporations is a cop out. My point is that blaming the corporations is not a cop out, and one of the reasons, not the only reason. NIMBY and zoning regulations are definitely also affecting the crisis.
That is such a naive point of view. Landlords would rather leave a unit empty instead of lowering rent because otherwise it would lower the value of their investment.
The housing market isn't a free market like you seem to imply. People need to have housing, so landlords will definitely gouge their tenants because they can and we see an article pretty much daily of renovictions and rent ballooning up once the lease is at term. Having more supply would definitely alleviate this problem, but it is only part of the solution. REIT buying swath of houses with lower interests than individuals is definitely inflating the prices because they can buy housing at a higher price, causing the other houses in the area to raise as well.
Sorry, but how does that tax exemption work for the landlords then? They have to live in the unit for at least a year to avoid capital gain on the property.
Yeah, that one is well known. I was trying to figure out how they made that work with rentals, which don't have that exclusive.
That's 9%/year annual rate of return (assuming 2% inflation), which is good, but not unheard of (here's the calculator i used. This ignores all the money they put into the place while they lived in it (roof's and heaters etc aren't cheap). It also discounts that they need to find a place to live in 2021 where all houses just got much more expensive then back in 1986.
That whole time they were paying property tax.