Recently the news is filled with how high the cost of housing has become in Canada. Many people offer reasons why it is high, without much of a real solution to the problem, if there is a problem. We hear that rising interest rates, poor tenancy laws, immigration not enough housing and not enough rental properties. All of these concerns contribute to the issues at hand, but are they the problem to the current issue at hand.

It is hard to evaluate these concerns without looking first at what housing is? Recently I was talking to a landlord about being a landowner. We were discussing the BC tenancy laws fairness for landlords. They indicted as a younger person they were unaware they were entitled to buy land and property. Then they referred to the land barrons of old who controlled all the property and how the peasants just wanted to own land for themselves and that’s all they wanted. I pointed out that being a landlord and renting your property makes you the modern day land barron that the peasants of the past disliked. They were offended by my comments.

What did the peasants of the past complain about?. They complained that too few people owned the land and property and they would have the right to own the land they are living and working on for themselves. A system was created for the peasants to obtain ownership of the lands they worked and resided on. Fast forward to 2023 and the lower income people are complaining that too few people (corporations, or small landlords) own the land and property and they just want the right to live where they are. Over the years has the system changed since the original land barrons began giving the right to own land. 

For any housing issues we need to first look at what is housing expected to be used for?

The peasants wanted to keep the land they worked so hard to make a living at and not have it taken from them at any time by the land baron. It was designed to be a place for them to live. In the past 50 to 100 years property ownership has moved away from a place of ownership for the homeowner to an investment for land barrons to make money and profit. 

In today’s market there are homeowners who don’t live in the property they own and they rent it out instead to a renter using the property as an investment. Should that be the intended use of the property? Many homeowners have properties where they don’t live in the entire space and they rent a portion of the property to a tenant to live in their basement. Does that mean the home they have is too large for their needs? Other owners rent their properties on short term rental platforms where people who want to go on vacation use the owners house as a hotel. Is that the intended use of the property?  Let’s look at these two issues in particular. 

If people are buying properties for the purpose of an investment are they taking away a property that someone else may have bought to live in? Which is the intended use of the property when it was built. The developer advertising them as homes? Not rental properties. 

When the individual rents out the property as an investment property and the rental market changes to not be a favourable market for renting the property owners find ways to take advantage of the laws and the tenants. This creates conflict between landlords and tenants and often causes goverments to change the tenancy laws to protect tenants rights. 

When a homeowner is not using the entire property why are they staying in the location. Should they move to a property that is more suited to their needs allowing another party who does need that amount of space the opportunity to buy that property?. It would be hard to make this happen unless governments banned basement suites. Banning these types of rentals may cause people to sell their properties that are too large and move to smaller spaces. 

With the advent of technology the growth of short term rental properties has exploded to every part of the country. Prior to online platforms short term rental properties were located in what would traditionally be vacation locations. Now we see them in every neighboorhod across the country. Many landlords have moved the basement suite out of the long term rental market and moved it to the short term market reducing the number of rentals. This had become a large market due to the cost and lack of affordable travel accommodations in the market.  

All of these issues create movement in and out of the rental and sales market which has an effect on the cost of housing. What needs to be eveluated first is what is housing? 

My opinion is housing should be used for people to live in. Housing can be a purchased home or rental properties. We then need to determine what a rental property should be?  Should rental housing include basement suites and individuals being landlords of one, two or a small number of rental properties. Should “homes” be allowed to be used for vacation properties? This is not what the original intent of the property was when it was built. All levels of governments have zoning regulations that outlines what a property can be used for.   These short term rental properties are being offered in places that are zoned as residential and normal hotels are located in commercial zoning spaces. 

The difficult issue for governments is if they banned basement suites it will take large numbers of rental properties out of the rental market. If they prohibited or restricted the number of properties individuals could own and rent that would take large numbers of rental properties out of the market. These two actions would increase pressure on the rental market, though both actions may also cause more properties to be on the market for sale and that may reduce the cost of owning a home. Many developments are started by investors, being the first ones to purchase brand new properties and part of this is due to the financing requirements for these new developments. It is possible to change the financing requirements for new developments to allow them to take a longer time to sell the properties. 

Prohibiting the short term rentals in non traditional vacation locations would potentially increase the number of rental units and or properties on the home ownership market.  

I often hear that ther are not enough listings for sale or even to rent. There are lots of properties for sale, maybe reducing the number of agents would create a more lucrative market and less demand to seek new clients. The rental market is flooded with properties, just at a price people feel is unacceptable. 

  

One major issue that is not talked about is the type of housing that is built. Society has changed over the past number of years, yet in many places we are continuing to build the same type of property that was built 40 years ago. More families are divorced and or blended and need smaller spaces, yet only larger houses exist in a particular area, meaning they need to rent out the basement to make ends meet. Landuse is important in all aspects of housing affordability. It’s not just the housing cost but how people access the home. Transportation options need to be improved to give people more options to move around then they did before. Many families only had one car forty years ago, kids walked to the nearest school and today they need two or three due to both parents working, kids working or kids being driven to school. By allowing kids to go to schools further from their home we create greater pressure on our transportation and housing systems. 

Removing the short term rental would require governments to allow more development of hotels properties and they need to be in different locations then the traditional locations.

The other aspect that we have not mentioned or talked about is purpose built rental properties. There needs to be more. All of the above, individual owner rentals, basement suites or short term rentals can be removed from the marketplace very quickly.  Without a regular influx of purpose built rental housing annually the rental market and the home ownership markets will continue to increase in cost at rates higher than inflation. Goverenments should identify, build or contract to build more purpose built rental housing each year to meet the market needs. This will slow development of sales of properties as the developers won’t make as much of a profit and will stop building. 

As you can see with each cause there is an effect that is potentially negative.  

What do you think should be done about the housing costs in Canada?.   

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