As Canada’s conservative heartland goes to the polls, the incumbent United Conservative Party is planning to sell much of Alberta’s social housing to landlords. Under the plan, landlords will prosper, and tenants will suffer.
A view of a construction site of Telus Sky, a skyscraper in downtown Calgary, September 10, 2018, in Alberta, Canada. (Artur Widak / NurPhoto via Getty Images)
The oil-producing, prairie province of Alberta, Canada’s conservative heartland, is going to the polls on May 29. If reelected, the United Conservative Party (UCP) plans to sell off most of the province’s remaining twenty-seven thousand social housing units to private landlords.
Alberta is not immune to the country’s housing crisis. The UCP plan comes amid skyrocketing rental costs in the province. It is difficult to see how the plan will not exacerbate the province’s rental crisis, but the UCP claims that the scheme is somehow part of its plan to “support affordable housing.”
This absurd proposal is a perfect example of supply-side “solutions” to the housing crisis — it is a “solution” that will actually make matters worse. It appears that the party believes that by privatizing social housing, thereby raising housing costs, it can . . . reduce housing costs. It is wishful thinking at best, mystical obfuscation at worst.
The UCP plan will not work as advertised. Similar programs, like Margaret Thatcher’s Right to Buy, which transferred 1.5 million publicly owned properties into private hands, did nothing to improve housing in the UK. In fact, for most people, it was a total disaster. For landlords, it was a godsend. The UCP seems eager to tread this Thatcherite path.
The plan may be a windfall for landlords, but it will have devastating consequences for people who need homes. The UN has declared adequate housing a human right. The UCP’s program seems tailor-made to hinder the pursuit of a society in which this right obtains.
Selling Off the Housing Stock
According to the province’s plan, the UCP aims to sell off “most” of the Alberta Social Housing Corporation’s three thousand properties — which accounts for about twenty-seven thousand units — to the private sector over the next ten years. As Alberta’s seniors and housing ministry announced late last year: “Alberta will shift away from being a significant owner of housing stock and focus on regulating and funding affordable housing.”
In addition to the aim of “genera[ting] revenue,” UCP leader Danielle Smith’s mandate letters simultaneously assigned the minister of communities and social services with the task of “address[ing] affordable housing across the province.” Unless one is operating with a slumlord ethos, these two aims seem irreconcilable. In what seems to be a naked instance of doublespeak, the UCP has set up a minister of affordability in place of its housing and labor ministers — even as it makes housing less affordable.
With over twenty-four thousand low-income Alberta families waiting for housing, the UCP has decided that the best course of action is to ensure the profitability of private landlords. To ensure consistent profitability, the conversion of public, nonprofit housing into for-profit housing will require the establishment of a reliable revenue stream. That will either mean increased rents or cuts to services and maintenance or some combination of the two. Neither will be good for tenants.
Based on the ministry’s data, as of last year, just 18 percent of the social housing stock was deemed to be in a “good” state of repair. With the majority of units constructed in the 1980s, the repair backlog continues to escalate, estimated at approximately $1 billion. Any reduction in the repair budget will make the situation worse.
The UCP’s Priorities
Maggy Wlodarczyk, a member of the Association of Community Organizations for Reform Now (ACORN) told Global News: “Rent prices have been increasing for the past few years now. People are having a really hard time even staying in the apartments they’ve been living in for years, especially with the rise of other cost-of-living expenses.”
The privatization of social housing will impact the broader rental market and result in increased costs for all tenants. Privatizing nonmarket housing leaves low-income people more dependent on market housing — increasing competition for the already-scarce affordable rental stock.
While paying lip service to housing availability with the claim that “rent should be affordable,” UCP minister Jeremy Nixon told a press conference that “rent control is not on the government’s radar.” The UCP has also blocked inclusionary zoning motions by Edmonton and Calgary city councils.
Calgary Residential Rental Association executive director Gerry Baxter told Global News, “Landlords want to see people thrive, and if you’re looking to create affordable, strong and inclusive communities, we need to ensure that all Canadians have a broad range of housing options.” This prioritization of “choice” — the favorite canard of free marketeers everywhere — may be applauded by the province’s landlords, but it will further harm the province’s tenants.
According to Nixon and most of the landlord lobby, the government’s existing policies are the best way to make rent “affordable.” Rent control or investing in nonmarket housing apparently has no part to play in ensuring that the population is housed.
While on the campaign trail, the UCP might claim to care about reducing housing costs, but no one can seriously believe that UCP leader Danielle Smith has any sympathy for tenants. Her curious suggestion that “the hungry” — people who can’t afford food — should be fed “tainted meat” is exhibit A in this regard. Her career has been marked by open malice toward workers and the poor.
In a 2022 interview, the UCP leader warned the province’s workers that they are in for austerity and “pain.” “We haven’t seen any austerity in the public sector,” Smith lamented. “It’s just continued to grow, more workers, higher wages.” Elsewhere, Smith has claimed that provincial income tax has created a “problem,” whereby “people think someone else should pay for the social services they need.”
The central claim underpinning UCP policy, however — the notion that increased profits will magically lead to affordable housing through increased supply — is a widely held position that extends far beyond Alberta. Among right-wing economists and policy wonks, it is a typical rebuke to calls for rent control and other supposedly “onerous” tenant protections.
What’s Good for Landlords Is Not Good for Tenants
The UCP is hardly alone in making supply-side housing arguments in Canada. When Ontario scrapped its rent control on most new buildings, a CBC opinion piece claimed that “low income earners” should “actually welcome” the decision — because it will “help make housing more affordable. “A partial reversal of rent control is one small step back to the right path,” the CBC piece claimed.
The Fraser Institute, Canada’s preeminent conservative think tank, similarly claims:
The solution is to relax rent controls and provide tax incentives to developers to build new apartment units, to increase the supply of rental units and make renting more affordable. The sooner this is done, the sooner the benefits will come to renters, landlords and cities interested in mitigating economic inequality.
This view rests on the idea that increasing housing costs and bolstering landlord profits will somehow decrease housing costs in the long run. What is good for the landlord will, supposedly, be good for the tenant.
But, contrary to their own trumpeting, landlords do not create or “provide” housing. Successful landlords hoard it. They buy up existing units and existing land, often where housing is scarce, and use their power to gouge ordinary people for the privilege of shelter.
Housing does not follow the same supply-and-demand dynamics that other goods and services follow. Landlords and housing investors do not reap their returns from housing, maintenance, or any clear service as such — they’re reaping rent. They grow fat on monopoly profits where “land is scarce.” While most goods depreciate over time, land does the opposite, especially in major cities.
Indeed, in the early months of the pandemic, when housing prices dropped in Alberta, CBC News described a “surge” in Ontario investors scooping up housing units in Calgary. The acquisition was aided by a steady influx of potential tenants and Alberta’s decision not to enforce rent caps.
According to the Canada Mortgage and Housing Corporation, despite plenty of “incentives” for landlords, Alberta’s rental housing has a vacancy rate of just 2.6 per cent, comparable to most other metropolitan areas. These investors and speculators are not lowering rent; they are acquiring existing properties due to inflated rents and subsequently driving rents even higher.
The Strategies of Real Estate Profiteers
Real estate agents with Royal Lepage made this explicit in their advice to prospective real estate investors:
Calgary is an excellent market to invest in real estate for the following reasons. 1) Calgary is the 4th largest city in Canada and as so has wide and broad rental population for attact [sic] for your investment property. 2) The number of rental properties in the city has remained stable for a number of years and as the rental market increases it puts preasure [sic] on rents. 3) Alberta has no rent controls and the rental market is a free market that allows rents to rise with a lack of supply. Rents can increase at higher percentages when market conditions are in a supply shortage.
In Edmonton, despite a much-reported decrease in home buying during the oil-price downturn and pandemic, at least one firm, Elevate Realty Group, says its investors can expect steady profits:
Generate instant cash flow by investing in western Canada’s most lucrative real estate market. Our fully finished, turn-key properties are guaranteed to deliver $500 –$800 in passive income each and every month – ZERO maintenance, ZERO rent restrictions and ZERO land transfer tax. Simply sit back, relax, and watch your investment grow.
Free-market incentives will do nothing to halt the overall trend of increasing land value and rents. Moreover, privatizing nonmarket housing will exacerbate the competition for market housing among tenants and empower landlords even more.
Whatever the UCP might claim, its measures will not make housing more “affordable.” Smith’s policies — enabling further rent increases and scrapping social housing — will make life worse for many Albertans. The UCP’s measures will only be of benefit to landlords.Original post