Front Burner - One company’s dominance over rental housing in Canada’s North

Episode Date: August 23, 2021

In Yellowknife and Iqaluit, as much as 80% of private, multi-unit rental housing is owned by one company: Northview Canadian High Yield Residential Fund. Today, why some tenants say that’s a big problem, and what this story says about the challenges facing renters across Canada.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Jamie Poisson. Oh my, the best Jamie Poisson. So that right there is Verna Bolio. And she is so tired of complaining about her home.

About the window smashed years ago that still hasn't been replaced. About the power that goes out if she uses too many appliances at once. goes out if she uses too many appliances at once. We shower like this all the time and I can't do this anymore. And about the water, the water that just will not run hot no matter how long she waits. It's warm enough for a baby and that's it. You know what I mean? Like when you bath a baby, that's it. Like it's just like a 10-year-old, and it's in about maybe five minutes. Verna lives in a building owned by Yellowknife's biggest rental company. As much as 80% of the private multi-unit rental housing in Yellowknife and Iqaluit belongs to this one company, Northview Canadian High Yield Residential Fund. This is something that's happening right across the country. You might have heard us talk about it on the show before.

Huge companies buying more and more of the housing stock. Tenants say consequences include things like not getting their issues dealt with, rising rents, and yes, rent evictions. When we've talked about this before, it's always been in the context of Toronto and the surrounding areas or Vancouver. But today, I want to focus on a place that might not seem so obvious to many of us, Yellowknife, with two reporters who've been working together on a series of stories for the CBC about what happened when this one real estate company captured this huge segment of the city's rental market. Sydney Cohen is a journalist with CBC North, and John Last is a freelance reporter.

Hi, Sydney. Hi, John. Thanks so much for making the time today. Hi, thanks for having us. Hi. So, John, maybe I'll start with you. It sounds like it's probably pretty hard to find a place in Yellowknife without it being owned by this company, Northview, right? And I know, as I just said in the intro, one expert that you talked to put that number as high as them owning 80% of private rental units. And I just, can you paint a bit more of a picture for

me of just what that looks like on the ground there? Yeah, I mean, I moved to Yellowknife nearly four years ago. And just before I did, I spent probably about a month looking for housing in the city. And it was hard. There weren't a lot of places that weren't owned by this company. And even though I went on these Facebook groups where people sort of traded information about vacant apartments and I saw these warnings that people would give about renting from Northview, I still ended up with a sublet in a Northview building because I just couldn't find anything else. And that was a common experience with a lot of my colleagues and friends. And I lived there for four years. And even though there were sort of leaks in the ceiling, and there was garbage in the hallway, and you know, my balcony door froze shut in the wintertime, I was never able in that whole time to find another place that wasn't hundreds of dollars

more a month. And so the other places were hundreds of dollars more a month. Why is it that you think the Northview properties were less expensive? Oh, I mean, they were just way less expensive. And part of that, I think, is just the scale. But it's hard to say. I mean, you know, a lot of the other places that I looked at, they were as much as $500 more a month. And they were rented out by local landlords, small, small operations with just a few buildings. When you're talking about something the scale of Northview, it's a lot easier to offer stuff at a lower rent. But I shouldn't say, you know, it wasn't cheap rent. I was still paying about $1,300 a month for a one bedroom apartment. Okay.

I want to talk a little bit more about the experiences that other tenants had in just a minute. But Sydney, I also understand that Northview provides public housing as well. And can you just tell me how that works? Yeah, so Northview also has as many public housing tenants like Verna, who we heard up at the top, through these agreements with the Northwest Territories Housing Corporation, which is the territory's public housing agency. So in these cases, Northview is the building owner, and they rent units to the Territories Housing Corporation, which in turn, rents these units to public housing tenants. The housing corporation rents around 120 units from Northview and Yellowknife and another 46 in Inuvik. And this actually amounts to 87% of the

housing corporation's residential leases. Okay, wow. So now that we have a sense of the role that these guys play in the rental market, Sydney, I wonder if you could take me through some of the role that these guys play in the rental market. Sydney, I wonder if you could take me through some of the criticisms you've been hearing. So at the top, we heard from Verna about these really challenging conditions that she's living in. And what did other tenants tell you? Yes, we spoke to 16 current and recent Northview tenants on the phone and Zoom and in person. And we talked to nine others over Facebook and email. And a lot of them shared the same complaints. You know, we heard about water damage, heating issues, filthy common areas, like the list goes on. I spoke with George Lessard, who said that his apartment kept flooding after rainstorms.

And he said during power outages, the key fob system to get into the building would fail. So it effectively locked him out. And in Yellowknife, power outages aren't an uncommon thing, you know, and this can be a really big problem in the winter when it's really, really cold. I also spoke with a woman named Julie Normandin. She's a single mom to a toddler. She lives in a townhouse in a Northview complex called Bison Estates. And last year, she said the parking lot was just fully coated in ice and she slipped and fell numerous times. One time she fell while she was holding her sleeping daughter. And she went to the hospital because she thought she broke her arm. And, you know, I visited Julie at her

apartment this summer. And the night before I came someone had thrown a chunk of concrete through her daughter's bedroom window and shattered the glass and you know Northview boarded up the window from the outside but she told me they didn't fix the shattered glass for more than two weeks. And so you know know, that's Julie's experience. Did you hear from other tenants about what happens when they bring concerns to Northview? How did they say that Northview responds? Yeah, so a lot of tenants said that not much happens or like Northview will make these superficial fixes, but the problems just keep cropping up. And Northview also made a policy during the pandemic that it would only deal with what they called emergency work orders.

And, you know, Julie, for example, who fell with her daughter, she told Northview about the ice in front of her building and she said nothing was done about it. Like they didn't throw gravel down or anything. and she said nothing was done about it. Like they didn't throw gravel down or anything. And yeah, and it's even more complicated for Verna and other public housing tenants I spoke to because technically she's supposed to bring maintenance issues to the housing authority first. Like Verna told me that her window's been broken for many years

and she's had, you know, heating and electrical issues for years. But she says she's complaining to everyone and no one is helping her. And I'm just sick of it. I'm sick of complaining and I'm just a headache to them now. I went through housing, I wrote letters to housing, to them, especially about my heat. I have a problem right now. I have a problem.

And have you put any of these complaints directly to Northview? What do they say about it? Northview told us that they don't comment on individual tenants' matters. But they did say that since 2015, they've invested more than $58 million in the North and that they strive for 100% tenant satisfaction, 100% of the time, but they recognize that there will always be issues to resolve and ways for them to do better.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Thank you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. How did Northview get such a huge foothold in the North? How did this all start? Well, in a nutshell, it started in 1986, and it was this project of a former deputy minister

and a former teacher. And they got their start mostly with government contracts. So building things like schools and sports centers, health centers, RCMP offices in these tiny little communities around the north, places like, you know, Joe Haven. And these are jobs that actually require like a very high degree of local knowledge because the construction season is really, really brief in the north. And basically you need all of your materials, all of your workers, all of your equipment to arrive basically on one sea lift on a barge. And while they were doing the work in

these places, they realized that there wasn't anywhere to house their workers. And they started to realize that there was a real shortage of rental housing in the north. So they saw this as an opportunity for investment. And they started buying and building apartments across the north. And then in the mid-90s, they merged with this company based in Calgary and went public. And that kind of supercharged the company with all this new investment from across the country. And it really fueled a kind of buying spree around the north and in other sort of small resource dependent towns across the country. And then this company, I understand it, in the early 2000s turned into something that's become

really common now in Canada, right? It's called a real estate investment trust or a REIT. And can you just explain briefly what that is and how that helped them, I guess, get like an even greater foothold here? Right. So real estate investment trusts are this very simple corporate structure where investors can buy a very small piece of a company that rents apartments or commercial property. And in exchange, what they get is a very small piece of the rental income that that company gets. So it's basically a one-for-one exchange. And essentially, that just kind of opened them up, this company Northview, to even more investment income. So they were able to buy more and more and more properties. And to put this into context, they went from owning just a few thousand units, mostly in the north, to tens of thousands of units everywhere across the country in multiple provinces.

Right. And so they don't just operate in the north. Not anymore, no. Okay. And then I guess i don't want to fast forward too much here so let me know if you think i'm skipping over some uh important plot point but then in 2020 the company got bought right by two even bigger companies kingset capital and starlight investments and and this was uh a pretty big deal in the real estate world, right? Yeah, it was actually one of Canada's biggest real estate deals in history up to that point. And when all the dust settled, it was worth about $4.9 billion. And in that deal, the company sort of merged and it involved 27,000 residential units and

1.2 million commercial square feet. It's these quantities that it's almost kind of hard to wrap your head around. But what I found really interesting about that is that there wasn't a lot of commentary on it, even as the company was sort of consolidating this control over a huge portion of Yellowknife. And I mentioned Starlight. I think that this name is probably going to be familiar to a lot of tenants across the country and to listeners of the show as well. We've talked about them on our show when one of their buildings was moving to evict a tenant in Toronto, a Syrian refugee during COVID. And in March of last year, tenants at another one of their buildings in Parkdale in Toronto started withholding partial rent because they called

unfair living conditions. And as we've also talked about more broadly, this is all part of what is being called the financialization of housing, right? Like big, big companies, I believe Starlight has more than $20 billion in assets consolidating the rental market. And this is now a fairly common model in Canada, across the border in the United States as well. And there's been a lot of criticism that tenants are now dealing with this totally faceless entity that is more interested in sort of maximizing their profits, not like a mom and pop landlord. And so how does Northview sort of defend the critiques of their bigness in Yellowknife? Well, they wrote us in an email that they reject the narrative that their presence in the North is a, quote, reflection of dominance. But the company does advertise itself to investors

as the largest private sector residential landlord in the Northwest Territories in Nunavut. Now, Northview also says they're in the business of providing essential housing in a place that has a major housing shortage, which is the Northwest Territories. And that also includes, as we've heard, public housing. And they say they proudly employed, like over their history, they've proudly employed

hundreds of Northerners and housed thousands of residents in dozens of communities across the Northwest Territories in Nunavut, and that they've contributed millions of dollars to the economies of the communities in which they operate. Okay. I want to talk about the government response to this. So I know there's this former MLA who sort of seems to, I don't know if regret is the right word, but regret that the government of the Northwest Territories didn't do more to address this issue. And John, can you tell me about what she told you? Yeah, I spoke to this woman, Wendy Bissaro. She was a Yellowknife MLA from 2007 to 2015. And this was kind of the key period where Northview was doubling the number of units

it managed in the territory. And she said she didn't really notice this company acquiring a bigger and bigger percentage of the territory's rental properties. I think it was a concern, but it wasn't something that we talked about in terms of, as a government, what are we going to do? I was not seeing that they were going to take over 80% of the market. I guess I didn't see them as this sort of landlord out to grab everything. I'm a bit naive in that regard, I think. So I'm a bit naive in that regard, I think. And she sort of said that she felt naive in retrospect about the whole thing. She didn't really expect that this company was going to grow to this kind of size. But this was actually something that I heard from a lot of politicians from that time. They just really didn't see this as a public policy issue that government should have to deal with.

And they didn't really foresee how one company's growing control could create a bad situation for renters down the line. And you know, we're talking about REITs, like, these were pushed by governments, right? Right. In the 1990s and 2000s, the Canadian government, the CMHC, they were really pushing this as a new investment model because they had seen how it had been so successful for investors and people building housing in the United States. Sydney, is there anything being done now? What are we hearing now about what's happening in Yellowknife?

Yeah, not a whole lot. There's one Yellowknife MLA, his name is Ryland Johnson. He's kind of made this his issue. He says the government needs to do more. He says they should stop renting from Northview and stop, you know, being the anchor tenant and all of these buildings that, you know, belong to this huge southern landlord. We tried to get interviews with the infrastructure minister, the housing minister, neither would talk to us. The finance minister did acknowledge that the territorial government has influence over the

rental market and that, you know, they're reviewing their procurement policy or their procurement process right now. But, you know, the territory spends more than 20 million on its leases with Northview and Kingsett each year. And up here, that's actually a lot of money. And does that all come from public housing or are they leasing other things as well? No, that includes office space as well. Johnson, the MLA, he says that all the money that the government is spending on its leases with Northview

could be going to local landlords, you know, or Indigenous development corporations. Like anyone really who will keep that money in the territory. But, you know, or Indigenous development corporations, like anyone really who will keep that money in the territory. But, you know, I will say like, at least on the affordable housing side, politicians, I think, are taking more notice now. And the federal government, you know, has recently put some money into affordable housing in the territory. They gave, for example, $19 million recently to the Yellowknife Standing First Nation to build 19 new affordable homes in Dilo and Deda, which are two communities

really close to Yellowknife. Okay. And John, I just wonder before we go today, if we can zoom out a little bit, just for the regular person living in Yellowknife who wants an affordable apartment, but an apartment where their needs are met, right? Where the windows are intact and there's heat when it's cold. What are the concerns here about what all of this ultimately can mean for the future of housing in the North? Yeah, it's interesting. I mean, I guess to sort of put yourself in the shoes of a Northerner, you know, anytime one company controls so much of something that's

so essential to your health and happiness, like housing, it makes people a little nervous. And now that the holdings that this company has in the North, they're just such a small part of this bigger company that, as you said, you know, it has $20 billion in assets. That just swamps any concern that Northerners might have. It's just such a small piece. But, you know, also at the same time for Northerners, that's kind of a familiar feeling to be on the edge of something that's much bigger than they are and to have this feeling that, you know, we have real concerns, but they just might be drowned out in the face of this gigantic company.

Hmm. Guys, that was super interesting. Thank you. Thank you so much for this. Thank you. Thank you so much for this. Thank you. Thanks a lot. All right. So before we go today, rental housing came up on the federal election campaign over the weekend. NDP leader Jagmeet Singh says his party will provide $5,000 in rental support for families if his party wins. That would immediately help families that are struggling with that increased cost that Justin Trudeau is allowed to happen. Singh says that he'd pay that rental subsidy by increasing taxes on big corporations like Amazon.

He also said that he'd, quote, take big money out of Canada's housing market. The other major parties have also been talking about this issue, and I'm sure we'll hear more soon. Liberal leader Justin Trudeau says he aims to eliminate all GST on new capital investments in affordable rental housing, and Conservative Party leader Erin O'Toole plans to encourage Canadians to invest in rental homes by letting them defer the capital gains tax

when rental property is sold. We're definitely going to be digging into the analysis of these proposals and more over the next several weeks, so I hope that you will stay tuned. But that is all for today. I'm Jamie Poisson. Thank you so much for listening to FrontBurner. We'll talk to you tomorrow.