A new report by the volunteer-run project RenovictionsTO finds that corporate landlords including Pulis Investments and Riley Real Estate Ventures are, among themselves, increasingly open about their strategies to displace long-term tenants and evade rent controls.
Pulis Investments, founded by the father-and-son duo Brian and Kyle Pulis, is a growing rental corporate landlord that currently manages units across “growing markets” in southern Ontario. While Ontario’s rental control guidelines state that landlords can raise their tenants’ rent by 2.5 per cent each year, Pulis assured its investors in a leaked memo that it has a method to get around this limit: evictions. To achieve, the firm’s memo says, the “renewal of undervalued apartment buildings and townhome complexes,” it promises investors that Pulis will impose “significant renovations” on its buildings to force longer-term tenants out and bring in new tenants and a new rent rate. The memo says:
As the Partnership intends to vacate all apartment units in the Property and reposition the Property by performing significant renovations and improvements in order to lease the Property to a new demographic of tenants, the future rents, vacancy, expense, cost, and other financial information concerning the Current Properties are expected to be materially different than the historical information disclosed herein.
This way, the firm’s memo states, Pulis can “realize immediate market value gains” by hiking rents above the legal limit. In 2016, for example, Pulis bought a 34-unit building in Hamilton for $3.3 million. In 2016, the average rent for a two-bedroom apartment in the building was $770. By 2021, after two-thirds of the original tenants were displaced, average rents more than doubled to $1,700. In 2020, the building was assessed at a total value of $9.02 million, a profit of about $6 million or 200%.
These are commonly called “renovictions”—when landlords displace their long-term tenants in older buildings, who would otherwise be covered by rent control, by ordering extensive renovations and terminating their tenancy. This destroys homes and massively increases both rents and landlord profits. The landlords call this process, as the report notes, “closing the rent gaps”.
Another landlord listed in the RenovictionsTO report, Riley Real Estate Ventures, states on its website that its “mission” is to “acquire undervalued properties” and “execute on extensive renovations”, increasing rent and “refinancing or selling the property”. As with Pulis Investments, renoviction is central to Riley’s business model. Tenants are not pushed out as a byproduct of renovations. Rather, renovations are conducted so that rents can be raised.
These landlords are not an exception, as renovictions and the resulting “above guideline rent increases,” are increasingly becoming the norm. The legal framework for renovictions is the Residential Tenancies Act, which in Section 50 allows landlords to “give notice of termination of a tenancy,” for renovations, “own-use”, or to move in a family member—or with the help of aggressive litigation, threats, and/or negligence to make the unit unlivable.
The practice is so common that landlords and property managers that are proactive and effective in displacing tenants through this type of harassment are celebrated in real estate advertisements and brochures as successfully providing an “active management”, implying the property has a high turnover rate, which boosts investor confidence.
Toronto city council’s laughable half-measures
As a response to public pressure, municipal and provincial governments have highlighted renovictions as a danger to the housing markets. However, they are unable to propose any solutions. The City of Toronto is set to announce a bylaw to combat renovictions by the second quarter of 2023. Laughably, the report on the city’s renoviction policy admits that the “bylaw cannot stop renovictions, as this is within the jurisdiction of the province”, and that all they hope for is to “deter the practice of renovictions”.
But how is this going to be “deterred,” when landlords retain their absolute power to hike rents between tenants?
On this point, the city offers few concrete solutions to take away landlords’ power to gouge their tenants. It merely proposes to ask the Ford and Trudeau governments to “invest” in a vaguely-worded low-income housing plan, and to reintroduce rent controls on newer buildings for existing tenants. Aside from doing nothing to stop rent hikes in the case of evictions, there is little reason to believe any of these measures will be taken up by higher levels of government. Once again the problems facing working class people are lost in the jurisdictional game of hot potato, where each level of government will try and pass on the buck to the next.
Moreover, reliance on government compliance and funds to combat landlords is extremely utopian. The city’s report states that reintroducing rent controls to units occupied after November 2018 is a way to combat renovictions. This demand is placed on the very same Doug Ford government that removed rent controls in the first place. Furthermore, as a token of appreciation to his landlord backers, Ford has also announced that maximum annual rent increases will more than double in 2023, from 1.2 per cent to 2.5 per cent.
The harsh reality is that we cannot expect Ford, the Trudeau Liberals, or the next mayor of Toronto to solve this problem for us. Ford will continue to work for the developers and capitalists in Ontario. Given that Ontario is the most indebted province in the country and is rapidly moving towards cuts, no new funds should be expected to find their way to Toronto. The federal government has also proposed in its 2023 budget that it will be making massive cuts to government transfers, and has planned to cut funding to its own National Housing Strategy from $2.475 billion to just $820 million this year.
You can’t control what you don’t own
The struggle against the ongoing destruction of long-term purpose-built housing for working class families must be fought using our own methods. The RenovictionsTO report correctly dismisses the city’s half measures, but places emphasis on tenants organizing against landlords to defeat attempts at evictions and displacement. While there has been some success through tenants organizing, we must be very clear that only a small fraction of these struggles end in victory.
The fundamental question the report avoids is that of ownership. While tenants can organize among themselves, they are going up against multi-million dollar corporations with a variety of means at their disposal to crush resistance, including lawyers and specially dedicated departments—not to mention pro-landlord legislation. What this ultimately points to is that you cannot control what you don’t own. Those that own housing and use this human necessity as a profitable investment will always call the shots.
This is why Marxists highlight the question of ownership as a fundamental issue in the housing crisis. The only way to put an end to this predatory and parasitic exploitation of housing is to immediately place a ban on evictions, move to confiscate property from developers and big landlords, and finally initiate a mass program to build social housing. Housing must not be a speculative investment, it is a basic human need!