By Chen Zhou
Startups that promise to help Canadians priced out of the real estate market realize their dreams of homeownership for just a loonie are becoming a nightmare for renters.
In May 2022, a volunteer-run organization RenovictionsTO tweeted the story of tenants at 98 Northcliffe Blvd fighting renoviction. Instead of accepting the buyouts and moving out, the tenants claimed their rights of continued residence and protested at the door of the CEO of their landlord company, QMW Corp.
On RenovictionsTO’s website, it explains that a renoviction is when a landlord evicts a tenant by claiming they will complete major renovations. Landlords often mislead tenants and pressure them to move out, so they can raise rents and maximize profits.
What’s unique about this case is that a Canadian crowdfunded real estate platform addy is criticized for being QMW Corp’s partner. RenovictionsTO tells ThinkPol that addy is offering people priced out of home ownership a chance to invest in real estate, only to have them invest in renovictors like QMW and make tenants suffer.
Addy’s spokesperson Katie Kernaha replied to ThinkPol that they are not involved in the 98 Northcliffe project so cannot provide comments. She also mentioned that one of addy’s core values is win-win or no deal.
“We provide opportunities to invest in institutional-grade commercial real estate. These are deals that are already happening but are typically reserved for the wealthy. We open access to these deals so that 99% of Canadians can get equal access,” she said.
But one of the tenants of 98 Northcliffe Abbey Gagnon explained that people who don’t actually have any of their own investments in real estate can get involved with investing in real estate through addy. But they might not be told the entire story. The company in turn gives money to landlords who use the money to kick tenants out.
“So, they’re potentially financially benefiting from me being literally evicted and pushed out of affordable housing, which is pretty unfortunate,” she said, “a lot of the people in the building didn’t know their rights. And they ended up taking the buyout money thinking that there was no other option.”
Addy partnered with QMW Corp on another project called Clearview on the Park. A promotion video made by addy in 2021 introduced this property with concerning contents like this building’s average rent being $400 below market and addy indicated they were planning to renovate for “meat on the bone” profits.
Raza Mirza, a long-term renter and affordable housing advocate tells ThinkPol that he finds it ironic that the reason people can’t afford real estate is the financialization of real estate itself. The solution proposed by some companies is actually to further make it a financial asset, making it harder for people who actually want to buy something to live in. This “self-enforcing loop” doesn’t make any sense.
Affordable housing activist Justin Fung also thinks fractional investing in the real estate market will hurt a new generation of people wanting to buy or rent in the long run. This consolidates a ton of power into a tech startup that will act as yet another large corporate landlord that seeks to extract maximum value from owners and renters.
Mirza suggests when people are making an investment, they should take time to understand what they’re signing up for. “If you look at what happened in the last few months, with interest rates going up, and house price stalling, it is a real possibility that people who have invested with high hopes of return may actually end up losing money.”
Kernaha says they are not investing in single-family homes or single condos. Furthermore, their community has helped create 107 social housing units (with 195 coming), and 156 brand new rentals.
But in Fung’s eyes, affordable social housing is always used to show that developers and landlords are “giving back”.
“How much does this represent of Addy’s overall number of units? If it’s a small percentage then it’s clear this is strictly for PR purposes,” he says.
Mirza adds that the high cost doesn’t even allow nonprofit companies to build affordable social housing, let alone companies like addy that need to make a profit. They have to not only meet all those costs and challenges of building and operating social housing, but they also need to make more money to pay out to investors.
Fung says renoviction infringes upon the rights of tenants by not allowing them to have access to safe and secure homes. Tenants cannot afford to have their rents raised on them substantially from one year to the next or be suddenly made to move from their homes without good reason.
Mirza has seen many cases of landlords misrepresenting in hopes that the tenants are not even aware of it. He suggests that there should be a law that the landlord must provide a copy of the Residential Tenancy Act when signing a tenancy agreement, and they must strictly abide by the legal content. If the landlord does not comply with this, they may be fined or directly lose the lawsuit in case of a dispute.
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