Big REITs Buying Up Hamilton Apts, Leaving Vacant to Inflate Rents: Time for Speculation Tax?

By Joey Coleman // @JoeyColeman
Published: Apr 30 2017 (23 days ago) // Last Updated: May 01 2017 (23 days ago)

Hamilton's rental housing affordability problem is getting worse as large investor-driven corporations and Real Estate Investment Trusts continue to buy up apartment buildings in the City.

With deeper pockets, these companies are leaving units vacant and holding out for rents of 50% and more above the average market rent in our City.

Of the 70 three bedroom family units at 181 John Street North and 192 Hughson Street North, 51 are vacant and not on the market for rental. Greenwin has applied to convert them to single bedroom units; Greenwin rents single bedroom units starting at $1075 per month1.

Compare this to the average three bedroom monthly rent of $1090 in 20132, $1176 in 20142, $1161 in 20153, and $1257 in 20162.

With deep pockets, Greenwin can carry the cost of losing $55,000 to $64,000 per month (using 2013 to 2016 average rents) in revenue from the three bedroom units in the hopes of nearly doubling revenue in future years after dividing them into separate one bedroom apartments.

DISCLOSURE Greenwin's minor variance for the conversion was initially opposed at Committee of Adjustment by the Beasley Neighbourhood Association. I was the Beasley representative at the hearing. I'm a member of the BNA executive, but am not the lead on the file. I may be asked to represent the BNA position at a future hearing.

Greenwin's use of cash-offers to entice tenants to move shows how profitable increasing rents can be for large investment companies.

This is happening across the City. Greenwin just happens to be a well-known example.

Just this week, I'm told from a very reliable contact his East Hamilton building sold to a Toronto investment company. Rents are going from $900 per month for a small two-bedroom unit to $1400 per month.

That's just one example.

REITs are buying up buildings with large numbers of units across Hamilton, enough to tilt the scales of supply and demand against renters.

As Interrent REIT puts it "InterRent's strategy is to expand its portfolio primarily within markets that have exhibited stable market vacancies, sufficient suites available to attain the critical mass necessary to implement an efficient portfolio management structure and, offer opportunities for accretive acquisitions." 4

Interrent now owns a large portion of Riverdale's rental stock5, having paid $51-million6 for four buildings. One bedrooms now start at $975 per month, well above the 2016 average $850 in East Hamilton, which itself inflated from $749 average in 2005.2

The effect of these companies on the market is hard to measure. It is having an inflationary effect on the market as smaller operators point to these artificial rates to justify jumping their own rental rents. (Eventually, the new Toronto-set rates don't seem too far out of line with the market)

CMHC's market reports forecast based upon supply and demand; while the apartments are categorized as "vacant", their vacancy is separated from the traditional weighting of supply and demand. Meaning Hamilton's official vacancy rate is becoming divorced from the reality of the rental market.

The City starts taking measures to protect rental supply when vacancies drop below 2% in a category. That doesn't happen if the vacancy rate is inflated by speculation.

Vacant Units Property Tax?

Would a vacant units property tax discourage this kind of rent speculation? The province is proposing to allow municipalities to impose a tax on vacant units:

Introducing legislation that would, if passed, empower the City of Toronto, and potentially other interested municipalities, to introduce a vacant homes property tax to encourage property owners to sell unoccupied units or rent them out, to address concerns about residential units potentially being left vacant by speculators. 7

Hamilton City Council has express no interest in being able to impose such a tax. Will rents become an election issue in 2018?

Only time will tell.


  1. Greenwin list for 181 John Street North

  2. Canada Mortgage and Housing Corporation 2014 Hamilton CMA Rental Market Report

  3. Canada Mortgage and Housing Corporation 2016 Hamilton CMA Rental Market Report

  4. InterrentReit homepage

  5. InterrentReit Stoney Creek Towers listing

  6. Hamilton Spectator: East-end Hamilton apartment blocks sell for $51 million

  7. Backgrounder - Ontario's Fair Housing Plan

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