Rental Controls and affordable housing: Why Investors and financial institutions don’t like building rentals in Canada – December 7, 2021,
The lack of financial education in public schools help to fuel poverty and it’s really unfortunate when you think about it. People who lack financial education typically become Left Wingers, the people I actually find the evilest are the people with financial education who don’t want an unbiased financial education in public schools primarily because they’re Left-Wingers.
Left-Wingers flourish because of ignorance, financial education or basic math isn’t hard to understand or comprehend, what’s hard to understand are things like Keynesian economics, which contends that the government should meddle in the economy when there’s an economic downturn. This is what confuses people about the economy, because if the government can create a rental control law, why can’t the government prevent rental prices from rising and prevent those evil rich people who keep charging poor people higher rents?
If you don’t have basic financial education and you’ve seen the government with one stroke of the pen change economic laws, why wouldn’t you assume that rich people aren’t screwing over the poor? I live in Toronto and I’ve been inside of government housing projects, I’ve also been inside rental housing buildings built by I think it was the Goodwill or The Salvation Army, the real problem with subsidized housing and this is true with private rental purposed housing as well are the tenants.
Tenants can be destructive and for some strange reason, tenants are usually more destructive in government-run housing than they are in private rental housing buildings. I can’t speak for other provinces, but in Toronto, the maintenance staff who are often unionized city workers do a pretty good job cleaning up the properties, but within a span of 24 hours, the government housing buildings become filthy again.
These are costs people who lack financial education often ignore that go into housing. Now if you’re a landlord who has to charge their tenants a FIXED amount of rent per month based on the government rental control laws, you can’t punish your current tenants for the unnecessary destruction to your property, instead, you have to raise your rents on future tenants, to cover your losses.
Because I’ve worked with charities, I know first hand that a lot of the people in charge of these charities lack financial education. Most of these well-meaning charitable organizations aren’t getting the banks to loan them money, because more than likely they’re ignoring the maintenance costs associated with low-income rental purpose housing.
Regardless of how well-meaning your CHARITABLE housing plan is, tenants have RIGHTS, I remember speaking with someone who lived in a co-op and some of the tenants simply weren’t cooperating. Sure they signed a lease that said they’d do their part to keep the building clean, but the law also states that you can’t simply evict them without them challenging you in court and courts have fees and court fees will add up.
Humans rich or poor will always find loopholes in the law, and politicians will often compound problems by making promises to the poor in exchange for political power. So as tenants’ rights laws pile up, the private banks that lend money to particular organizations notice patterns. a charitable organization as an example doesn’t want to ruin its reputation and you have to remember that most humans have a “what have you done for lately” attitude towards life.
How this translates into rental purpose housing is if the low-income tenant feels disrespected by management, said tenant could become problematic. Now, because the government meddles in all sorts of things, people who understand tenants’ rights and other laws, will hold back rent, become more demanding, become a vocal protestor, or even if they’re grateful might become a vocal advocate for more “free” or government-subsidized housing.
Some people imagine that when they help people get free housing that these people will take the free housing get themselves back on their feet and eventually buy their house, although this is true some of the time, it’s not true the majority of the time. The majority of the time, building free or charitable housing equates to more people looking to the government or a charity to repeat the process.
“I want to be as lucky as that person I know who got free housing” So I’m going to support the Left-Wing candidate who will fight to build rental purposed housing for the poor? People again forget all the costs involved in maintaining rental purposed housing, Canada currently has an elevator repairman shortage. a lot of the people who live in charitable or government housing are usually on some sort of provincial welfare program?
As these problems compound, the champions for free housing who have no financial education assume that this is an easy fix, come on government do something about this housing problem? Well, as we know the Federal Government got into the business of mortgage insurance. So currently, the Canada Mortgage and Housing Corporation (CMHC) helps Canadians to purchase mortgages to buy homes, this of course helped to create a housing boom in Canada because CMHC created a new pool of home buyers that didn’t exist before.
Making matters worse another federal government crown corporation known as the Bank of Canada lowered interest rates to near zero, so this all led to a boom in the Condo market. It’s just smarter to build a condo instead of building rental purposed housing. When you build a condo instead of rents, you charge maintenance fees. people who own things aren’t as destructive as people who rent. When you build a condo you don’t have to worry about people on welfare taking you to court, if your tenant doesn’t like their condo they can sell it. Even if the tenant sells their condo at a loss, the condo management company doesn’t care.
Now, where rental purpose housing are a better option than condos is when there are no rent controls because now financial losses can be recouped, tenants have to respect private property or face higher rent prices or eviction, tenants win because more rental purposed housing properties are built meaning more landlords competing for business.
Once the government steps in, malinvestment is normalized and banks simply follow the trends. Now, in the article below, you’ll notice that the private banks aren’t interested in investing, but CMHC is? This coincides with the government creating housing bubbles in Canada. CMHC is a profit-driven enterprise, it’s a crown corporation, but what separates it from the private banks is that if CMHC fails it steals money from the taxpayers, if a private bank fails it takes money from the private investors(at least that’s how it’s supposed to happen).
It’s difficult for most people to see how the various levels of government create poverty, but if Canadians were better educated about finances, we could solve a lot of these silly financial problems created by the government.
Interesting times ahead