Last November, a post on Facebook marketplace offered prospective tenants one hell of a deal. At a bargain of just $900 a month, with an upfront deposit of more than twice that amount, those in need of a place to live could luxuriate in half a bed. It may sound like something out of Charles Dickens, but the posting is just one example of how completely insane and dysfunctional Canada’s housing and rental markets have really become.

According to one 2023 RBC Economics study, the country has experienced its “highest annual increase in rent growth” in history. Predictably and dramatically, homelessness has spiked and a growing number of tenants in many major cities are being forced into overcrowded units “not suitable for their household size.” As buying a home becomes increasingly difficult, meanwhile, the number of renters is growing at at least twice the rate of owners.

Amidst it all, and against the wider backdrop of a punishing cost of living crisis, Canada’s leaders want you to know they’ve stopped trying to avoid the problem and are finally taking bold action to make housing more affordable and bring down spiralling rents. “Homes are for Canadian families to live in,” declared prime minister Justin Trudeau last week. “Not for foreign investors to build financial portfolios with.” Echoing Trudeau’s statement, Finance Minister Chrystia Freeland condemned the use of housing “as a financial asset class by foreigners,” adding that the government was “using all possible tools to make housing more affordable across the country.”

In suggesting that a class of buyers is inflating housing costs by treating them as vehicles for investment, of course, Trudeau and Freeland aren’t wrong. But it’s unclear what the passports of the profiteers have to do with anything besides opportunistic political rhetoric.

Just as its title suggests, the Liberals’ Prohibition on the Purchase of Residential Property by Non-Canadians Act — passed in 2022, and extended to 2027 last month — forbids foreign buyers and companies from purchasing residential properties.

It’s a policy very much in line with those of centrist parties in other countries. The Labour Party’s Keir Starmer, for example, will campaign on a similar ban in Britain’s next general election and New Zealand’s centre-left government put one on the books back in 2018.

It’s also one that’s very unlikely to realise its stated objective. Housing might be expensive, but talk remains cheap — and even a cursory look at the legislation in relation to Canada’s current housing landscape suggests there’s a lot more rhetoric here than there is substance.

For one thing, as the University of Western Ontario’s Diana Mok notes, the act has a number of built-in carve outs that will dilute its application: it doesn’t apply to larger multi-unit buildings or those outside of major metropolitan areas, thus leaving plenty of wiggle room for speculators. More importantly, foreign buyers represent a pretty negligible share of the residential housing market overall — owning between two and six per cent of Canada’s residential properties according to 2020 Statscan data. “The law,” Mok concludes, is therefore “more of a political gesture than an effective tool.”

The abandonment of public housing by the federal government in the 1990s went hand-in-hand with a wider push to financialize the entire sector: rent controls were deregulated, rules were rewritten to make it easier for landlords to purchase buildings then forcibly hike rents.

Still, if we take the government’s own messaging at face value, there’s a deeper problem with its approach than the inadequacy of recent legislation. In suggesting that a class of buyers is inflating housing costs by treating them as vehicles for investment, of course, Trudeau and Freeland aren’t wrong. But if we take their premise to its logical conclusion, it’s unclear what the passports of the profiteers have to do with anything besides opportunistic political rhetoric. “Greedy foreigners are inflating housing costs” isn’t just an implicit concession to xenophobia, it’s also a nifty way of skirting the problem and letting the real malefactors — private equity, corporate real estate, or companies like Airbnb — off the hook.

Over the past several decades, Canadian housing has been transformed into a financialized wild west where the interests of the investor class are sacrosanct and social need is secondary.

As Martine August explains in a remarkably thorough 2022 report published by the Canadian Human Rights Commission, the abandonment of public housing by the federal government in the 1990s went hand-in-hand with a wider push to financialize the entire sector: rent controls were deregulated, rules were rewritten to make it easier for landlords to purchase buildings then forcibly hike rents, and mortgage loans were converted into securities that could be bought and sold.

It’s this process, not the work of nefarious foreign investors, that’s ultimately to blame for skyrocketing rents and overpriced homes, and the crisis won’t be fixed by minor regulatory changes or technocratic tinkering. In a 2019 piece of legislation, the government of Canada officially committed itself to the “progressive realisation of the right to adequate housing.” It’s certainly a laudable goal. But until governments at every level reinvest in social housing and put the needs of ordinary people ahead of the investor class’s balance sheets, it will mean nothing to people spending half their incomes to live in cramped apartments or the growing number sleeping in the streets.

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