9 minute read
CMHC Exploring Development-led Evictions Data
from CAM October 2021
by MediaEdge
New CMHC data sheds light on Toronto’s changing rental housing landscape
The landscape of rental-housing has changed in recent years, with notable sources citing a marked rise in developmentled evictions. Commonly referred to as “renovictions”, this type of displacement occurs when a property owner or landlord applies to evict a tenant due to the desire to make changes to the unit, building, or land. Research in this area has been sparse, and as such, CMHC recently embarked on a study to delve more deeply into the issue.
Formal, development-led eviction applications in Canada’s largest municipality, the City of Toronto, increased in prevalence between 2010-2020,” observed report authors Christopher Zakher and Jordan Nanowski from CMHC’s Housing Market Insights team. “This phenomenon, which relates directly to the potential loss of rental housing for certain households—and, in the context of a supply-constrained rental market such as Toronto’s, the potential loss of limited affordable rental housing options—has largely gone unexplored. For this reason, we sought to uncover key trends underpinning it over the previous decade.”
Process & background
Using eviction applications as a proxy, the report provides insight into the prevalence of development-led evictions in Canada’s largest municipality and puts these findings in context with the loss of rental housing it may cause for specific households in need of affordable options. Essentially, the study set out to answer the following three questions: 1. What has been the prevalence of formal, development-led eviction applications in the City of Toronto over time? 2. Was the assumed work that inspired these formal eviction applications warranted? 3. Primarily, who was submitting these applications — existing or new rental property owners?
Key findings
When compared to the size of the primary rental market stock, the prevalence of formal, development-led eviction applications between 2010-2020 was low. Nevertheless, these eviction applications did increase markedly over this period.
Applications were overwhelmingly concentrated in the Former City of Toronto and appeared four times higher for rental units in the secondary rental market versus the primary rental market.
Over the previous decade, formal, development-led eviction applications increased simultaneously with the widening gap between average asking (i.e., vacant unit) and average market (i.e., occupied unit) rents in the city’s primary rental market.
Rental units in older structures in the city’s primary rental market tended to be the subject of formal, development-led eviction applications. As well, city locales with a larger share of rental housing identified as requiring major repairs saw a greater number of applications.
Finally, in the primary rental market, it was relatively common to see formal, development-led eviction applications submitted following the sale of a rental property to a new owner.
Ongoing implications
First and foremost, given the scarcity of affordable rental housing, tenants who are being evicted for developmentled renovations are then faced with the greater challenge of finding a comparable new home. According to the report authors, this may explain why there has been greater disagreement on the part of tenants with N13 eviction notices in recent years. (Recall that these eviction applications are submitted to the LTB when a tenant disagrees with the N13 notice of eviction or does not move out of their rental unit upon receipt of the notice). Addressing the lack of rental supply would seem to be the most obvious solution to resolve this over the long-term.
The second implication, which comes in the form of a question, is how do we balance the need between adequate rental housing and affordable rental housing in the short-term? In other words, is it possible to address the inadequate housing in which nearly one in 10 of the city’s renter households find themselves in without evicting them
into a more expensive, oftentimes, unaffordable rental market?
Thirdly, the report identified a plethora of data gaps when it comes to development-led evictions. Most notably, the report authors stated they were not able to acsertain how many formal, development-led eviction applications led to a single eviction, nor could they gauge the totality of development-led eviction activity taking place (i.e. they were unable to quantify the number of evictions taking place informally).
As the rental housing landscape changes and the prevalence of development-led evictions continues to rise, one obvious implication is that there are few measures currently in place to address the fallout associated with the lack of affordable housing.
Additional CMHC findings related to evictions
Between October 2019 and March 2020, CMHC conducted in-depth, semi-structured interviews with both professional housing stakeholders and tenants who’d lived through an eviction. This analysis revealed that:
• development-related and ‘no-fault’ evictions are occurring with more frequency; • there has been a shift from evictions driven by tenant-factors to those driven by landlord-factors; • the changing scale of evictions, with mass evictions involving entire buildings at once, were reported in Winnipeg,
Vancouver, New Westminster,
Kitchener–Waterloo, Hamilton, Toronto, and Halifax.
To find out more about the changing topography of the rental housing landscape, and specifically, what’s driving residential evictions, visit: www.cmhc.ca.
OUTSOURCING PROPERTY MANAGEMENT ACCOUNTING
The benefits of trusting your back-o ice to a third-party specialist
If managing your back o ice is bringing you stress, rest assured that you aren't alone. As the property management sector grows in volume and complexity, building teams across the industry are working overtime to manage day-today financial and tenant management tasks.
Not that property management has ever been easy. As any professional in the industry can attest, keeping owners and tenants happy, maintaining asset value, and navigating evershi ing rules and regulations has always required a large degree of time, talent and resources.
So what’s different today? In addition to traditional challenges, property managers are being stretched thin in their e orts to keep pace with heightened pandemic measures, tougher economic conditions, growing competition, and ESG (environmental, social, and governance) mandates. Moreover, many are (fortunately) seeing their portfolios grow, requiring more from their back o ice.
It’s a common challenge in property management. Consider, for example, the tale of “Property Biz,” a hypothetical company that has expanded its business by adding to its portfolio over the last years. This is undoubtedly good news, but that growth has le Property Biz’s back-o ice teams struggling to handle the added work and pressures. They’re overwhelmed, understa ed, and at risk of burning out or falling behind while managing critical financial tasks. Moreover, their everincreasing portfolio is increasing demand for people and resources they may not have available.
In short, Property Biz is growing, but it needs support.
Akan T. Rajah, Managing Partner with Assetso , has seen this story play out numerous times within the property management community. "Clients come to us because they are looking for a trusted partner to take some of that back-o ice load,” he says. “The good news is that there are ways to o load that back o ice burden so the team can focus on their core business and generating value for their occupants and stakeholders."
OUTSOURCING ACCOUNTING With property teams' now asked to divide their focus and talents across an increasing number of responsibilities, keeping the back o ice in order can be a challenge.
Herein, says Rajah, there is value in pursuing an outsourced
solution: "We can take all that back-o ice work o our clients' hands by providing a dedicated and industry-trained team on our end who will handle all their accounting tasks."
And there is no shortage of tasks that Rajah and his team are trained to handle. AssetSoft's third-party accounting services include: • Rent collection & management: Handling the collection and processing of tenant rent cheques, including managing deposits into the client's bank and updating the enterprise resource planning (ERP) systems (e.g., Yardi) accordingly.
Similarly, Assetso can take appropriate actions on behalf of its clients when rents are late (e.g., fees, notices, system updates, etc.). • Vendor management: Collecting vendor invoices, updating
ERP systems, and notifying clients when they need to be approved and paid. • Reconciliations: Managing all reconciliation activities with the bank and other partners as needed. • Lease audit/abstraction: Conducting third-party audits to confirm that the expenses clients are charging for (e.g., rent, utilities, etc.) are the same as what was agreed upon from the start, and to identify any irregularities or red flags that might save even more costs that would have otherwise gone unnoticed. • Bookkeeping: Ensuring all systems are updated and no accounting information is falling between the cracks. • Reporting: Creating owner reports to indicate how the building is performing over a period of time.
These are just some of the tasks that can be o loaded to a trusted third-party accounting specialist. And the keyword, says Rajah, is trust: “Accounting deals with a lot of sensitive information, and it can be hard to pass those o to a third party. That's why the first part of providing relief for our clients is providing them with peace of mind knowing our team is well trained and experienced to take on their accounting tasks with the highest integrity.”
It may take time to establish that trust, he adds. Still, once clients see how the outsourcing process works, and the transparency within, they are happy to let Assetso 's team do what they do best: "Our offshoring model leverages the strength of conventional outsourcing, but ensures the client has direct control on their business outcomes. Because of this, clients can establish their very own team without worrying about all legal, human resource, and technical requirements."
AN UPSCALING ADVANTAGE The industry is expanding. Demands are mounting. Portfolios are growing. Herein, an additional benefit of outsourcing is the ability to tackle heightened accounting requirements without the need to hire sta .
For example, Rajah says, "When one of our clients buys new buildings, they don't have to worry about finding new sta . All they do is tell us and we expand our team with more people who are fully-trained in back-office accounting and management."
Indeed, outsourcing allows property management teams to o load time-consuming HR tasks, such as sta onboarding, training, and upskilling.
Moreover, adds Rajah, "The costs of bringing new sta on are all absorbed on our end. That includes wages, healthcare plans, insurance, and managing all related tax and labour laws."
BY THE NUMBERS Adding up the advantages, it’s easy to see how outsourcing property management accounting can bring real, long-term value to one’s operations. And today, any extra support goes a long way. "It's about making lives easier for commercial property management talent," adds Rajah. "Managing a property is much more complex and cost-consuming than it used to be, but like many other modern-day operations, the right partners and technologies can make a huge di erence."
The Assetso team encourages any questions and inquiries. Email them at learnmore@assetso biz or visit their website at www.Assetso .biz.
