Sweden-based realty giant plots gentrification through the back door in neighbourhoods across the city
There is a new corporate landlord in Toronto, and experts say the city has never seen anything like it.
Akelius, a Swedish-owned company, says it’s offering a new style of modern rental living. But tenant advocates are warning that its aggressive pursuit of higher rents is threatening to distort the city’s already unaffordable housing market – and push lower-income residents out of their communities.
So far, media coverage has focused on Akelius’s four buildings in Parkdale, where tenants claim the company is neglecting repairs in a bid to force them out. But the impact of Akelius, which owns $7.3 billion worth of property in Sweden, Germany, the UK and Canada, goes far beyond a single neighbourhood. Since entering the Toronto market in 2011, it has bought up 2,100 units in 31 properties across the city, from Weston to Birch Cliff, Lawrence Park to Regent Park. It has stated it plans to buy 10,000 units in Canada in the next few years.
Tenants all over the city tell the same story: the company moves in, embarks on major upgrades to some parts of the building but neglects basic repairs in their units. Superintendents who live on site are replaced by a phone number that’s little more than a black hole for residents’ complaints.
Soon enough people start moving out, and Akelius renovates their vacated units to rent them out at a higher price.
“Their profit model is based on putting out long-term tenants, renovating units and jacking rents,” says Cole Webber of Parkdale Community Legal Services (PCLS). While most corporate landlords who buy properties are happy to simply accept rent from the existing residents, “Akelius has come in with a plan to bring in a more affluent type of tenant.”
Already the company has converted nearly a fifth of its apartments into what it calls “Akelius First Class” dwellings. The strategy is profitable: at the end of 2013, those signing new leases in Akelius buildings paid 39 per cent more than the company’s average rent at the beginning of the year.
At a July 23 meeting at Metro Hall attended by about 50 Akelius residents from across the city, Alireza Anvari described the company as “a monster.” When the firm took over his mid-rise at 160 Huron, near College and Spadina, he said it immediately began replacing the balconies but stopped taking out the garbage, replacing burnt-out light bulbs and fixing washing machines. “When they bought the building, the services immediately dropped,” he said.
Anvari organized a tenants association, and after putting pressure on Akelius, he’s seen some improvements.
But the new management was too much for Sean Sicard. In December he moved out of his $1,000-a-month junior one-bedroom at 160 Huron. He now pays $100 more for an apartment at College and Dovercourt, and he accuses Akelius of “play[ing] the system to push people out.”
An 80-year-old Parkdale tenant who only gave his name as Jerry witnessed similar changes at his building at 99 Tyndall. He says that when Akelius bought the property, it started giving eviction notices to people who were one or two days late with their rent. Akelius has started renovating vacant units, but has done nothing to fix the peeling ceiling in his apartment. “Repairs are non-existent,” he says. “It’s useless to ask for anything.”
There are rules that are supposed to protect tenants from profit-hungry landlords. Each year the provincial government sets a guideline that limits how much more they can ask tenants to pay. For 2014, it’s .8 per cent.
But there are at least two major exceptions to the guideline, and Akelius has exploited them both. First, a Mike Harris-era law known as “vacancy decontrol” allows landlords to raise the rent on units as much as they like after tenants move out. Critics have long wanted this changed, since it provides a huge financial incentive to evict low-income tenants.
Second, landlords can apply to the Landlord and Tenant Board (LTB) for an above-guideline rent increase if they can show their taxes increased steeply or they made a substantial investment in building repairs or security measures.
Geordie Dent, executive director of the Federation of Metro Tenants’ Associations, says there are normally between 100 and 150 applications for above-guideline rent increases in Toronto every year. This year Akelius has applied to increase the rent above the limit at 11 buildings, more than a third of its properties.
“This one landlord in a year is now accounting for almost 10 per cent of all the [applications for] above-guideline rent increases,” says Dent. “In my experience I’ve never seen a landlord act this aggressively.”
Akelius’s applications are still pending, according to the LTB, but the company has reportedly told tenants at one of its Parkdale properties that they could end up paying 4.1 per cent more, five times greater than the provincial guideline.
In some cases, Akelius is arguing the increases are justified because it has invested in repairs such as upgrades to common areas, elevators, landscaping and facades. But tenant advocates say these projects mask neglect of basic maintenance that residents are entitled to.
“Tenants aren’t getting their own maintenance done but are getting hit with increases,” says FMTA organizer Kelly Bentley.
Ben Scott, asset manager for Akelius, says the improvements it’s making are more than cosmetic, and include vital work like replacing roofs and handrails. Since taking over property management from subcontractor Briarlane two months ago, he says Akelius has addressed 96 per cent of service requests.
Asked about tenants feeling they’ve been pushed out, Scott says, “Our focus is on adding value to the buildings we manage.”
He doesn’t deny that the company’s plan is to renovate and charge more for vacated units, but says, “they’re priced competitively based on their location, size and quality, and reflect current market rate.”
The last thing Toronto needs, say housing advocates, is more “first-class rental living” of the kind Akelius is offering. According to the Canada Mortgage and Housing Corporation, all over the city rents are on the rise, and vacancies, affordable or otherwise, are increasingly rare.
Last year the vacancy rate in the GTA was 1.7 per cent, down from more than 4 per cent a decade ago. The only part of the city where vacancies were up was central Toronto, but only because rents there have become so expensive that “prospective tenants likely looked elsewhere,” according to a CMHC report. Between 2012 and 2013, rents downtown jumped 3.7 per cent.
Parkdale councillor Gord Perks fears that Akelius’s incursion into areas like Parkdale, one of the few neighbourhoods where lower-income people can still make rent, will only accelerate the transformation of downtown into the preserve of the well-off.
“I’m very concerned that one of the last places where there’s private, affordable rental in Toronto is being squeezed out,” says Perks.
Individually, there’s not much tenants can do to combat ever-increasing rents. But Akelius tenants are starting to organize already buildings have formed tenant committees, and people from different buildings are starting to talk to one another.
In May, Parkdale residents marched on Akelius headquarters on Niagara carrying documentation of uncompleted repairs and demanding the company withdraw its application for an above-guideline rent increase. At the PCLS meeting, there was even talk of a rent strike.
Webber says better legislative protection for tenants is needed, but in the meantime their best hope is to join forces with other renters across the city. The pressures of gentrification aren’t only affecting people living in Akelius buildings.
“It’s not going to be enough for Akelius tenants to take this all on,” he says.
11 of 31 Number of its properties for which Akelius has applied for an above-guideline rent increase this year.
392 Number of its 2,100 units Akelius has converted to more expensive “Akelius First Class.”
39% more Amount new tenants paid for leases in Akelius buildings at the end of 2013 compared to average Akelius leases at the start of the year.