Financialization

Josh Hawley

Financialization refers to the ever-increasing influence of financial strategies, tools, and technologies within people’s daily lives.

Josh Hawley is a PhD student in Sociology at Carleton University. His research focuses on large areas of private rental housing in Ottawa, called rental villages. He spends a lot of his time working with tenants in Ottawa to fight eviction and rent increases.

Financialization of housing: The repositioning of Heron Gate Village

Heron Gate Village, a large rental complex in Ottawa, is home to about 4,000 tenants. They all rent from one landlord, Toronto-based Hazelview Properties. Hazelview owns billions of dollars worth of real estate around the world, but mostly in Canada, and Heron Gate Village is its biggest property. Hazelview has started implementing a massive redevelopment plan which has already seen over 600 tenants, mostly Black and brown families, lose their homes. The process underway at Heron Gate Village exemplifies what has come to be known as the financialization of housing. ​​Financialization describes the process of embedding strategies from the world of finance further into aspects of daily human life.

Hazelview and other landlords that share a similar business model package their properties into attractive investment portfolios they can pitch to investors. Hazelview sells a carefully curated image of Heron Gate Village to potential investors. By investing in Hazelview, investors expect a predictable return on their investment, because everybody needs a place to live and property consistently increases in value. As one company executive said, “we are looking for ways to generate a predictable yield on an apartment building, where the rent comes from tenants who are paying for a roof over their heads.” However, the reality of the on-the-ground living conditions and day-to-day experiences of tenants who call Heron Gate Village home are vastly different from what is presented in Hazelview’s investment portfolios.

Hazelview acquired Heron Gate Village in 2012 and 2013 (under its previous name Timbercreek Communities) with one objective: to reposition the property. Repositioning is an industry term that means completely changing the character and image of the property, in order to make it more attractive to investors, not better for tenants.

A traditional landlord makes their money from rent collection. A landlord could sit back and collect a steady stream of predictable, passive income from tenants paying their rent. If this landlord was feeling ambitious and had enough capital, they might redevelop or renovate their property and then charge higher rents. In any case, the goal for this landlord is always to rent out all available units to maximize rent collection, thereby increasing their return on investment.

For a financialized landlord like Hazelview, however, rent collection makes up only a small amount of their revenue. They make most of their money from investors, who buy into investment funds or shares in the company, if it is traded publicly. Conceptually, it could be viewed that investors in a financialized landlord own a fraction of a rental property, or even a fraction of an individual unit. When the rent goes up for tenants or the property increases in value because the landlord succeeds in repositioning, the investors get a higher return on their investment. While any individual can buy shares in a company that is publicly listed on the financial markets, financialized landlords primarily target the big players: institutional investors. These investors are often large public sector pension funds, like the Ontario Teachers’ Pension Plan. One executive, when talking about Hazelview’s plans for Heron Gate Village, said, “We’re not investing $100 million as a bet on rent. This is an important investment for Timbercreek and its pension plan.”

There are many reasons why Hazelview views Heron Gate Village as ripe for repositioning. Hazelview sees the neighbourhood as having a lot of what they call “value-add” potential. Ottawa is expected to grow rapidly over the next 20 years, and the neighbourhood is in a good location while property becomes scarcer and more valuable. Heron Gate Village is right in the middle of the city, halfway between downtown and the airport. Most significantly, however, is that the area is the most racialized area in Ottawa and one of the poorest, with many tenants having English-language barriers and varied immigration statuses, and working low-wage jobs or living on social assistance. Landlords like Hazelview target areas like this because they think tenants will be easier to push out to allow for a new image of the property to be crafted. To help craft these images and derive value from their properties, these landlords calculate and analyze everything from the building mechanics to the personal lives of tenants and their guests.

Financialized landlords use several tactics to reposition their properties. One is improving the “curb appeal” (think of viewing a property while standing outside on the curb or looking at one online) rather than improving conditions inside tenants’ units. In Heron Gate Village, Hazelview replaced the concrete balconies on the five apartment towers with glass ones. They cut their own operating costs by installing new water systems in their buildings, which also acts as a form of “greenwashing” to attract investors. Another tactic is “rolling the tenants.” In Ontario, high turnover benefits landlords because there is no rent control—a limit on how much landlords can increase rent each year—on vacant units. Once tenants who are paying leave their units, the landlord can increase the rent without making any improvements, giving investors an impression of an increase in value. “Squeezing” is another tactic, which describes increasing amounts of financial pressure on tenants, which in turn encourages rollover. Squeezing can be accomplished by rent increases, increasing laundry costs, charging for visitors’ parking, and submetering utilities.

In late 2015, Hazelview gave notice to around 80 households that they had to move because their townhouses were going to be torn down. Everybody moved out, the houses were demolished, and luxury rental buildings were built in their place. In 2018, Hazelview did the same thing to 150 households. This time, however, tenants across the neighbourhood organized and fought back. They showed the public what Hazelview was doing, and the story even made international headlines. Sadly, all of the tenants again were pressured to move, with many ending up in the shelter system or paying hundreds of dollars more in rent elsewhere in the city, and the townhouses were demolished by Hazelview. The tenants’ organization was not all for nothing, however. They filed a collective human rights case against both the City of Ottawa and the landlord—the largest housing human rights case in Canadian history.

Financialization occurs when parts of our lives are increasingly influenced by strategies, formulas, tools, and technologies from the world of finance. Traditional rental landlords derive value from a property through rent collection, saving on expenses through neglect, or selling a property when housing prices have increased. Financialized landlords, however, are in the business of image creation and investor returns. In the case of Heron Gate Village, Hazelview has targeted the neighbourhood for repositioning because of its value-add potential, and is realizing this plan by kicking out current tenants and demolishing housing. Financialization allows landlords to sell to investors the idea of a property, instead of the property itself, as it is experienced and lived in by the tenants who call it home. When tenants work together to expose the landlord’s tactics and push back against evictions and rent increases, they can resist being victims of financialization.

 

Discussion Questions

  • What are some key features that distinguish a landlord of a financialized property from a traditional landlord?
  • In what ways are tenants affected in their daily lives by the tactics of financialized landlords?
  • How can tenants build power to challenge landlords who have financialized their properties?
  • What kind of neighbourhoods do landlords target for repositioning? In other words, if you were a financialized landlord looking to attract institutionalized investors by repositioning a property, what characteristics would you look for in a neighbourhood or rental complex?
  • What other aspects of our lives are affected by the process of financialization?

Exercise

Find a financialized landlord in your city and identify the properties it owns. Identify which of those properties the landlord might be targeting for repositioning based on the area and statistics of the neighbourhood. Work with your classmates to create a poster, flyer, pamphlet, or website that can be used to explain to tenants in this neighbourhood how financialized landlords make their money, what tactics they might be using against tenants, and how tenants can organize together to save their homes.

Additional Resources

August, M. (2020). The financialization of Canadian multi-family rental housing: From trailer to tower. Journal of Urban Affairs, 42(7), 975–997. https://doi.org/10.1080/07352166.2019.1705846

August, M., & Walks, A. (2018). Gentrification, suburban decline, and the financialization of multi-family rental housing: The case of Toronto. Geoforum, 89, 124–136. https://doi.org/10.1016/j.geoforum.2017.04.011

Crosby, A. (2020). Financialized gentrification, demoviction, and landlord tactics to demobilize tenant organizing. Geoforum, 108, 184–193. https://doi.org/10.1016/j.geoforum.2019.09.011

Gomá, M. (2020). Challenging the Narrative of Canadian Multicultural Benevolence: A Feminist Anti-Racist Critique. OMNES: The Journal of Multicultural Society, 10(1), 81–113. https://doi.org/10.14431/omnes.2020.01.10.1.81

Hussein, N., & Hawley, J. (2021). Uneven Development, Discrimination in Housing and Organized Resistance. In Beyond Free Market: Social Inclusion and Globalization (1st ed., pp. 141–156). Routledge.

Kalman-Lamb, G. (2017). The financialization of housing in Canada: Intensifying contradictions of neoliberal accumulation. Studies in Political Economy, 98(3), 298–323. https://doi.org/10.1080/07078552.2017.1393911

Mensah, J., & Tucker-Simmons, D. (2021). Social (In)justice and Rental Housing Discrimination in Urban Canada: The Case of Ethno-racial Minorities in the Herongate Community in Ottawa. Studies in Social Justice, 15(1), 81–101. https://doi.org/10.26522/ssj.v15i1.2239

prole.info. (2012). The Housing Monster. http://prole.info/pdfs/thm.pdf

Rockwell, N. (2021). Property Standards. In Press.

Varoufakis, Y. (2015). The Global Minotaur: America, Europe and the Future of the Global Economy (Third). Zed Books.

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Digital Object Identifier (DOI)

https://doi.org/10.22215/stkt/hj58

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