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Renters lose out

Jul 08, 2013

Tenants occupy nearly a third of the city’s households, but continue to pay a much higher tax rate than single-family homes, and this year were also hit with substantial reassessment increases that council mitigated for farmers but not apartment dwellers.  And hundreds of rental units in low-income neighbourhoods continue to be converted to condominiums, despite a deepening affordable housing crisis.

Tax rates on multi-residential buildings are 2.74 times those on single-family homes, despite a 15-year-old provincial policy that pushes for equalization that has been largely ignored by Hamilton. That policy did convince council to slash business taxes by over 40 percent in the first half of the last decade, and to apply the single-family rate to any new apartment buildings.

This year, average taxes rose 1.9 percent on residences, but climbed 4.4 percent on multi-residential buildings largely because of reassessment. Rising property values also drove up taxes on farmland but this impact was partly offset by the city through lowering of their tax ratio.

“The commercial and industrial property classes benefited from a reassessment tax reduction, while the multi-residential and farm property classes experienced a reassessment tax increase,” explained the staff report. “Offsetting the multi-residential reassessment-related impact is not being recommended at this time, in light of potential appeals in this property class, as well as the resulting tax impact on the remaining property classes.”

The report went on to explain that total taxes on farm properties averaged just a one percent increase because most of the charge is based on the residence rather than the farmland. This was also helped by a city decision to    reduce farm taxes to less than 20 percent of residential rates.

“The City of Hamilton has consistently reduced the farm tax ratio, establishing a farm tax ratio lower than the prescribed 0.2500 every year since 2003.”

Apartment building taxes are paid by the owners but generally make up about 20 percent of the monthly rents collected from tenants. In Hamilton, about a fifth of tenants spend over half their income on rent, which means the lowest income households are actually paying 10 percent or more of their total income just on property taxes.

“In 2006, 33,340 households in Hamilton, which represents 44 percent of renter households, spent more than 30% of their household income on shelter,” calculated the Social Planning and Research Council. “Of that number, 15,020 or 21 percent of renter households spent more than 50 percent of their income on shelter putting them at serious risk of homelessness.”

Tomorrow, the planning committee is poised to approve the conversion to condominiums of 118 apartments on Barlake Avenue in a neighbourhood flagged in the Code Red investigation of the Hamilton Spectator. City statistics reveal that 1200 apartments had been converted or were pending conversion as of the end of last year.

City policy requires that tenants be notified in advance and given the right to continue renting, but tenant opposition to conversion doesn’t prevent it from occurring and units can be sold as soon as the occupants move. Conversion approvals in Hamilton attempt to control apartment losses by requiring vacancy rates to be at least 2 percent for two consecutive years, and there are some restrictions on shifting units that are “significantly below the average market rent levels” to private ownership.

The average rent level in east Hamilton used in the latter calculation is $729 per month, but a 2010 Social Planning and Research Council (SPRC) analysis found that $734 a month was the average rent of families living below the poverty line. Some other cities require vacancy rates as high as four percent, but measuring short term trends may not adequately prepare municipalities for major recessions and other shocks to the housing market. 

Loss of apartments to condo conversions is a concern across the country. It was flagged as a problem in the city’s Housing and Homelessness Action Plan released in 2011 which calculated a net loss of nearly 800 units in the previous decade despite an official plan target to add over 600 units a year to accommodate population growth. In May of last year, the SPRC reported 5,300 Hamilton households on the waitlist for affordable housing.

“This represents a dramatic 48% increase since 2007, just before the recession,” noted the SPRC report. “This jump in demand for affordable housing is among the highest in the province – the provincial average was a 25% increase in the number of affordable housing waitlist applications this same period.”

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