5. Gentrification Tax
Tenants in large cities are vulnerable to displacement by gentrification as landlords use all means to either raise their rents or to replace them with higher paying residents. In order to maintain affordability and stability, we demand a gentrification tax on sale of residential real estate earmarked to fund deeply affordable rental housing secured within community land trusts, so the value produced by the neighbourhood stays within it.
Through gentrification landlords profit from an “unearned increment”; the value embedded in real estate not created by a private owner, but by Indigenous people, local cultures, tenants, neighborhood and community organizations, publicly funded infrastructure, and non-human biotic and abiotic ecologies.
Cities across c\a\n\a\d\a could enact a gentrification tax to capture this unearned increment of value and use its revenue to fund affordable housing. Capital gains on property will be taxed when sold, at a percentage that decreases as the time from purchase increases, in order to disincentivize flipping. The tax revenue will be dedicated to funding housing secured in community land trusts operating in the neighborhood from which the revenue was collected. This hypothecated tax would collect a new magnitude of sustainable funding for housing, In the face of increased immigration and the polarization of cities between renters and owners, a new income stream for housing affordability is the only way to create a truly sustainable and equitable city. By ensuring the construction, renovation, and maintenance of affordable housing in the neighbourhoods most at risk of gentrification, this tax would enable the creation of land trust cities.
We demand that the City of Toronto create a Gentrification Tax. To illustrate the transformative potential of this instrument, we have developed a case study in the downtown Toronto neighbourhood of Parkdale. This neighbourhood still contains large stock of affordable rental units for low-income residents, a majority of whom are black, Indigenous and or people of colour. Currently, both mid-rise apartments and rooming houses are under threat from corporate landlords and real estate investment trusts (REITs), who financialize housing, increasing rents and forcing out existing tenants.
In response to this ongoing crisis of housing financialization, the Parkdale Neighbourhood Land Trust (PNLT) has purchased rooming houses and low-rise apartment buildings, taking land out of the competitive housing market. The Gentrification Tax will provide funding for PNLT to add mid-rise apartment buildings to its trust, taking this valuable building stock off the market and out of the reach financialized landlords.
Architectural investments will then be made in these buildings to create long term housing that is sustainable, accessible, generous and collective. At grade, dense new landscape and community facilities will create generous public spaces, activating the public realm and connecting it to adjacent parks and greenspaces.
Select additions and renovations to existing buildings will create new public and private amenity space, additional family-sized and accessible units, while minimizing disruption to existing tenants and ensuring they can remain in their homes. The aggregation of formerly private rental properties into a network of Land Trust properties will render new civic forms in Toronto neighborhoods.
Gentrification Tax Contributors:
Region: Toronto
Activist: Joshua Barndt, Monica Hutton, James Partanen, Parkdale Neighbourhood Land Trust
Advocate: Sameer Farooq, Kika Thorne, Ali S. Qadeer, Jane Mah Hutton, Adrian Blackwell, Gentrification Tax Action
Architect: Bradley Dunn, Janna Levitt, Joe Loreto, Conrad Speckert, Ivee Wang, LGA Architectural Partners Michael Piper, tuf lab Michael Hopkins, Blackwell Engineers; The HIDI Group; Vermeulen Quantity Surveyors
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