Today’s Globe and Mail features an article about the University of Toronto’s plan to turn “to the private sector to solve their campus housing problems” for students. In particular, the article refers to a plan whereby the U of T would become “the first university in Canada to erect a large tower offsite with private money.”
According to the article, “[t]he university owns half of the site, Knightstone [a private equity firm] owns the other. Knightstone would collect payment from the students, and pay the university a cut as rent.” The article goes on to quote the firm’s CEO saying: “We just want to let the schools focus their capital on education and leave their hotel-like functions to the right partner.”
As I’ve outlined in a 2007 housing policy paper, there are major advantages to keeping the ownership of rental housing public. As I state in the paper:
“The private sector…has a vested interest in raising as much money from tenants as possible. Thus, not surprisingly, empirical research does confirm that, when it comes to who owns and operates units, the non-profit sector keeps rent down over the long-run when compared to the private sector. Whereas private landlords will tend to raise rents as much as the market (and legislation) allows, non-profits will tend to raise rents only insofar as their costs go up. Thus, it is clear that the non-profit sector is very good at
preserving affordable housing.”
In short, I’m not necessarily opposed to engineers, land surveyors, lawyers and labourers (all of whom are very important in the contruction of housing) coming from the private sector. But I belive it is in the public interest for housing to be owned and operated by the non-profit sector.