Kensington Market non-profit buys second building, reduces rent for tenants

Amidst an ongoing housing crisis and unaffordable rents in Toronto, its practically unheard of for tenants to see their rents go down, especially if the building is taken over by a new landlord.

The Kensington Market Community Land Trust (KMCLT) is able to buck that trend with the property they recently acquired in downtown Toronto and will be reducing the rent by a considerable amount.

The building at 380 Spadina Avenue contains one commercial unit and two residential one-bedroom apartments, approximately 950 square feet each.

According to a report by rental platform Liv.rent, the average monthly rent for an unfurnished one bedroom unit in Toronto is approximately $2,150.

“So the upstairs tenants that are living here now [and paying market rent] — they’re seeing their rent reduced on average by about $500 a month,” says the co-director of KMCLT, Zack Bradley.

The tenants, who prefer to remain anonymous, tell CityNews it’s a welcome respite.

“We are thrilled – especially in these uncertain economic times,” they say.

“It’s nice to see an organization like KMCLT take the initiative to preserve Kensington Market. We love living here and we look forward to being part of an organization that is working to improve the neighbourhood.”

Bradley says the second unit is currently empty and will be leased out soon for under $1,000.

“So way below what is the average for the City of Toronto and most of their utilities are included,” he says.

The idea is simple but often uncommon in Toronto — to make the apartment affordable for someone who needs it.

“When we get places like this, if we set the rent say under a thousand dollars, then your max income that will allow for you to rent this place will be around $47,000. So we’re trying to find people who are in desperate need of housing in this area. We’re thinking of maybe a single mom, we’re thinking of maybe someone who’s a senior in the community or maybe a couple that’s looking to grow and have a first child, maybe an artist who’s been pushed out of studio after studio after studio,” says Bradley.

The commercial tenant downstairs — Uncle Jacob’s Cycles — has been in the Kensington area for decades and moved into the building about 1.5 years ago. They won’t be required to move out or see a massive rent hike either.

“As a land trust, our goal is to acquire and protect buildings in our community in Kensington market. We know that the neighbourhood has been experiencing a lot of changes in recent years, with affordability, with gentrification. And our goal is to ensure that we can use land for community needs, whether that’s to protect affordability or the really eclectic and vibrant character of the neighborhood,” says Ho.

“Too often we see our property rents [being jacked up], either a commercial tenant or residential tenant. And it’s no longer being seen as a place to live, it’s being seen as an asset. So our goal as an organization is to take properties from the private real estate market and return it into community hands,” adds Bradley.

Bradley and Ho say KMCLT specifically looks for buildings with a commercial space because part of their mission is to preserve and promote local small businesses as well.

“We’re seeing so many chains come in, we’re seeing so many people being pushed out. Long-term legacy businesses are closing up shop … we’re losing the diversity and flavour of what was Kensington. And what is the biggest detriment to small businesses? It’s rent. So we want people to have entrepreneurship and [infuse] creativity into commercial spaces here in our neighbourhood,” says Bradley.

“You want to have a [neighbourhood] where you can buy cheese, you can buy bread, you can buy meat, you can get your bike fixed. These are places that are part of the everyday community, and if we just focus on housing I think we’re only focusing on half the problem.”

How can they afford a rent reduction?

The rent reduction is the result of the non-profit’s funding approach that banks on community support, which they say isn’t driven by a profit motive.

“Our organization bought our first building in 2021, and we’ve been trying to acquire additional property since then, but financing has always been challenging,” explains Angela Ho, Community Investment Manager with KMCLT.

“So last spring we launched a community bond campaign with the goal of raising up to $2 million to create an acquisition fund that will allow us to help buy our next property.”

Within eight months, they raised a million dollars with 170 investors. In addition, they received a sizeable donation from a private donor as well as $400,000 in funding from the City of Toronto’s Multi-Unit Residential Acquisition (MURA) Program. The program supports the acquisition of rental homes by non-profit organizations in order to “protect rental housing at-risk of redevelopment, converting units into permanently affordable non-profit rental housing.”

“We are losing affordable housing much faster than we can build it. We do know that the cheapest way to keep affordable housing is, in some cases, to buy it and keep it in public or at least non-profit ownership,” says University-Rosedale Councillor Dianne Saxe.

“I did two motions for them to get them City money to help with that. And I personally bought a bond, which they used to buy this building,” Ho explained. “So we didn’t have to take out a mortgage to buy this building, making this building community financed and community owned.”

No mortgage also means they’re not paying interest to a bank, but only to those who invested in community bonds — at a rate lower than traditional mortgage rates.

“If you were to take out a regular mortgage with higher interest rates, often those costs get passed on to the tenants to make the numbers work. So our financing approach gives us room to reduce the rents,” says Ho.

This summer, KMCLT will be launching another community bond program to raise funds to buy a third building in the area.

“We’ve had a lot of success with our community bond campaign. We’ve built a lot of wonderful connections with organizations and individuals and we want to build on that momentum,” says Ho.

“We know that there’s an appetite for people to invest their money in a place that aligns with their values, and in the City of Toronto that looks like affordable housing. We’re really excited to be able to continue with the community bond campaign and protect more buildings in the neighbourhood.”

Bradley adds that the goal is to raise around $2 million through community bonds and once again apply for the City’s MURA program.

“There’s a great need in our community. So there’s a constant desire and need to push forward and to buy more land,” he said.

Coun. Saxe is also putting forward another motion to secure $1.2 million in City funding (via the MURA program) to help KMCLT buy the next identified property.

“It’s a great mixed use building — 26 apartments, 10 commercial units and space to build more,” says Saxe.

“I’m putting all of my affordable housing money from my entire ward into the Kensington area because of the leadership of the Kensington Market Community Land Trust and their ability to operate these facilities in the long run. And that’s something that we don’t have anywhere else — I’m really glad to see it.”