Toronto’s rental market, much like home-ownership in the city, is unhealthy.
And now, a new report suggests that in order for the city to improve its rental state, the market needs to add 8000 new purpose-built rental units per year.
The report by Ryerson University’s City Building Institute highlights Toronto’s low vacancy rate when it comes to rental. The rate has been below 3%, which is considered to be the minimum level indicative of a healthy market. This means it is difficult for renters to find suitable and affordable housing.
According to Ryerson, one of the biggest reasons for our rental market health decline is an over-reliance on private condos.
“Over the past ten years, the Toronto Area rental market has only grown by 2,400 purpose-built rental units while 76,000 private rental condos have joined the market as rentals,” states the report. “In other words, over the past decade, growth in the Toronto Area rental market has been entirely reliant on individuals and commercial property managers buying condos and putting them onto the rental market.”
Renting out condos is known to be less stable for tenants, as landlords can use their own provisions on the properties. As well, the report indicates that the reliance on condos for rental has contributed to “property speculation” which has helped push home-ownership prices upwards.
And it’s this over-reliance on condos that has caused most developers to favour condo projects over rental ones in the city.
In order to balance the market, Ryerson reports that the 8000 new purpose-built rental units would ensure that sufficient new rental units are built for the thousands of Toronto residents looking for homes each year.
“While this target should be regularly reviewed, population projections suggest that the Toronto Area will require the addition of 8,000 units every year up to 2041,” reads the report, which acknowledges that this can’t happen overnight.
The report calls for immediate actions by various levels of government to reach that goal within five to ten years.
Among its public policy recommendations, the report says that municipalities should introduce vacant unittaxes throughout the Toronto Area, as well as regulate short-term rentals – both of which are issues that the City of Toronto have looked at.
Municipalities should also have more incentives to all rental developments. “Expanded incentives are
required to ensure new regulations do not dampen development interest,” states the report.
The addition of rental units per year would slowly get Toronto back to a healthy housing system, which is more than a physical system.
“Our housing system does more than provide shelter; it helps drive economic and social well-being. A healthy housing system should address all residents’ shelter needs, no matter their income, background, or stage in life,” said the report. “Getting it right means a more affordable, more attractive, and more competitive region to call home.”