Did you know that there are approximately 1.31 million renter households in Ontario, representing 29% of the province's households overall, and that approximately half of Toronto residents also rent? Pundits expect this number to continue to climb, especially in downtown Toronto, where a shortage of affordable housing inventory and rising prices are pushing home ownership further out of reach for many.
The current pool of renters in Toronto is mostly comprised of an aging demographic who favour the freedom of rental living after years of home ownership, a steady stream of immigrants and corporate relocations making Toronto their home, and those who have been sidelined by Toronto's skyrocketing property prices.
While the current bulk of rented properties in Toronto are privately owned, according to research firm Urbanation, current and proposed construction of rental buildings has increased 75% over the last decade. (Read more about the renting movement in our blog, A Shift In Toronto Real Estate Property Investors Should Note.) In 2016, it's estimated that 49% of Torontonians rent their homes, making legislation for renting property even more essential; documents such as the Residential Tenancies Act – now affecting half of Toronto's population – form the cornerstone of renting guidelines, and regulate the industry.
The Ontario Government has just imposed a cap on rent increases across the province. In reaction to the current economic climate, as well as a real estate market whose only consistent trend these days is 'up', in 2017 landlords will only be able to increase the rent of their properties by a maximum of 1.5% – down 0.5% cent from 2016.
Exceptions can be made but only with approval from the Landlord and Tenant Board. It applies to most private and residential rental units except vacant residential units, social housing, nursing homes, commercial property or residential units first occupied on or after November 1, 1991. Note, anything constructed since 1992 (like most condominiums) are void of this requirement.
How did the government come up with this number? The guideline is based on the Ontario Consumer Price Index (CPI), a measure of inflation calculated by Statistics Canada that compares, over time, the cost of a fixed basket of goods and services purchased by Canadian consumers. It's widely used to adjust contracted payments, such as wages, rents, leases, private and public pension programs, personal income tax deductions, and child or spousal support allowances. The variables that Stats Can tracks in order to calculate the CPI include costs of food, shelter, health, recreation, etc. According to the index, the variable that saw the biggest increase this past month was 'Energy' costs, which rose 3% from April 2016 to May 2016.
If you're curious about past rent caps, or the detailed rules surrounding renting, visit the Ontario Ministry of Municipal Affairs and Housing website, or OntarioTenants.ca. But for a more thorough exploration of the rent control complexities facing landlords and tenants in Ontario, we recommend our blog, Rent Controls For Ontario Landlords And Tenants.
So, what can we take away from next year's rent cap and the rising investment in rental housing? Essentially, renting is more and more becoming a lifestyle for Torontonians. We are in the middle of a renting renaissance that makes the prospect of taking on an investment property all the more appealing and profitable (Dear Urbaneer: Is It Better To Invest In Stocks Or Toronto Real Estate & 5 Essentials For Toronto Real Estate Investment). There are pros and cons; we’d be delighted to talk to you about your needs, property investment objectives and help you find a property that impresses today and will grow over time. With several decades of experience navigating the Toronto housing market for the long term, as well as a multi-disciplinary education that allows us to deliver, comprehensive, valuable, relevant service, please know we’re here to help!
~ Steven and the urbaneer team
earn you trust, then your business
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-8000
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