If you’re looking to rent an apartment in Toronto this year, one report says get ready to pay more than the previous tenant.
The national rent report from rentals.ca and Bullpen Research suggests rental rates will jump 11 per cent in the city this year, compared to a nationwide average increase of 6 per cent.
The average price of renting a two-bedroom apartment could jump to over $2600 a month, fueled in large part by a supply shortfall — despite the numerous condos you see being built as you drive into the downtown core.
Bullpen Research President Ben Myers says those appearances are deceiving.
“It’s just more visual. Obviously when you drive down the Gardiner, you see all those units being completed,” he says. “But there’s a lot of areas of Toronto where people want to live and there just isn’t the supply of rental units in those markets.”
In addition to a shortage of supply, Myers says a number of steps taken to cool the housing market have had the unintended consequence of increased rental prices.
The new mortgage stress test is also part of what is driving rental prices up, by setting off a domino effect.
“The B-20 change requires people to qualify at 2 per cent higher than their contracted rate. That’s reducing mortgage credit availability and is making people rent for longer,” he says — which in turn increases demand for rental space. In addition, existing tenants are staying put instead of paying more to move
With low supply and low turnover, Myers says the rental market is now seeing bidding wars.
“Rental units going for 105 or 107 per cent of the list price — people are actually bidding on it. People are having to put together really detailed packages for potential landlords to see how great a tenant they are,” he says.
Myers says 25,000 to 30,000 more units are needed to meet current demand, though he doesn’t expect to see that happen.
The Ontario government blamed inaction by the previous government for the increases in rent and say the steps they have taken to exempt new units from rent control rules will help keep housing costs in check.
“Exempting new units from rent control will encourage large developers and small landlords to create more rental housings,” said Julie O’Driscoll, Director of Communications.
She adds they have also started broad public consultation so Ontario residents can submit ideas on how to build more hosing and reduce housing costs.
You can complete a survey or submit your ideas on the Ontario website.