Rental vacancy rates lowest in 16 years
Rents across the GTA continue to rise as vacancies diminish.
Thestar.com
Emily Mathieu
Nov. 28, 2017
Affordable apartments are becoming increasingly difficult to find across the GTA, with vacancy rates hitting a 16-year low amid steadily rising rents, a new report shows.
The details around the rising costs of rent and the decline in available apartments are spelled out in the latest Rental Market Survey for the Greater Toronto Area, from the Canada Mortgage and Housing Corp.
The overall vacancy rate for the GTA was at 1.1 per cent, down from 1.4 per cent in 2016. The Toronto Census Metropolitan Area (CMA), which covers much of the GTA, was at 1 per cent, down from 1.3 per cent the previous year.
The average cost of an apartment rose to almost $1,300 a month, across the GTA.
“Rising costs of home ownership forced more people to seek and remain in rental accommodation. The resulting average vacancy rate for private purpose-built apartments in the Toronto CMA declined to reach its lowest level in 16 years,” the authors wrote.
That lack of supply and high demand, the authors wrote, also allowed landlords to charge “significantly higher rents” after tenants moved out and still remain competitive.
The average cost of a purpose built apartment in the GTA, according to the report, was about $1,300 and almost $2,080 to rent a condominium.
Greg Suttor, a senior researcher at the Wellesley Institute said $1,300 was a bit of a milestone, in a rental market that has been ticking up for years.
In Canada, spending 30 per cent of annual gross income on rent is defined as affordable. Suttor pointed out that an annual gross income of $52,000 would be needed, to meet that standard in what is now the average cost of a Toronto apartment.
That means lower-income residents must choose between living in housing they can’t afford, or being pushed to the margins of the city, he said.
“We know that the market is very tight, there is only so much supply and there is huge demand,” said Suttor, noting that average rental costs have gone up more than 5 per cent and the cost of renting a condo has gone up more than 10 per cent, since last year.
In Toronto, an average one-bedroom costs $1,194, up from $1,132 the previous year, the report showed, and across the GTA that figure rose to $1,191 from $1,129.
In central Toronto, a one-bedroom apartment was slightly easier to find, with a vacancy rate of 1.9 per cent, up from 1.4 per cent, however the cost of the unit was at $1,498 up from $1,336 from the previous year.
In addition to demand, “major repairs, renovations and replacement investments by property-owners may have also been factors for stronger rent increases in 2017,” the authors wrote.
In Ontario, monthly rent can automatically be raised each year but only by a set amount established by the government. Landlords can apply for an additional increase if they can prove they have done necessary capital repair work on buildings.
Once a tenant moves out, there is no limit on how much a landlord can charge.
Tenant advocates contend those legal rent increases tied to repairs are used to force lower-income tenants out of older buildings, so they can jack up the rent.
Earlier this year, tenants in buildings run by MetCap Living Management Inc. went on a “rent strike” to protest increases, which ended with a settlement.
The settlement included a reduction in planned rent increases at six buildings in Parkdale and the creation of a new rent-relief or assistance program run by MetCap staff to provide more security for lower-income tenants.
Earlier this month, the federal government released the National Housing Strategy, which includes a pledge to create a rent supplement program which should help low-income Canadians access what would otherwise be unaffordable apartments.
That program is expected to be in place in the next two to three years.
Across the GTA, developers have responded to demands for new rental units and “benefited from favourable lending conditions in recent years,” but still couldn’t meet the demand, particularly for newer rental units with condo-like features, according to the report.
This year in the GTA, “the number of purpose-built private rental units under construction surpassed 7,000 — its highest level ever,” and developers completed about 2,240 rental units between June 2016 and June of this year, a 31 per cent increase from the previous 12 months, the report showed.
“However, this pace of completions was modest relative to the record number of units currently under construction and not significantly above the past 10-year annual average of 1,800 units,” the authors wrote.
The number of actual rental units increased by 2,577, in part, thanks to the completion of some housing projects.
The federal strategy and commitment to housing, including the recognition it should be considered a human right, comes at a time when a lack of safe and affordable places to live is being recognized as a country-wide crisis.
In Toronto, the city’s emergency shelter system can hold close to 5,700 people throughout the week and on Friday, 96 per cent of those available spaces were full.
Toronto’s social housing stock is also dealing with a massive repair backlog, with 600 units expected to be closed by the end of this year.
The national strategy included a pledge to use a yet-to-be-specified portion of a $15.9-billion national co-investment fund for repairs for social housing stock.
“Repairing and maintaining Toronto’s social housing has long been a top priority for our city, and I expect the National Housing Strategy to prioritize investments in cities that have both demonstrated need and the ability to deliver repairs now,” said Deputy Mayor Ana Bailao, in a statement on the day the strategy was released.
“With so many residents struggling to find and maintain a home in Canada’s big cities, the opportunity presented by the National Housing Strategy cannot be missed. For this reason we will be working hard to ensure that all orders of government are working together in co-operation with housing providers to make this a success.”
