Toronto owners with vacant units could enjoy an 11% increase in rent this year.
According to Rentals.ca’s National Rents Report, which studied empty units and predicted that rents throughout the country would increase by 6% in 2019.
Ben Myers, president of Bullpen Research & Consulting Inc., notes that the breakdown in Toronto is pretty much divided between the oldest rental apartments, and the newest condo rental units. It also says that Toronto has a chronic performance below the number of units needed each year, and is contributing to the increase in rents.
“There’s likely to be a demand for approximately 25,000 new rental units a year, and we’re delivering around 2,000 new rentals and 18,000 to 22,000 condo rentals, which means there are about 3,000 to 5,000 units left each year.”
The preference continues to be for newer and more luxurious units, which typify condo rentals.
“Tenants like the newer finishes and amenities, and some of the older buildings may be larger, but they do not provide the lifestyle that some of these tenants are looking for,” Myers added.
The preponderant reason for the double-digit increase in the rental market in Toronto has to do with the economy of buying a condo unit in the city. In downtown Toronto, investors are buying between $ 1,000 and $ 1,200 per square foot, and to maintain positive cash flow, they will need to increase rents significantly.
Of course, this is compounded by an increase in the number of tenants. Since the stress test of the mortgage was introduced, many people can not own it. To make things worse for potential buyers, Canada has officially entered an environment of rising interest rates.
“The availability of credit in the market is being reduced and people can not afford the house they wanted, so people choose to rent for more time to pay for the house they want instead of the house they do not want, and that they would sell three to four years down the road, “said Myers.
After the liberal government of Kathleen Wynne introduced rent control, many owners sold their units to final buyers, and that flooded the market with more tenants looking for rentals, says Morrison.
“It’s good for the owners if they’re in a good neighborhood,” he said. “They need to be in a downtown neighborhood to command that demand. For owners north of 401, demand is not as high, but demand is high in the central core: Midtown, Leslieville, West End.”
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