Re­port call­ing for surge in rentals

Metro Canada (Toronto) - - Front Page -

The Toronto area needs 8,000 new ren­tal units a year — more than four times the num­ber it built last year — to re­store the re­gion to a healthy va­cancy rate.

It also needs to wean it­self from a grow­ing re­liance on the pri­vate con­dos that rep­re­sent about a third of rentals in the city, says a re­port pub­lished Thurs­day by the Ry­er­son City Build­ing In­sti­tute and Ever­green, an ur­ban sus­tain­abil­ity char­ity.

“Un­less we’re go­ing to make (home) own­er­ship a lot more at­tain­able, 8,000 is where we need to be at now and in the fu­ture,” said Gra­ham Haines, re­search man­ager of the Ry­er­son in­sti­tute.

At that rate it would take five to

10 years to re­store the re­gion to a va­cancy rate of at least 3 per cent, says the re­port called, “Get­ting to

8,000: Build­ing a health­ier ren­tal mar­ket for the Toronto Area.”

That level would per­mit ten­ants to find suit­able, af­ford­able hous­ing. But the Toronto re­gion’s va­cancy rate has been be­low that for years.

The most re­cent Canada Mort­gage and Hous­ing Cor­po­ra­tion fig­ure is 1.4 per cent. Rents for avail­able one-bed­room apart­ments rose 6.3 per cent between 2015 and 2016 and 8.8 per cent in the last year, says the re­port.

“A pos­i­tive would be if we can get back to­wards ren­tal build­ings and ren­tal sup­ply ver­sus condo sup­ply be­cause we can get back to the place where con­dos are an af­ford­able en­try into home own­er­ship,” said Haines.

“Right now we see con­dos are still go­ing up by 20 per cent be­cause they of­fer this in­vest­ment op­por­tu­nity for peo­ple who have spare real es­tate money,” he said.

While 76,000 con­dos have been built in the last decade, only 2,400 new pur­pose-built ren­tal units have hit the mar­ket, ac­cord­ing to the re­port. In­vestors get a de­cent rate of re­turn on rent and that puts the pur­chase price of con­dos fur­ther out of reach for home buy­ers, said Haines.

“You’re look­ing at like $600K for a two-bed­room condo. That’s un­af­ford­able for a fam­ily try­ing to get into the mar­ket,” he said.

The re­port rec­om­mends gov­ern­ments in­cen­tivize ren­tal de­vel­op­ment by ex­pand­ing the de­vel­op­ment charge re­bate in the On­tario govern­ment’s fair hous­ing pol­icy that, in April, pre­scribed $125 mil­lion over five years.

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