Report calling for surge in rentals
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.