Rental vacancy rate dip sparks warning
• A new report commissioned by an i ndustry landlord group says 1,000 rental units have been cancelled since Ontario expanded rent control rules across the province in May.
The r e port, c ommissioned by the Federation of Rental- housing Providers of Ontario and released Monday, was conducted by condo research firm Urbanation Inc. It warns that unless 6,250 additional new rental units are built each year for the next decade vacancy rates will continue to drop to critical levels. The report maintains vacancy rates are 2.1 per cent across the province and 1.3 per cent in the Greater Toronto Area.
The group maintains that before the introduction of Ontario’s Bill 124, which expanded rent control rules to buildings constructed after 1991, purpose- built rental projects were at a 25- year high in the GTA, with 28,000 units in the planning pipeline.
“Ontario’s scarce rental housing supply combined with escalating house and condo prices have created a housing crisis in our biggest cities,” said Jim Murphy, president of FRPO.
“The only solution is for Ontario to build itself out of this situation. This begins with our provincial lead- ers working with industry to identify and implement policies that create more purpose- built rental units, not less.”
Meanwhile, the head of Canada’s largest real estate investment trust said the decision to turn one of its projects into a condominium as opposed to a rental unit can be traced back to provincial rules that will tie rent increases to inflation, but the REIT is still planning to go ahead with many other rental projects.
“There are two things that happened. One was the Liberal government changing policy to apply to buildings like this, brand new buildings,” said Ed Sonshine, chief executive of RioCan, referring to a 133-rental unit project in the west end of Toronto.
Sonshine said the REIT has since reviewed every one of its rental projects and has about 20 in the pipeline. The traditional retail landlord will have about 4,000 units in its portfolio as it takes advantage of some of its strategic locations in urban centres.
“Our stated goal is to have 10,000 units across Canada,” he said in an interview, adding his company does not want to switch to condominiums over rentals.
“We are in the cash- flow business and we like cash flow even though the government has put a crimp in future growth.”
Sonshine said the unit was converted to condominiums because it had a partner on the development in Allied REIT, so only half of the 133 units belonged to his REIT, and the price of the condominiums had gone higher than expected.