By Swikar Oli
Most of the GTA will need to add 8,000 new dedicated rental units each year to meet vacancy rates acceptable to tenant advocates, says a report from the Ryerson City Building Institute.
The report, titled “Getting to 8,000: Building a healthier rental market for the Toronto Area” says that building dedicated rental units over condos is key to renters having more power.
According to the report, 76,000 condo units were added in the past decade, compared to 2,400 dedicated rental units.
“Condos make a lot of financial sense for builders,” Graham Haines, an author of the study said.
“We really haven’t built any sort of new dedicated rental supply.”
Rising land prices also means new development tends be for high-end rentals, the report says. It recommends changes to land-use laws so developers propose rental projects that are more dense in prime real estate areas, including transit hotspots.
Around a third of renters in the Toronto area live in condos, where tenants can be kicked out by owners who decide to sell the unit or move into it.
Third-year creative industries student Emma Rutledge said she prefers living in her $850 a month apartment in Kensington Market over the condo of the same cost close to Ryerson campus, where she lived last year. Rutledge said her landlord in the King and Yonge streets condo was “horrible.”
“If there was a broken dishwasher, she would always threaten to take our deposit or kick us out,” she said.
While condos make developers money up front, the report says high rental demands promise longer term profits from dedicated rental units.
The report recommends municipalities add incentives to develop dedicated rental units like the Ontario government’s fair housing policy introduced in April, which set aside $125 million in tax rebates for developers.
The recent plan requires new rental apartments to pay taxes on the same level as houses and condos across the Toronto area. Rent increases are now tied to the rate of inflation, with maximum increase capped at 2.5 per cent, although owners can set the rent to as much as they choose before a new tenant moves in.
Source: Toronto Real Estate Board, 2017
The report says these changes came after two decades of “limited government involvement in housing issues,” but it is not the only factor.
Between 2016 and 2017, rents for available one-bedroom apartments increased by 8.8 per cent. Wages at this time have remained largely flat.
“It didn’t start out this bad but because of a lack of assessment in our rental sector for three decades, it slowly built up to this point, it’s slowly gotten worse,” said Haines. To cut rental costs, first-year business management student Matt Leiper said he signed up a few months ahead for a student apartment in Neill-Wycik on Church and Gerrard streets, at the corner of Ryerson University.
For 150 square feet of living space, Leiper pays $550 a month. “If I’m living in the city, I don’t mind living in a shoebox,” he said.
Lower vacancy rates in dedicated rental units also means more rental discrimination based on “race, gender, sexual orientation, immigration status, disability and age,” the report says.
In the current climate, people will be pushed farther out of where they want to live, leading to longer commute times and stress. It also makes it tougher for businesses to attract and keep employees, the report adds.
The report recommends additional policy changes in all levels of government to stabilize availability and make renting more affordable over a five-to-10-year period. Other recommended policy changes include taxing vacant homes and asking the federal government to only offer rebates for development cost of rental units.
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