Toronto landlords with vacant units could enjoy as much as an 11% hike in rent this year. That’s according to Rentals.ca’s National Rent Report, which only studied empty units and also forecasted that rents nationwide would increase 6% in 2019. The research shows that renters’ preference remains for newer, lavish units, which typify condo rentals.
The primary reason for the double-digit market rental hike in Toronto has to do with the economics of purchasing a condo unit in the city. In downtown Toronto, investors are buying in at between $1,000 and $1,200 per square foot, and in order to stay cash flow positive they will need to increase rents considerably.
Of course, that’s compounded by a growth in the number of renters. Since the B-20 mortgage stress test was introduced in January, many people are precluded from homeownership. Making matters worse for would-be purchasers, Canada has officially entered a rising interest rate environment. After Kathleen Wynne’s Liberal government, voted out of office earlier this year, introduced rent control, many landlords sold their units to end-user purchasers, and that flooded the marketplace with even more tenants looking for rentals.
“These statistics are proof that there is a strong market being established for rental properties in the GTA. There is an upward pressure on the rental rates and as market rents rise so will the value of these properties and in turn be more difficult for people to buy them. I expect that this trend will continue in the upcoming years and as the margin of household incomes versus value of properties widens the more demand there will be for rental units. Therefore, further demonstrating the value in investing in rental properties.” — Leo Manchisi
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Sean Kavanagh 905.220.9198
Leo Manchisi 905.334.9650