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As the Canadian rental market recovers from the pandemic, vacancy rates in cities like Toronto are dropping and rents are rising. Despite those challenges, many appear content to rent.In a recent survey by Entrata, a property management software firm, two-thirds of respondents say renting fits their current lifestyle more than owning a home.
Almost half want to stop renting and own a home within the next three years and 43 per cent admit they need more space, possibly to accommodate ongoing work-from-home needs.
The main reasons for currently renting instead of owning are cost-related, with the inability to afford a down payment on a home and homeownership being too expensive.Also, according to the survey, 29 per cent of Canadian renters moved within the last year and another 51 per cent plan to move once their current lease is up.
“Our survey of Canadian renters shows that many have moved to larger spaces to accommodate work-from-home needs, moved back to hometowns and some even moved to the city to take advantage of lower rental rates,” says Chris Harrington, Entrata’s chief revenue officer. “We’re seeing a shift in the industry as renters look for more flexible leasing options and think differently about apartment amenities.”
On-site amenitiesNearly all Canadian apartment renters care at least a little about on-site amenities now versus before the pandemic. About 38 per cent say on-site amenities are why they love renting and 13 per cent say amenities make or break a rental property now.
The most important on-site amenity is high-speed internet, with controlled secure building access and in-unit laundry trailing close behind.
That’s not lost on developers like BentallGreenOak and Kingsett Capital. Its 99 Gerrard West development is home to 275 suites and features coworking and study spaces, an indoor movie theatre, a games room, gym, spinning/yoga and training studio, pool, sauna and pet spa.
A landscaped rooftop terrace includes a dog run, sundeck, green roof and urban beehive, outdoor movie theatre and barbecue area.
Luxury rental market offerings include The Selby by Tricon Residential, located just steps from Yonge and Bloor. “Be part of a new generation of renters who choose the freedom of rental living with all the privileges and none of the hassles of ownership,” it says on its website. Amenities include a fitness centre, games room and an eatery by Oliver & Bonacini.Purpose-built rental apartment development rose to its highest level in decades in 2021, with construction on 6,720 units underway. That nearly doubles the five-year average of 3,379 starts between 2016 and 2020, reports Urbanation, a development-tracking market research firm.
Nearly 18,000 rentals were under construction and another 93,300 were proposed for development, according to its 2021 year-end report.
Vacancy ratesMeanwhile, vacancy rates in the Toronto region returned to a balanced level of 3.1 per cent by the end of last year. That’s less than half of the 7.4-per cent vacancy rate of a year earlier and the nine-per cent peak vacancy rate of the first quarter of 2021.
In the final quarter of 2019, the region’s vacancy rate had fallen below one per cent.
The incentives introduced at the onset of the pandemic were effective for rental operators but became less necessary as the market tightened and shifted back towards a landlord’s market, Urbanation notes.
Just 47 per cent of surveyed purpose-built rental buildings were offering some type of financial incentive to new tenants in the last quarter of 2021, down from 70 per cent a year earlier.
“The GTA rental market downturn that occurred during 2020 as a result of the initial effects of COVID-19 quickly reversed in 2021,” Urbanation President Shaun Hildebrand says. “While an expected record high for condominium completions and a multi-decade high for purpose-built rental completions in 2022 may help to keep some level of balance in the market this year, expect rents to continue growing on record high immigration, rising incomes and low homeownership affordability.”By the numbers
The number of condo units listed for rent in the last quarter of 2021 dropped 48.9 per cent to 16,972 units compared to the previous year, the Toronto and Region Real Estate Board (TRREB) reports.
The average one-bedroom condo apartment rent was $2,099 – a 13.7 per cent increase compared to the same period in 2021. The average two-bedroom condo apartment rent increased 12.6 per cent to $2,763.
“The lack of housing inventory is not just an issue for the ownership market in the Greater Toronto Area,” says TRREB President Kevin Crigger. “After a relatively brief pandemic-induced blip in rental supply, available rental listings have declined. This has made it more difficult for would-be renters to find a place to live – essentially you can’t rent what isn’t available. By extension, the lack of inventory has also resulted in increased competition between renters, pushing average rents higher.”Tips for renters
• Determine your budget and research what it can get you and where. Decide if you’re willing to compromise on things like square footage and building amenities to live in your preferred neighbourhood.
• Know your rights. Ontario’s Standard Lease Agreement contains information on rental rules, and rights and responsibilities of landlords and tenants under the Residential Tenancies Act.
• Get documents in order, including a credit check, proof of employment and character references. Have your deposit ready.
Story by: Toronto Sun