Toronto’s Rental Market
If you haven’t tried to rent an apartment recently in the city of Toronto, the annual figures released by the Toronto Real Estate Board (TREB) may come as a shock. By the end of 2018, the average price for a bachelor condominium apartment rose to $1,821/month, a 1-bedroom to $2,143/month, and a 2-bedroom to $2,774/month. Ouch.
These statistics only refer to condo rentals, which we clarified with Mike Macri at TREB. “There are too many variables with freehold listings. There’s simply no way for a computer to accurately analyze whether an entire home is for rent, or just an apartment within the home, or whether it’s shared accommodation by room,” he explained.
According to the Canada Mortgate and Housing Corporation (CMHC), the average vacancy rate for Toronto has decreased to 1.1% (meaning for every 100 existing rental units, only 1.1 are available to rent). In our recent experience, even basement apartments, once considered undesirable, are easily renting in the $1,500 – $1,900 range, depending on size and location. This market is challenging for both landlords and tenants to navigate, and we are here to help!
Many people are surprised to learn that a professional Realtor® can help landlords find tenants, and tenants find rental units. The standard fee charged to the landlord is one month’s rent (+ HST), half of which goes to the listing brokerage/Realtor®, and half of which goes to the brokerage/Realtor® who brings in a qualified renter.
In a market such as this, where potential tenants are often competing for available units, Realtors® can help landlords attract and vet the best applicants, and can help renters secure their ideal apartments. It’s important for prospective tenants to have a credit report/score from TransUnion or Equifax, a letter of employment stating income, and a rental application completed, at minimum. We also encourage our clients to write a short letter of introduction (sometimes with photos) to the potential landlord, because creating that sense of personal connection can often make all the difference!
With so much market activity and significant recent changes to legislation, it’s more critical than ever for all parties to know their rights and responsibilities. Landlords and tenants should review the Residential Tenancies Act, 2006 (RTA), which regulates everything from “no pet” provisions in leases, to responsibilities for repair and cleanliness, to right of entry, lease terminations, and more. If you have questions, or find yourself in a dispute, it’s important to know that the Landlord and Tenant Board (LTB) is an available resource and source of support.
In the spring of 2017, an amendment called the Rental Fairness Act, 2017 was made to the RTA. Some of the key issues addressed by the Act included removing exemptions from provincial rent increase guidelines for post-1991 units (set at 1.8% for 2019), negating the ability of landlords to apply for “above the guideline” rent increase for utility costs, and mandating that landlords who evict tenants for personal use must then live in the unit for a minimum of one year. Substantial penalties may apply if a tenant can prove the landlord or immediate family member did not move in, and instead the unit was simply leased out again (a tactic once used to obtain much higher rental rates).
Another significant change came about in 2018, when the province of Ontario mandated that all leases entered into on or after April 30 must utilize a standard form going forward. Realtors® help with preparing a document called the Agreement to Lease, which in the past often included a clause stating it was also the completed lease. Now, the Agreement to Lease includes a clause that the landlord and tenant must separately draw up the provincial government’s Residential Tenancy Agreement (Standard Form of Lease).
As Toronto’s population continues to increase, and housing prices remain out of reach for many, it’s likely that renting will become even more commonplace, and conditions will stay highly competitive. New condo developments are frequently including family-sized suites in their plans, and many prospective homeowners are realizing their dreams by becoming landlords.
Whether you are looking for rental revenue to help cover your mortgage, or you are an investor wanting to lease out an income property, or you are a renter looking for a new home, having a professional Realtor® on your side can help make the process as painless as possible!