FORD GOVERNMENT MORE RENT CONTROLS?
CP24 - Chris Fox
The Ford government says that it will bring forward rent control legislation so that the “vast majority” of tenants do not face increases in 2021.
Under existing legislation rent increases on units that had not been previously occupied prior to November, 2018 are capped, roughly at the rate of inflation.
Toronto Mayor John Tory said he is glad about the announcement and he is looking forward to learn more about the details of the legislation. "At this point in time, the province is making the right decision to leave some more money in the hands of tenants," Tory said in a post on Twitter.
The maximum allowable increase this year was supposed to have been 1.5 per cent but on Friday afternoon a spokesperson for Minister of Municipal Affairs and Housing Steve Clark confirmed that legislation is forthcoming to “ensure that the vast majority of families do not see a rent increase next year.”
“Since the very beginning of COVID-19, our government has called on landlords and tenants to come together and be reasonable with each other – and landlords and tenants across the province have shown the Ontario spirit by doing just that. In that spirit, our government is announcing our intention to stabilize rents for Ontario’s 1.6 million rental households,” the statement reads.
The Ford government banned residential evictions earlier in the COVID-19 pandemic but earlier this month is began allowing the Landlord and Tenant Board to consider eviction requests again, something it has faced criticism for.
The statement released on behalf of Clark on Friday does not include any specific details about the forthcoming legislation to stabilize rent but does say that the government will “engage tenant and landlord groups” to ensure that it is “fair and balanced.”
“We know that families are continuing to be impacted by COVID-19. We know landlords have worked hard to be accommodating and have made sacrifices. And we know that by continuing to work together, we will move past this extraordinary time and increase housing – so that every Ontarian can find a home that suits their needs and their budget,” the statement reads.
Toronto Mayor John Tory said he is glad about the announcement and he is looking forward to learn more about the details of the legislation.
"At this point in time, the province is making the right decision to leave some more money in the hands of tenants," Tory said in a post on Twitter.
Globe and Mail Matt Lundy
Major landlords are ramping up incentives to lure new tenants after the COVID-19 epidemic crushed demand for rental housing – an abrupt change from before the crisis. It’s not unusual for larger landlords to offer incentives to drum up interest. However, the pandemic has brought out a higher level of competition to entice a weaker flow of tenants, including in Toronto and Vancouver, where incentives are rarely needed.
For years, before the pandemic, rental demand was so overwhelming and purpose-built construction so meagre that searching for an apartment in many urban centres was practically a blood sport, with giant lineups, occasional bidding wars and surging rates. Eventually, developers looked to capitalize. There were more than 50,000 purpose-built rental unit completions across the country in 2019, according to the Canada Mortgage and Housing Corp. – the highest tally in decades. Plenty more supply is on the way.
The Toronto market is undergoing a massive shakeup. Out of 50 purpose-built apartment complexes in the city tracked by Urbanation, 29 have offered incentives during the third quarter. This includes free parking, one or two months of free rent, and move-in bonuses of up to $1,500. The province has “seen discounting and incentives pretty much across the board, and we have certainly adopted the same approach to remain competitive,” Minto Apartment REIT chief executive Michael Waters said in an August earnings call. Boardwalk REIT, which has heavy exposure to Alberta and Saskatchewan, has “selectively increased the use of incentives for new rentals during the pandemic to increase our occupancy,” CEO Sam Kolias said during an earnings call last month. Killam Apartment REIT is “likely always offering incentives in certain markets,” executive vice-president Robert Richardson said by e-mail. The company is giving renters a partial or full month of free rent at a number of properties in Alberta and Newfoundland and Labrador. “Today’s energy-reliant economies are not as strong as in previous years,” he said.
For landlords, there are further headwinds. The Ontario government said last week it was moving to freeze residential rents in 2021. (They were supposed to rise by 1.5 per cent, as dictated by rent-control guidelines.) Shares of apartment REITs tumbled on the news, adding to already substantial losses in 2020. Still, looking beyond the pandemic, tight markets such as Toronto will continue to grapple with insufficient supply, while stronger demand will curb the need to offer incentives.
AUGUST APARTMENT RENTS DOWN
With August rents in Canada down 7.6 per cent annually, experts agree that the lower demand is a continued reflection of several COVID-related factors, including: job loss; a decline in immigration; virtual learning as post-secondary classes resume; and young professionals moving back home with their parents.
According to the latest rental report from Rentals.ca, August rents were also impacted by the fact that more employees are working from home, allowing them to move away (or consider moving away) from the more expensive downtown rental markets.
“The average rent for all property types in Canada remains flat, but rental rates for the most expensive central properties in Toronto, Vancouver and Montreal continue to decline,” said Ben Myers, president of Bullpen Research & Consulting. “Despite the lower rent levels and incentives offered by landlords recently, there is less financial motivation to move during a pandemic, especially with Ontario freezing rent hikes on all rent-controlled properties for 2021. The lifting of COVID-19 eviction bans in several provinces could lead to further supply hitting the market and further depressing rent levels.”
At the national level, average monthly rent for a one-bedroom unit in August was $1,597, almost $100 cheaper than the average recorded in January. Toronto continues to lead Canadian cities for highest average monthly rent for a one-bedroom unit at $2,013, a number that has dropped for the sixth straight month. Eight of the top nine priciest cities and areas for renters are located in the Greater Toronto Area, with 12 of the top 14 most expensive cities being in Ontario.
RECENT APARTMENT SALES
12 Lansdowne Avenue – Toronto – SOLD $6,200,000 / $238,460 per suite / 3.0% Cap Rate
This sale consists of 26 rental apartment suites owned by a private investor in a walk up building just north of Queen Street East in Parkdale. The 1920's vintage building was in good condition for its age and had no on site parking and balconies at the front. The rents here were extremely low and the rental upside huge. This property was sold and fully marketed by The Apartment Group with multiple offers and sold to a private investor.
2 Blackthorn Avenue – Toronto – SOLD $8,100,000 / $368,180 per suite / 3.4% Cap Rate
This sale is a 22 rental townhouse project in the west end of the City in a "B" location. The property comprises almost 0.7 acres of land and within walking distance to retail shopping. The building was in good condition for its age and had on site parking. This property was owned by Timbercreek and was fully exposed and sold to a private investor.
101 Driftwood Avenue – Toronto – SOLD $6,715,000 / $192,970 per suite / 3.3% Cap Rate
This sale consists of 32 rental apartment suites owned by a private investor and was sold by their estate. The building was mid rise with a brick exterior, flat roof and double windows and included elevators and on site parking. The building was in good condition for its age and and was fully occupied with below market rents. This is considered to be a "C" location. This property was fully marketed and sold to a private investor.
3 Torbolton Drive – Toronto – SOLD $3,600,000 / $200,000 per suite / 3.4% Cap Rate
This property is a low rise walk up rental apartment building consisting of 18 rental apartment suites located in west Toronto in a "B" location. The building was in good condition for its age and and was fully occupied with below market rents. This was an estate sale and sold along with 101 Driftwood above. This property was fully marketed and sold to a private investor.
THE APARTMENT GROUP
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LORENZO DIGIANFELICE, AACI
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