In last week’s blog we wrote about how to buy a Toronto condo in 2018 faced with tighter lending rules and higher interest rates in the buyer’s market. This week, we turn to the Toronto rental market, which is equally under pressure. To that end, let’s talk about how to rent a Toronto condo in 2018, with some helpful tips from our Condo Pros.
Toronto condo rental market at a glance
Toronto condo rental market is under tight pressure
The short, blunt truth is that Toronto’s rental market is fast-paced and ruthless right now. Multiple offers are the norm. Average monthly rent is $2,234. When looking to rent a condo in Toronto, you need to be prepared, flexible, and patient.
The new landlord and tenant rules that came into effect last September have unfortunately worsened the rental situation in Toronto, or at least increased the pressure. While the rules have succeeded in making the system more secure for tenants, many landlords are now feeling insecure. One of the main rules, the Ontario-wide rent control for all rental units, has actually coincided with a general rise in rental prices, particularly in downtown Toronto. Since landlords can raise a tenant’s rent only a certain amount each year, they are seizing the opportunity between tenants to raise the rental price of their unit on new lease contracts.
Condo Pro Alexander Evans explains, “We will continue to see a tight market as people who are currently renting will not want to move out of their current unit as it will most likely mean them paying more for a similar unit as we have seen a significant increase in the average rental rates. Landlords are doing what logic predicts they would do and that is pushing to get the highest possible rent whenever they have a new tenant knowing that they can only increase the rent by the government set rate in the future for renewals.”
Toronto’s limited rental supply is a big problem
Adding to the pressure is Toronto’s lack of rental supply. Something like 80% of rental units in Toronto are found within the private ownership market—condo owners renting out their unit. The portion of the market that is actually purpose-built rental units is minimal, especially compared with the rising demand for rental accommodations. In a city that is averaging $554,070 to buy a 820 sqft home, more people are choosing to stay in the rental market. According to the Toronto Star, the rising prices and competitive demand are pushing tenants and buyers out of downtown Toronto into the 905 neighbourhoods.
For property owners and landlords, financial anxiety must be a daily struggle. Should you turn your unit into a short-term accommodation like Airbnb? Should you hike the rent each time you sign a new long-term tenant? Each year, property taxes and maintenance fees are likely to rise more than controlled rent increases can match, not to mention the costs of general upgrades and repairs. What’s fair?
Something to recognize and remember is that it’s tough for everyone involved in the rental market right now. Everyone is feeling the pressure, even the government. The federal and provincial governments are trying to correct the problem, and we can appreciate that, but it’s not an overnight fix.
The one group that should be feeling the pressure more is developers. There is an great opportunity right now for developers to invest in purpose-built rental properties to address the supply issue and, essentially, capitalize on the demand. However, there is still a strong preference to build condo buildings over purpose-built rentals.
How do you rent a Toronto condo in 2018?
Even though it’s tough, people are finding condos for rent in Toronto every day. It just takes a bit of know-how, and like we said earlier: preparation, flexibility, and patience. Three other essentials to tackle the Toronto rental market are:
A letter of employment
A credit report
Two personal references
For more tips and advice about renting in Toronto, we asked our Condo Pros. Here’s what they said.
Tips to rent a Toronto condo in 2018
Brooke Anyon: Know where you want to live. It sounds obvious, but Toronto offers a wide range of neighbourhoods, each with its own highlights and drawbacks, especially when it comes to affordability. Knowing what Toronto neighbourhood you like and which you can afford will save you a ton of time.
Shauna Arthurs: Given the competition, I usually call and have a quick chat with the listing agent ahead of time, talk my clients and explain their situation, and often that connection helps. Don’t hesitate to ask your agent to call the landlord or listing agent on your behalf.
Jeff Augustine: Some of my clients have submitted short letters along with their application, just a paragraph or two, that introduce them as a person rather than a credit score. This can be a great way to get to know your landlord and ease the process for them of accepting a stranger to live in their unit.
Diane Boca: We are experiencing a lot of multiple offers, so remember to be flexible and available with respect to viewing times to get in quickly or to view new listings as they come up.
Joanna Davids: There are more pre-qualified renters out there than available rental units. Getting all of your qualifying documents together before you book a viewing is a huge leg up to secure the unit you want. Your qualifying documents include your letter of employment, credit report, and at least two personal reference letters.
Renee Didiano: Be honest with your rental agent. Tell them why you left your last place or the details of your income. They are your representative when it comes to dealing with the listing agent or landlord, and the more they know the better they can present a clear picture of you as a tenant.
An ideal minimum credit score is 680. If your credit score or your employment status is likely to hurt your rental application, see if there is someone that can cosign for you, like a parent/guardian or a friend. If a cosigner is not an option, sometimes offering a few months’ rent in advance can help give the landlord confidence in your ability to carry the cost of rental.
Gareth Reid: Don’t wait to prepare your application documents. Say it takes three days to request and receive a letter of employment and personal references, that’s enough time to lose three different offers for not having the paperwork.
Be ready to go above and beyond to get the place of your dreams. In some cases, you might even want to prep yourself as if going into an interview, so the landlord or their listing agent can get a real feeling of who will be living in the unit.
Alex Roy: Brooke and Shauna nailed it. I just completed a deal downtown this weekend because everything was prepared and ready to go. No scrambling for documents and had the listing agent up to speed before we even saw the unit.
Arvin Reyes T.: As general rules to consider:
The ratio of monthly rent to monthly income should ideally not exceed 33%.
Longer term employees at a company are given preference over newly employed people.
Landlords prefer single occupants for 1 bedrooms, no more than two occupants for 2 bedrooms. Wear and tear is believed to be less with fewer tenants.
Landlords prefer no pets in their units, and this could be a deal breaker if tenants choose to disclose their pets. Although the Residential Tenancies Act does make a “no pet” provision void, if a tenant mentions their pet the landlord can refuse an offer at their discretion.
*Data sourced via Condos.ca on Jan 17, 2018