If you’re a renter looking for a new place, you probably know this is a pretty tough time to be in the market. Competition is fierce, especially for more reasonably-priced properties, and prices just keep going up. And it’s because there are more people looking and fewer available properties: the number of units for rent is down by over 25% from this time last year.
Plus, with all the interest rate hikes that have been happening lately, more people are putting their homebuying plans on hold and continuing to rent (or giving up on buying completely), putting even more pressure on an already depleted housing supply.
So what’s a wannabe tenant to do in this crazy market? We talked to Property.ca Inc. agent Adam Hoffman about the key trends and insights renters should be aware of before starting their search.
1. You may face a bidding war.
For a rental? Yep, it’s totally a thing now, especially for properties priced below $2,500. And it isn’t just happening downtown – Adam has been seeing multiple offers on leases all over the city, especially going up Yonge through midtown, North York, Thornhill and Richmond Hill. However, things have slowed down marginally since August/September, since that’s typically when student demand is highest.
2. Multiple offers don’t necessarily mean a higher price.
If you look at recently rented Toronto properties on condos.ca, the majority are being rented for the asking price or less.
“Some properties might get 10 offers but still rent for asking,” says Adam. “It may be a scenario where a landlord is holding out to see if someone will step up with a higher offer. Or they’ll accept someone who offers prepaid rent over another applicant who is only prepared to pay the standard first and last.”
3. It comes down to eliminating uncertainty for the landlord.
Landlords don’t want risk. So telling them why you’re renting, why you want to move, how you’re going to pay, what your track record has been so far – those are all things that will impact their decision. Anything that reassures them you’re a good tenant will help.
A letter of employment, your last few pay stubs, a credit report, and a completed OREA rental application will go a long way. Proof of your legal status in the country will help reassure them you won’t disappear after a few months. And if you’re from outside Canada and don’t have a credit history here, that’s not necessarily a deal breaker – many landlords will accept a credit report from your home country.
4. Some tenants are offering prepaid rent to get an edge.
Landlords aren’t legally allowed to ask for anything more than first and last months’ rent and a key deposit equal to the cost of having a new key cut. But they can accept it if it’s offered. So if your credit score isn’t the greatest or you’re an international student, you can eliminate what your landlord sees as a risk by prepaying 6 or 12 months in advance.
Of course, this means you need to have a big chunk of cash on hand – and it can leave you open to being scammed. Working with a professional REALTOR® is the best way to protect yourself in those kinds of situations.
5. Working with an agent gives you an edge.
Real estate agents know how to present a client and structure an offer so the landlord will say yes. That’s why we ask renters to get their paperwork lined up before starting to look at properties. It’s all about proactively eliminating a landlord’s concerns, answering questions before they’re asked, and putting your best foot forward so you have a higher probability of success.
Read more: Ready, set, rent: the condos.ca rental process
6. But even with a good agent, it’s competitive out there.
Even great quality renters are being turned down, says Adam. The competitive market is a big part of it, but fearful landlords are also a contributing factor. Maybe they’ve had a bad experience or had to evict someone for non-payment. Or they’ve heard about the issues other property owners have faced with their renters.
To avoid problems, many won’t even consider anyone who looks even a little bit risky. Adam says there are some rental properties that are sitting on the market right now – not necessarily because people aren’t interested, but because the landlord is being picky.
“I recently came across a property where rental applicants had just sold their house for over a million, but they didn’t provide all the documentation the landlord was looking for,” says Adam. “So they didn’t get it – the landlord went with the applicants who had fewer assets but were more transparent, therefore offering greater certainty.”
Looking for a Toronto or GTA rental? Search properties for rent on condos.ca or property.ca – you’ll be matched with a lease specialist agent who will give you an edge over the competition and help you make a great move.