One major gap in Ontario’s draft long-term affordable housing strategy is the lack of policy on critical issues in the private rental market, including unaffordable rents and lack of adequate supply of rental units. Many low and moderate and middle-income households live in private rental housing. The latest Ontario private rental market report from Canada Mortgage and Housing Corporation reports that the overall rental vacancy rate plummeted by 17% over the past year to a low of 2.9% – below the 3% considered the minimum for a healthy rental market. The report also shows that average rents grew faster than the official government rent review guideline.
There are 18,032 vacant rental units in Ontario, according to CMHC, well below the number needed to house the 141,635 households currently on affordable housing waiting lists. Even worse, CMHC reports that Ontario’s rental housing “universe” is shrinking – down by more than 1,000 homes to 624,052 rental homes in the latest survey. While there has been a slight uptick in the vacancy rate for rented condo units, the average rents are much higher than in the conventional rental market.
Average rents in Ontario rose to $923 over the past year, an increase of 2.7% (above the rate of inflation). Rents rose in every part of Ontario, even in Windsor – which has a double-digit vacancy rate. While some have argued that higher rental vacancy rates lead to lower rents as landlords “compete” for scarce rental income, the CMHC numbers show that rents are being driven up irrespective of local market conditions. The actual increase in average rents is 28% higher than the Ontario government’s rent review guideline of 2.1% – which suggests that landlords are exceeding the official standard set by the province for rent increases.