Renting in the Greater Toronto Area is becoming increasingly perilous for many tenants.
The average cost of rents in Toronto hit $2,898 in August, while throughout the region prices have generally skyrocketed by over 30 per cent in the last two years alone.
It’s not a mystery why. Demand is far outpacing supply, particularly when it comes to purpose-built rentals. That is, housing built specifically for stable, long-term rental accommodation that is usually professionally managed.
The shortage has been decades in the making. And now a “perfect storm” of factors has made the impact on the rental market and rent prices especially acute, says Shaun Hildebrand, president of real estate consulting and data firm Urbanation.
“There’s an intense level of competition among renters. Demand is growing on a number of fronts and there’s extremely limited amounts of supply,” he said.
In 2018, Ontario’s Progressive Conservative government took a controversial step to try to address a dearth of purpose-built rentals. Fresh off his election win, Premier Doug Ford rolled back rent controls on all units built or occupied after Nov. 15 that year, saying the move would provide “market-based incentives for supply growth.”
The government wagered that scrapping rent controls on newer units would encourage developers to build more purpose-built rentals, since the absence of rent controls, at least in theory, makes those projects more financially attractive.
Given the current circumstances for renters in the GTA, it may seem obvious the government’s rent control revisions did little to create more supply. But the reality is more complicated.
A February report by industry groups and Urbanation found the changes did initially generate more developer interest in purpose-built rental projects. Between late 2018 and the end of 2022, the number of proposed rental units throughout the GTA nearly tripled from about 40,000 to more than 112,000, though less than a third were approved.
In the City of Toronto specifically, applications for purpose-built rentals more than doubled in 2019 from the previous year, according to a staff report.
Meanwhile, GTA rental starts (the number of units included in projects with shovels in the ground) hit a three-decade high of 5,958 in 2020, according to the industry report. That’s about triple the average pace of rental construction starts of the preceding two decades, it said.
But then the momentum stalled, and progress has remained largely stagnant since.
What happened to Toronto when rent control went away?
In 2018 Ontario rolled back some rent controls to incentivize developers to build more purpose-built rental units. But as CBC Toronto’s Shannon Martin found out, that’s not exactly what happened.
The COVID pandemic hit and along with it supply chain constraints. That coincided with an ongoing skilled labour shortage. Then came progressively higher interest rates. Since 2020, average construction costs have increased four times faster than rents, according to Urbanation.
Many proposed rental projects became commercially unfeasible very quickly, Hildebrand said.
Unfortunately for renters, this all corresponded with intensifying demand-side pressures.
High interest rates and astronomical house prices have kept would-be homebuyers in the rental market. Those who do live in rent-controlled units are reluctant to leave, fearing huge increases in rent if they move into a new place. Landlords in Ontario can charge new tenants whatever the market may bear for a previously vacated unit, a practice known as vacancy decontrol.
The GTA continues to be a primary destination for new Canadians and has also seen a post-pandemic influx of international students, two demographics that typically rent.
Huge demand over next decade
A significant majority of purpose-built rentals in the GTA went up more than 40 years ago, according to the Canada Mortgage and Housing Corporation (CMHC). Construction slowed significantly in the intervening years, with investor-owned condos becoming the dominant source of rental supply in the region by far.
“We’re now paying the price of not building,” said Steve Pomeroy, a professor at McMaster University’s Canadian Housing Evidence Collaborative, about the pressures on renters.
Understanding Toronto’s rental market pain points
Toronto’s rental market has several pain points. CBC Toronto’s Shannon Martin speaks to several housing experts to better understand how Canada’s largest city has been pushed into a rental crisis.
Urbanation projects that demand for purpose-built rentals in the GTA will grow by about 300,000 units in the next decade. Even under a “pretty optimistic scenario,” the firm forecasts a deficit of more than 170,000 units over that same time period.
Notably, though, those projections were made before the federal government announced it is waiving the GST on long-term rental construction — a policy to spur development that’s long been favoured by housing experts and industry insiders.
Some GTA developers have already indicated the move could see more proposed rental projects, and stalled ones, move forward. But the existing supply deficit in the region is so substantial that some experts say a tax cut alone is unlikely to be a panacea.
One problem is timescale. Short and long-term demand are expected to remain high, while rental projects, particularly those with large and complex footprints, take years to materialize.
“It takes four or five years, minimum, to create a unit,” Pomeroy says. “An international student can get on a plane today and arrive by tonight or tomorrow. We can’t produce a rental unit that fast.”
A polarizing policy
Rent control has proven a politically divisive issue. The opposition New Democrats and Ontario Liberals were critical of Ford’s changes to the province’s rent control policy in 2018, and both parties have said they would reintroduce protections for all rental units if in government.
Critics of rent control argue that it deters both new construction and upgrades to existing rental units by landlords. Those who support it say the benefits to tenants, particularly a sense of financial stability, outweigh any potential negatives.
According to Pomeroy, the evidence from past decades presents a mixed picture. Rollbacks to rent controls in both Ontario and B.C. in the 1980s and 1990s, for example, did little to fuel construction of rental projects, he says.
That said, the lack of purpose-built rental housing in the GTA has quickly reached a critical point, with demand only forecasted to increase in coming years. Pomeroy says an ideal approach would limit the volatility of rent increases for non-rent controlled units, while ensuring new projects still make financial sense for developers.
“We have an under-supply of purpose-built rentals. And now we have to play catch up,” he said.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
