Housing crisis

LACKIE: Rents rise amid housing crisis

And the problem will probably get worse before it gets better

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Not so long ago, no one in the Toronto real estate game was more compassionate than the first-time buyer.

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Competition was fierce, inventory was scarce, and it seemed like the goalposts were constantly moving with aspirations of ownership further and further afield.

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Now, don’t get me wrong, it’s still an objectively lousy time to try to break into the housing market, even if the market is moving towards more favorable conditions for buyers. Between rising interest rates and general market uncertainty, many for whom the goal of home ownership will be put on hold indefinitely – just in time for this heat that has caused the resale market to heat up. move into the world of rental housing.

It’s a horrible time to be a tenant.

The rental inventory has fallen by 30% compared to last year as demand explodes. We have potential buyers who have postponed a purchase, students from Canada and abroad who are returning to in-person learning, and employees who have been called back to the office.

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The cost of a one-bedroom apartment in the city has now increased by more than 20% year over year and costs an average of $2,269 per month.

We are now seeing several offers turn into bidding wars from day one on the market. Mediocre apartments that you couldn’t give away in the midst of the pandemic are now fetching rents that defy logic.

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In an effort to stand out and be competitive, it is now common for potential tenants to ‘volunteer’ to prepay at least part of the rent, with international students invariably having to pay even more to satisfy a landlord of their creditworthiness. in the absence of a credit history in Canada.

From an agent’s perspective, that’s wild.

We have few clear guidelines on how to navigate such a process beyond what the Residential Tenancies Act states is permitted. A landlord can’t legally require you to pay your rent upfront in order to be approved as a tenant, but we get into troubled waters when it’s announced that it’s voluntary.

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But can you really say it’s intentional if it’s the only shot you have?

What happens if you are unable to pay the potential owner money? Say you work in the gig economy and don’t have a human resources department to provide you with a letter of employment or you lack sterling credit – then how could you compete?

Now, assuming you already have a place to live, the dire state of affairs means that if you’re not currently paying big rent, you’re probably living with the constant anxiety of whether and when your landlord might try to get you. to crush. After all, being a landlord is not an act of benevolence – if the market rent has risen dramatically beyond any increase legally permitted by rent control legislation while port charges have skyrocketed, it goes from self that people might need to cash in and sell, or feel compelled to work around the system to land a tenant who will pay more.

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While there are countless good responsible landlords out there, there is also a wide range of people who actually have no interest in landlordship and only care about investing in financialized real estate, especially during of the past two years. These people have entered the game with the expectation of passive income and that a tenant they will hopefully never have to interact with will carry it for them.

This dream tenant will be a nerd who treats the place like a museum, transfers his rent on time, manages leaky faucets and running toilets himself, and willingly agrees to rent increases that coincide with rising prices. holding costs.

On the other hand, there are endless horror stories of big landlords plagued by nightmarish professional tenants who know exactly how to game the system. Tenants who know that with a broken and overdue path to a Landlord and Tenant Board hearing, their landlord is functionally at their mercy.

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The Residential Tenancies Act tilts heavily in favor of tenants in that the right to a hearing before a commission almost invariably trumps any other escalation measures available to a landlord. And by the time that court date comes eight months after the paperwork was filed, it’s not uncommon that, in order to get an eviction order, the landlord has to waive back rent.

This is not a good way to encourage more rental supply in the midst of a housing crisis on the verge of a financial crisis. It is more vital than ever that the Landlord and Tenant Board is functioning properly so that it is quick and responsive to abuse.

Whatever the global solution, it is still a long way off. I expect it will probably get worse before it gets better.

@brynnlackie

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