Competition for apartments is back as Toronto’s rental market shrugs off its pandemic slide

When Emma Griffiths returned to Toronto after working abroad for seven years, she found a good job in the tech sector. All he needed was an apartment.

A couple of weeks before starting her job, she went to work lining up to see apartments and condos. But as soon as Griffiths began his search in late August, he ran into a snag on an inquiry about a one-bedroom and living room advertised for $ 2,600 a month.

The real estate agent handling the lease for the condo told him that he had to commit to paying five months’ rent in advance or that there was no point in even showing him the unit.

Griffiths approved, knowing that Ontario landlords cannot demand more than their first and last month’s rent.

“In my case, the owner was asking for $ 13,000 up front. A lot of people just don’t have that kind of cash, particularly in current economic conditions, ”he said.

Requests out of bounds And apartment bargain wars are expected to become more common as Toronto’s pandemic rental contraction appears to be coming to an end.

Rents were already peaking before COVID-19. But when students and young workers fled the virus in 2020, the cost of rent plummeted. For the first time in memory, landlords were offering incentives and gifts to attract tenants. In February This year, rents were down 20 percent compared to February 2020, just before the pandemic, according to the ads website Rentals.ca.

But as the weather warmed this spring and pandemic restrictions eased, there were signs that the trend was reversing. In August, condo rents rose again to $ 2,362 on average, a 7.2 percent increase from July and a 15 percent increase from last February’s $ 2,000 average.

Paula Arscott, agent for Re / MAX Lakeshore Realty in Cobourg, does not normally work in downtown Toronto. But he experienced the rebound in the rental market while helping his nephew search for a condo last fall.

At the time, he said: “There was the selection of the litter. In fact, it could go lower than the suggested monthly rental price and could negotiate. “

Ten months later, when his nephew wanted to move to a bigger place, Arscott said they were browsing multiple deals that pushed rents hundreds of dollars above sales prices. In one case, there were three offers on a condo that was priced at $ 2,400 a month. It rented for $ 2700.

“We went to see some that, even before we got there, there were two offers, something like the whole process of buying a house,” he said.

In the end, his nephew found a rental within his budget and even negotiated with the landlord to paint the apartment.

The return of students and workers to the center means rents are once again approaching pre-pandemic levels, said Shaun Hildebrand, president of market research firm Urbanation. Tenants who did not take advantage of the COVID-19 market lull have likely lost their chance, he said.

“I think we’ll find out that it was the shortest rental market crash in history,” Hildebrand said.

He said high house prices are also driving competition on the rental side. People who have been excluded from the purchase price are usually people with higher incomes who can afford to pay more rent.

Hildebrand hopes things will get worse when immigration resumes. The vast majority of foreign students and temporary workers, 75 to 80 percent, are tenants entering an under-supplied market, he said.

The supply of condos in the hands of investors who end up in the rental market is not enough to make up for the lack of specially designed rentals, Hildebrand said. A second quarter development survey showed 100,000 specially built units are in the approval process, but not much is being built.

“There are only about 15,000 rental units under construction in the GTA right now. That compares to 86,000 condos, ”Hildebrand said.

“We are in a very similar situation to 2019, when multiple offers demanded rentals and the owners really had the power,” he said.

That could leave more tenants vulnerable to situations like the one Griffiths encountered.

Downtown Legal Services attorney Benjamin Ries says that, in his experience, international students are more often subject to requests for months of rent in advance.

“It could be called discrimination or landlords could say that someone whose credit or rental history is from another country sees more risk there,” he said. “It’s not uncommon, especially when the market is competitive, for owners to demand 12 months in advance, which is a big problem.”

It’s illegal for landlords to demand more than a month’s rent in advance, although most ask for the first and last month because the first month is no longer illegal as soon as the tenant takes over, Ries said.

Even if they know the rules, tenants have few resources. If they don’t agree to pay, they likely won’t get the unit. If they pay, they can bring the landlord to the Ontario Landlord-Tenant Board, but it could be more than a year before they get a hearing.

“It’s usually much quicker for people, as soon as they move out, to stop paying rent and allow the illegal part of their deposit to count (like their rent) and reduce that deposit to just one month,” he said. Ries.

The landlord could try to evict them for arrears, but a tenant with a deposit of more than a month probably cannot be evicted for arrears because “from the board’s perspective they have already paid,” he said.

However, if a tenant offers to pay more than the landlord demanded, legal precedent suggests that they will not be able to sue because they offered without being asked.

Ries says that it can be a tricky distinction when the landlord is using a real estate agent to lease their property because, if there is nothing in writing that requires the additional deposit, that agent may plant the idea that the rent can be secured with additional funds.

“Obviously, the purpose of the one-month rent deposit is for landlords to only have some leverage to balance their need for security with the tenant’s need for a little power as well,” he said.

When The Star contacted The Star, the agent representing the owner of the unit that Griffiths tried to see said that the request to rent for additional months was made because she had not started her new job.

“If you can put yourself in the place of an owner, if someone comes and wants to rent you a place, if they don’t have a job, are you going to rent to them? Most likely not, ”said Scott Griscti of Royal LePage Credit Valley Real Estate.

He said that the rentals are an extension of the service his company provides to its clients. “We don’t look for rentals, I don’t connect myself to get rentals. Most agents will tell you that making a rental is a lot more work than making a purchase, ”he said.

Griscti called The Star a few days later to say that she had done some research and acknowledged that it was not allowed to ask for more months of rent in advance.

Griffiths said Griscti cited Ontario’s pandemic eviction moratorium, which has since ended, as the reason for wanting cash up front.

“The intent of that policy was to increase housing security during a global health pandemic,” he said. This landlord’s reaction appeared to have the opposite effect, making it more difficult for tenants to secure a home, he said.

“Economic instability and lack of job security shouldn’t be an excuse to squeeze tenants out of thousands of dollars,” said Griffiths, who found a place the first weekend he went looking. He got a two-bedroom apartment for $ 2,600 near the other unit he never saw.

Still, she said, she was stunned by how rents skyrocketed in Toronto during her absence.

“When I left, some friends were renting nice one-bedroom apartments for about $ 1,400. Now similar places cost twice that amount, ”Griffiths said. “It also amazes me that much of what is available is tiny condos that don’t seem like long-term housing options. Much of what is being built now is marketed as an investment opportunity, not a place to live, and the people who buy it plan to be homeowners, not residents. ”

Many units are too small to contain a sofa and dining table. Many of the rooms are windowless rooms separated by sliding plastic doors. They are not places that she can see as more than a stopgap, something affordable but not a permanent home.

Griffiths said he thinks it’s a mistake to think Toronto residents only want single-family homes.

She says, “If there were more apartments available, you would see more people willing to move into apartments and condos for the long term, either by renting or buying.”



Reference-www.thestar.com

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