Why is rental affordability important for Ontario tenants?

Rentals in Ontario, Canada, are a pressing issue for tenants. With the growing population and a corresponding increase in housing costs, meeting the demand for affordable housing has become necessary. This article explains how affordable rental prices are for Ontario tenants, using the newest insights available for 2024. Royal York Property Management is one of the top Canadian property management and rental companies, handling a portfolio of over $10.1 billion in value with over 22,000 properties. Our experience underscores the importance and urgency of dealing with rental affordability if there is to be stability and prosperity in our communities.

Understand Why Rental Affordability Matters   

Affordability in rentals refers to a situation whereby tenants are able to afford to pay rent without sacrificing other stringent human needs like food, health, and transportation. It is normally computed as a percentage of such income that goes for housing; the common threshold or benchmark of affordability is normally 30% of gross income. Indeed, the rental market in Ontario has had huge ups and downs, but one of the big challenges facing the 2024 rental market has to do with maintaining the current level of affordability. Some of the major factors contributing to this pressure on rental affordability include high demand, low supply, and rising property values.

Let’s Overview Ontario’s Rental Market  

Over the past decade, Ontario tenants have increased significantly. As of 2024, there are over 1.7 million tenants, which means a 10% increase from that seen in 2016. Among the many factors that have fostered growth are urbanization, migration, and demographic changes. The average price of rentals in Ontario rose by 27% from 2016 to 2021. However, for the past two years, it has been different in the rental market. The notable fact is that, in Canada and Ontario, the cost of renting hit an all-time high in September 2023. However, with this fact, the availability of properties in the rental market has been increasing. For example, the total number of rental units available for rent in Ontario increased from an estimated 6,700 in December 2023 to 11,500 by April 2024. New developments and the soaring conversion of ownership units for rental purposes drive the current expansion.

Learn About Economic Impacts    

Rental affordability is a bit hard on wider aspects of the economy. When tenants of your property can afford their rent, then they have more money to spend on local suppliers' goods and services, boosting the economy. By the same token, a high rent burden may restrain consumer spending, capturing local businesses and general economic growth. Using such explanation and analysis, rental market stability and affordability can facilitate economic stability because such tenants can save, invest, and thus contribute to the economy at large. For example, tenants paying affordable rents can better afford to patronize local shops, restaurants, and services, which then support employed residents and local economic vitality.

And About Social and Community Impacts Too  

Affordable housing is at the core of stable and lively communities. When tenants can afford their rent, they are more likely to stay in one place, fostering strong community ties and enhancing social cohesion. Stable housing allows one to become more active in one's community and, at the same time, gives rise to long-lasting relationships with neighbors. In this way, greater accessibility to affordable housing opens opportunities for social improvement due to the availability of a supportive platform where people are capable of pursuing higher education, trying several career options, and realizing their personal growth. Stability is particularly obligatory for families with children; therefore, it supports continuous child school attendance and academic success.

See How Affordability Affects Health and Well-being  

The availability of affordable housing has a lot to contribute to health: housing stress, meaning the financial burden from high rent, and suppliers of a myriad of mental health issues, including anxiety and depression. Affordable housing eases this stress and thus offers better mental health and well-being. Students, when not worn down by too much rent, can find it within their budget to afford other health-related expenses like good food, medical care, and recreation. It also reduces the risk of homelessness, a factor that contributes to solemn and harmful health consequences.

Recognize the Challenges to Rental Affordability    

There are numerous different reasons why rental affordability in Ontario persists as a challenge. Increasing prices of property and rent rates, coupled with a sky-high level of demand against limited supply, make it hard for most tenants to secure affordable housing. High rates of short-term rentals—like those posted on websites like Airbnb—further exacerbate the problem by pulling units that may have otherwise been long-term rentals out of the permanent rental pool. Additionally, the cost of construction and renovation projects, influenced by labor shortages and rising material costs, further limits the expansion of affordable housing options.

Explore Policy and Regulatory Perspectives  

Government policies and regulations promote rental affordability. In Ontario, many different initiatives have been put in place to protect tenants and encourage affordable housing. For example, rent control measures in Ontario restrict the amount by which a landlord can increase rent annually and thus provide some form of financial security for the tenants. Besides that, there are laws protecting tenants against unfair practices to give them legal recourse if they become victims. There is the possibility of future policy moves toward incentivizing developers, increasing funding for social housing, and regulating short-term rentals.

Understand Variation Across Cities 

The affordability of rentals varies across Ontario cities. Metropolitan areas have high demand, so again, outlying detached homes charge premium rents that place so many of them beyond the reach of too many tenants. There are, however, other cities, such as Hamilton, Kitchener, Barrie, and Ottawa, which are relatively more affordable, especially away from the city core. They do offer lower-priced units tailored to accommodate differing income levels, indicating disparate pictures of the rental market in Ontario.

Know the Role of Property Management Companies  

Property management companies can significantly contribute to rental affordability. By efficiently managing properties, these companies help maintain reasonable rent levels while ensuring high-quality living conditions. Here at Royal York Property Management, we have a host of services that would prove both useful for the landlord and the tenant. Our comprehensive tenant screening processes make sure that the correct tenant is under your roof to minimize the possibility of non-payment and maintain a survivable rental income stream for the landlord. Furthermore, our proactive maintenance and repair services ensure that properties are kept in top condition, which supports maximum tenant satisfaction and minimizes turnover rates. Our landlords can balance affordability with profitability by leveraging our expertise to create a win-win situation.

Consider this multi-unit property in Toronto, operated by Royal York Property Management. Our retrofitting to make the building more energy-efficient and the optimization of operational costs have minimized rent increases while improving the quality of life for our tenants. As a result, tenant satisfaction was at an all-time high; vacancy rates were significantly lower. Another example is a family from Ottawa who, thanks to our flexible lease alternatives, could plan stable housing and, at the same time, take better care of their budget. These examples reflect how effective property management increases rental affordability and satisfies tenants.

Rental affordability is one factor that determines the well-being of Ontario's tenants. It's in the best interest of landlords, property management companies, and governments alike that rental affordability poses a set of issues that need to be understood and addressed. Our commitment at Royal York Property Management is to work toward the important goals of making rent more affordable for tenants, ensuring our customers are satisfied with our fully well-rounded property management services, and ensuring a portion of Ontario's rental market remains viable in the long term. Want to know more about how Royal York Property Management can help you out of the mire in the rental market? Visit our website, http://royalyorkpropertymanagement.ca, or contact us for a personalized consultation. Together, we can make rental affordability a reality for all.