A new report warns of a rapidly growing deficit in the rental housing supply in the Greater Toronto Area (GTA).
The report from the Building Industry and Land Development Association (BILD) and the Federation of Rental-housing Providers of Ontario (FRPO) estimates that the deficit of rental housing units in the region will double to 177,000 in the next 10 years.
A vital segment of housing stock
“There was a surge in purpose-built rental starts in the region in 2018, but that appears to be stalling out,” said Dave Wilkes, president and CEO of BILD. “Purpose-built rentals represent a vital segment of the GTA and Ontario’s housing stock.
“They are dedicated rental housing and provide security of tenure. Unfortunately, we are just not seeing purpose-built rentals being built at the scale that is required. It comes down to the economics of building and managing these types of buildings.”
In the GTA, purpose-built rental units represent approximately a seventh of all the housing stock available, rental and owned, but slightly less than half of the number of units available for rent, according to the report.
According to the report, the region’s stock of purpose-built rental housing is aging, with almost 90 per cent of it dating back over 40 years, when 223,954 units were built between 1960 and 1979.
In comparison, only 23,590 units were built between 2000 and 2022.
More expensive to build
The report notes that building purpose-built rentals, particularly in major cities in the GTA, is more expensive for developers than building other forms of housing.
This is due to the higher capital investments required upfront and longer waiting periods for the projects to become profitable. These challenges are further exacerbated by how taxes and charges are applied to purpose-built rentals.
“The majority of Ontario’s purpose-built rental housing stock was built before 1980, so new units are essential to provide more choice and take the pressure off aging units,” says Tony Irwin, President & CEO of FRPO.
BILD and FRPO are urging all levels of government to implement policies that will stimulate the development of purpose-built rental housing to meet the rapidly growing demand in the area.