Desperation for Rentals Reaches Fever Pitch in Halton

 

While housing has long been expensive in Oakville, Burlington, Milton and surrounding cities, there once was a time when renting was a genuinely cheaper alternative to buying.

Those times have changed, and some GTA residents are becoming desperate for rental housing.

In February, we found a place on Kijiji,” says Ray C., a tenant who has lived in both Milton and Mississauga within the last six years.

We all met and made a deal for me to move into a basement apartment. [Shortly after I moved in] the landlord called me outside and he and two sons kind of surrounded me. I’m 55; I was scared. The son told me he doesn’t like the smell of my food, but we hadn’t really cooked yet. He said he smelled cigars, but we don’t smoke cigars. They then said they needed the apartment for their mother who was coming back from Poland. They told me I had to be out by the end of March, and they said they’d give me my money back.”

At the time of the incident, Ray was living with his girlfriend and their cat. After being told to vacate, he went to the Landlord and Tenant Board and was informed that his landlord was required to give him 60 days notice and produce proof that a family member was moving into the unit.

The landlord produced the appropriate forms and told Ray and his partner that they were free to stay on until the end of April.

But the situation was still a stressful one.

We had to find another place, and it’s not the greatest place, and it’s kind of dumpy. We moved in March. We were told we were being kicked out after three days. We ended up living in the same clothes for the next month because we couldn’t unpack. It’s ridiculous. My girlfriend cried for five straight days.”

While Ray’s situation was unique in the sense that the rug was pulled out from under him early on, he’s not the only one grappling with a daunting rental market.

We are living in Mississauga and for the last 11 years we have rented,” said Kiran A. in an email to insauga.com.

We spent five years in one condo at the rent of $1,250 and the next five years at the rent of $1,450. We had to leave our condo in December 2018 upon the request of our landlord because he was selling the condo. We had to find a new one and it was the toughest time of our lives because there was nothing available at that same or slightly higher rent.”

After a long search, we found one condo at the rent of $1,950. Now it’s super hard to pay the rent. Our income is the same, but the rent is high.”

While landlords are restricted to increasing rent by no more than 1.8 per cent a year, this rule only applies when the same tenant is occupying the space. If a long-term tenant leaves, the landlord can increase the rent to reflect current market conditions (and in the Square One area, units are going for up to or over $2,000 a month).

While former Premier Kathleen Wynne proposed implementing rent control on all buildings built after 1991, the newly-elected PC government scrapped the change. While some argue this will encourage developers to build more rental units, it’s no secret that the high rates are difficult for tenants to navigate—and that developers have neglected to build rental-only homes for quite some time.

I am one of the very few that have been lucky to obtain emergency housing, but it’s temporary. I’m looking at rentals, and it is insane. I’m a single mom and not rich by any means. I’ve had landlords in Burlington not accept my application because I don’t make at least $55,000 a year,” says Rachelle R.

I’ve been questioned why I don’t have a husband. I would literally be putting 80 per cent of my income towards the rent. It’s impossible to buy in Burlington, and now it’s impossible to rent. I have considered looking elsewhere, but my daughter is seeing specialists for sensory processing disorder in Burlington, and we would lose those resources and be waitlisted once again. So we are stuck trying to find a unit that isn’t unaffordable and also doesn’t have an insect problem.”

Other tenants are stuck trying to find units that can accommodate their families.

It is hard to find an affordable rental property in Mississauga. I am living in a one-bedroom apartment with four family members. My son is in grade 10 now, and he needs a separate room for study, as I have another son who is six-years-old,” says Ninad A.

I have been living in this apartment since 2010. I requested a two-bedroom apartment in my same rental property, but the [company] declined due to my income. I am working full time and also work overtime to make extra money, but unfortunately, I couldn’t make enough. I am paying over $1,000 every month but can’t afford a two-bedroom apartment. My son has to study in the kitchen, or he has to study after everybody goes to sleep because he gets disturbed by us. It is gradually harder to survive in Mississauga even after the government increased the minimum wage.”

Difficulties are common, and tenants’ challenges are compounded by the fact that not only are affordable rentals rare—rentals, in general, are becoming harder and harder to come by.

According to the April national rent report produced by Rentals.ca and Bullpen Research & Consulting, the average property on Rentals.ca was offered for $1,864 per month in March 2019.

In March, Mississauga tenants found themselves paying $1,891 for a one-bedroom and $2,226 for a two-bedroom—and the report identifies Mississauga as one of the top five most expensive rental markets in Canada.

The report says that on a quarterly basis — first quarter 2019 over last quarter 2018 — the average property listed on Rentals.ca increased by 4.3 per cent to $1,869, while median national rents were up 6.9 per cent quarter over quarter at $1,764.

Mississauga was the fourth most expensive city for average monthly rent for a one-bedroom home and the fifth most costly for average rent for a two-bedroom. The top three most expensive rental markets for one-bedroom units are Toronto (1), Etobicoke (2) and Vancouver (3). The top five are rounded out by Mississauga (4) and Richmond Hill (5).

Brampton was the seventh most expensive on the list of 30 cities for average monthly rent for a one-bedroom at $1,639 and twelfth most costly for a two-bedroom at $1,780. 

The pickings are slim, and landlords can afford to be picky.

Some landlords say very little cooking is allowed. I would send messages on Kijiji, and no one would get back to me. You don’t want to be a stalker, but you want an answer,” says Ray C.

One guy asked me to send him $1,800 and said he’d send me keys. I said no. It’s opened my eyes up big time. I might not hear back from a landlord for a day or two, but it depends. Sometimes I don’t hear back at all. Maybe 10 per cent of people will get back to me right away.”

Ray C. said he and his partner lost out on four rentals between December 2018 and March 2019.

For me, $1,100 is my max. Some go for $1,200.”

Ray C. also says that units listed on MLS are typically out of his price range.

Realtors might ask you to go up to $1,500 or $1,600 a month. I make $20 an hour, and my girlfriend makes $14. I said I couldn’t afford it. Some apartments are $2,000 or $1,800—it’s outrageous.”

I think there should be help from the government. We could end up on the street. It’s like going for a job interview. It’s changed a lot over the years. I hear about bidding wars, too. Subsidized housing has a long waiting list; there are long waits for senior’s apartments. I wish the government would look into it more.”

The lack of affordable rental units has been a hot topic for years, and it’s fair to say that all levels of government are invested in, if not resolving, addressing the issue.

At a time when Mississauga’s rental vacancy rate sits at 0.8 per cent (a healthy rental market boasts a rate of three per cent or higher), the city has a vested interest in creating and preserving the rental stock.

To its credit, Mississauga has been working to make housing more affordable for middle class residents (the group most at risk of being squeezed out of the city due to the high cost of real estate and their inability to qualify for subsidized housing) with its ambitious—and necessary—Making Room for the Middle Plan.

Part of the plan, which also includes incentivizing developers to include some amount of affordable units in new developments—also boasts bylaws designed to protect renters and the city’s existing rental stock.

In recent months, several rental projects have been announced—one on Sheridan Park Drive and another on Hurontario, to name a few—but these announcements came after years of complete and utter silence on the apartment development front.

In 2016, the Daniels Corporation announced that it would be constructing the Skyrise Rental Residence high-rise in the Erin Mills Town Centre area. At that point, it was first purpose-built rental building (meaning a building intended solely for tenants and not for investors who might choose to rent out units) to be announced in 20 years.

The rental supply issue has reached crises levels, but how did we get here?

I think, from our point of view, the biggest barrier is the time it takes to get projects approved. It can take four years, and some have taken six or seven years or longer from the pre-application process to getting building permits. This is a crisis, and that’s backed up by data and CMHC figures that showed Ontario has a 1.8 per cent vacancy rate. Mississauga is at 0.8 and Brampton is at 1.2 per cent. It’s far too long, and it’s one of the single reasons we’re in the crisis that we’re in,” says Tony Irwin, President and CEO of the Federation of Rental Housing Providers of Ontario (FRPO), an organization that represents about 350,000 tenant households across Ontario.

Irwin says that the province needs to welcome 9,000 to 10,000 new units a year to keep a healthy market—especially as it welcomes more people.

People moving into the GTA is a huge factor, and there’s more immigration. With things like development charges, slowness when it comes to building approvals, and not fixing up existing rental properties, that’s why there’s such a gap.”

Irwin says that developers are held back by development charges, which municipalities levy to collect revenue.

While there has been talk of the province decreasing development charges to incentivize more housing development, cities have said this will hurt their coffers and potentially force them to pass costs down to residents through increased property taxes.

Development charge revenue is the one key financial tool a municipality has to ensure a portion of the costs related to new infrastructure, required as a result of growth in the city, can be recovered from new development. A reduction to, or elimination of, the municipalities’ ability to recover these costs does not reduce or eliminate the need for the municipality to service new growth in the community,” said Jeff Jackson, director, Finance and Treasurer, City of Mississauga, in an email to insauga.com.

A report entitled Increasing Housing Supply in Ontario-Development Charges Comments went to council this year outlining city staff participation in the provincial consultation on DCs. In that report, city staff identified their concern that the Government of Ontario is considering making additional changes to the Development Charges Act, 1997 and its regulations since its recent amendment in 2016 (Bill 73).”

Jackson warned that development charge restrictions could hurt residents and fail to produce new housing units.

Any changes to the Development Charges Act or its regulations that results in reduced DCs would have an immediate impact on property taxes and user fees if the city intends to maintain its current service levels. Alternatively, current service levels would not be maintained, which would in turn not provide the amenities the development community is seeking from the city. Furthermore, there is no correlation between DC rates and housing supply. Reducing the DC rate would not result in increased housing supply. It is not the right tool.”

But while there’s disagreement on the impact lowered development charges could have on new builds, Irwin says lengthy approval times remain a huge hurdle for developers.

There can be 15 or more different government agencies involved, so I think, from what I hear from our members, a lot of it does seem to lay at the feet of the municipalities.”

The issue, he says, is complex. 

I think it’s complicated. So many different agencies and bodies have a say, and there does need to be some oversight, but over the years, the number of steps that need to be taken has increased. The government can be stretched for resources. One of the things we hear a lot is that there are timeframes for developers, but not for the government.”

Irwin also suggests that new builds can be delayed because city councillors have a difficult time reconciling the needs of the developers with the needs of some more vocal constituents.

Projects can be delayed because the council is catering to constituents and people in their wards who don’t want the projects to proceed. There can be delays over valid issues, but a project can also be delayed for a year because of six trees. That’s fine, but the time frames should be somewhat reasonable. If we’re spending a year debating cutting down six trees, that could be discussed more quickly.”

There’s no certainty when there will be a resolution. Developers are just waiting and paying interest and development charges. Hurdles have increased over time. If a project takes six years to get approved, construction costs and development charges have probably have gone up. Developers know things won’t be built overnight and they’re aware costs will climb, but the longer it takes, the more costs increase and the harder to gets for a project to go forward.”

While it’s certainly true that small complaints—and often NIMBYism—can delay a necessary project (some residents protested the construction of the North Sheridan Way rental apartment over small parking concerns), it’s harder to justify the lack of rental buildings when new condos are being built at a clip in Toronto and the GTA (delays notwithstanding).

The discrepancy, it seems, is money.

While Irwin says that some purpose-built rental projects were cancelled following the previous government’s rent control announcement, he acknowledges that developers have favoured condos for years because they generate money more quickly.

I think it’s because builders were looking at rates of return and going through everything to make a project viable, a lot of things have made apartment projects unviable. The 2008 recession contributed, and economics surrounding rentals are extremely challenging.”

It doesn’t mean none have been built, but our partners look at the business case and whether the economics make sense, and the answer over the last 10 years has often been no. Building a condo can be expensive, but developers can get the money right away—the apartment is a long-term investment. That’s why we saw the boom of condos over purpose-built rental buildings.”

The push towards condo-building—driven almost entirely by concerns over access to quick capital—has left tenants reliant on private landlords rather than property management companies.

And the shortfall of purpose-built rental housing has left tenants in serious trouble.

Our report shows that we’re looking at supply gap of 70,000-100,000 per year over the next 10 years. Units will be needed to keep pace with population growth, and immigration Demand is high for rental units, and the number of new units in Ontario is going down,” Irwin says.

While there has been some positive movement in the rental area, Irwin does say that the general trend is concerning.

Irwin says 85,000 units came online in 2017, and that number fell to 68,000 in 2018.

But recent data suggests the worrying trend could be reversing itself.

According to a recent Urbanation report, the number of purpose-built rental apartments that were open for tenants in the GTA in the first quarter of 2019 reached a more than 25-year high of 1,849 units. Urbanation says this is nearly five times greater than the quarterly average since the first quarter of 2016 and represents significant growth considering only 13,520 units have been built since 2005.

The report says that demand for the newly completed rental buildings was strong, with several projects leasing close to half of their units by the end of the quarter.

It also looks like more purpose-built rentals will be constructed going forward.

The report says a total of 42,841 purpose-built rental apartments were proposed for development—that’s 20 per cent higher than the total proposed inventory of 35,834 units as of the first quarter of 2018 and nearly 50 per cent higher than the 28,841 units proposed as of the end of the first quarter of 2017.

The rise in completions in the first quarter brought down the number of purpose-built rentals under construction to 10,694 units from its recent high of 11,905 units at the end of 2018, but still remained above the level from a year ago (8,510) and substantially higher than two years ago (5,894).

What does Irwin think needs to be done to ensure more rentals are constructed?

There are a few things we’re advocating for. One thing we’ve talked about that we think the province should do is create a true as of right zoning framework. We have areas we want development to occur in, and there are areas we don’t want to develop on, such as the Greenbelt, We need a framework to enable development in areas that make sense,” he says.

We have this gap, we need to get 70,000 to 100,000 units built, so how do we make that happen quickly in places where it makes sense? We need to look at areas where more density is needed, such as near transit routes, transit stations, declining strip plazas, commercial areas, underutilized industrial lands, etc. I think that’s probably our biggest suggestion—update zoning so we can get rental housing projects going where it makes sense.”

Irwin says it’s also essential to evaluate not just land availability in the GTA, but in smaller cities where the population is increasing.

People gravitate to the GTA, but small communities say they’re having problems too. An MPP for Stratford has said he has people who want to bring jobs to the area, but there’s not enough housing. It’s not a Toronto, Mississauga or Brampton problem.

He also says zoning should be updated where appropriate.

One of the largest costs of building a new project is the cost of land. It’s prohibitively expensive if it’s available at all. We do have sites around the province where there are one or two towers, and the land is abundant to build more towers there. So those unicorn sites could have more towers. Towers are there already, so those projects should be expedited.”

Irwin says he’s optimistic that the province is listening and praises its move to roll back rental control on new builds. While that move was unpopular among tenants (who are indeed grappling with an incredibly unaffordable market, the province has announced that it’s working to lift barriers that stall the creation of new housing.

On May 2, the government introduced the Housing Supply Action Plan, also called More Homes, More Choice. The province says the plan will cut red tape, build more housing and increase the number of affordable homes.

The government has proposed making it easier to create secondary suites (such as basement apartments) by offering to eliminate a charge for creating one in new homes. The legislation, if passed, will also allow homeowners to create units above garages or in laneways.

The government also said that if the legislation is passed, it will defer charges for building rental and not-for-profit housing and allow developers to pay in instalments. During this time, municipalities would be able to collect interest.

The government also proposed—to much protest from municipal leaders—to give the Local Planning and Appeal Tribunal (LPAT) more power when it comes to resolving disputes between municipalities and developers. While some have said this move will favour developers over residents, others have said it could put a dent in construction delays.

But while it seems obvious that it’s imperative to increase supply to mitigate price increases and get more people in homes, Irwin says that the costly homes—which are more expensive than they’ve ever been in the GTA—are going to keep squeezing the rental market going forward.

Rental buildings used to experience 20-25 per cent turnover rate, but now it’s about 10 per cent. That could be a supply issue, but these are people who would have bought a home if they could afford one. Now, that’s extremely difficult if not impossible.”

That said, he believes the creation of more supply will only benefit renters.

I do know we need more supply, and if more comes online, it will probably positively impact rents.”

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