A new study out of the University of Waterloo is shedding light on what's really behind the rapid increase in rental prices in Canada’s major cities, particularly Toronto. Contrary to what many believe, it’s not just population growth or low housing supply pushing rents higher. It’s the rising influence of financial landlords—large institutional investors using strategic tools like vacancy control and algorithmic pricing to maximize returns.

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Who Are Canada’s Financial Landlords?

These are not the typical mom-and-pop landlords or small local property managers. Financial landlords include real estate investment trusts (REITs), private equity firms, pension funds, and other institutional investors. They manage large portfolios of multi-unit rental properties and operate with the same goals as any major business: maximize profits and increase shareholder value.

The University of Waterloo study analyzed data from 1,600 Toronto apartment buildings between 2022 and 2024. The researchers didn’t just rely on spreadsheets—they also reviewed corporate earnings, transcripts from real estate events, and even interviewed key players in the industry.

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What the Data Reveals: Higher Rents, Bigger Gaps

One of the study’s most eye-opening findings is that financial landlords charge significantly more for rent than traditional landlords. On average:

• Financial landlords charged 44% more than the average rent in a given neighbourhood—roughly $670/month higher.
• Family-run property chains came next, with a 30% premium.
• Single-property owners charged between 15% and 22% more than the neighbourhood average.
• Non-profit operators, by comparison, raised rents only 1% on average per quarter.

Even when comparing identical units, a property owned by a financial firm was 13.8% more expensive than one owned by a single-property landlord. That’s a difference of $323 per month for the same living space.

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The Use of Vacancy & Algorithmic Pricing

One of the most controversial tactics financial landlords are using is strategic vacancy. With tools like YieldStar—a software platform that recommends rental prices based on projected demand—landlords are sometimes advised to keep units vacant if it helps push neighbourhood rents higher.

This artificial scarcity inflates prices across the board. The U.S. Department of Justice has launched an antitrust investigation into YieldStar’s parent company, RealPage, alleging the tool encourages coordinated price increases by sharing non-public data among landlords.

This system is not just based on supply and demand—it’s engineered to shape demand.

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Targeting Low-Income Neighbourhoods

The study also highlights that the most aggressive rent hikes are taking place in Toronto’s Neighbourhood Improvement Areas (NIAs)—historically lower-income, racialized communities identified by the city for additional support.

In these areas, financial landlords charge 20% more than other landlords. This pricing strategy capitalizes on what researchers call the “rent gap”—the difference between current rent and what the market could bear under repositioned ownership.

This isn’t just gentrification—it’s a coordinated expansion strategy that extracts maximum revenue from communities that previously offered affordable housing options.

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Renovictions in Disguise

“Value-add” and “repositioning” are terms used by these landlords to describe strategies that often involve renovating occupied units, removing long-term tenants, and re-listing at much higher prices. These actions mirror renovictions—where tenants are evicted under the pretext of renovations—but are dressed up with investor-friendly language and business models.

The outcome remains the same: higher rent, reduced affordability, and tenant displacement.

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A Growing Share of the Market

The researchers found that in recent years, financial firms have acquired nearly all newly available rental suites in the Toronto market. With each acquisition, their influence over local rents grows—similar to how an oligopoly functions, where a few large players dominate the pricing structure across an entire market.

These firms often cluster their investments in the same neighbourhoods and base their pricing on each other’s listings, reinforcing and accelerating rent inflation.

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What Policymakers Are Doing

While the trend is drawing criticism, there’s little indication that it’s being reined in. In fact, policymakers have often used public funds to support these very firms—pitching them as partners in solving Canada’s housing affordability crisis.

Instead of encouraging smaller landlords or non-profits, governments are making it easier for well-capitalized investors to grow their portfolios. Some programs even provide financial backing to REITs under the banner of expanding rental supply.

It’s a paradox: the same firms contributing to the affordability crisis are being tasked with solving it.

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What This Means for the Real Estate Market

The financialization of Canada’s rental housing is changing the landscape of real estate in cities like Toronto—and possibly beyond. For real estate professionals and investors in regions like the Okanagan, understanding these trends is key.

As demand continues to grow in desirable areas, including Kelowna and surrounding communities, we may begin to see similar strategies adopted here. Monitoring ownership trends, rent fluctuations, and development models will be essential for anyone buying, selling, or investing in rental properties.

Coldwell Banker Horizon Realty remains committed to helping clients make informed decisions based on facts, not just market assumptions.