Recent research from the University of Waterloo has brought to light a significant factor influencing Toronto's rental landscape: the role of corporate property owners in escalating housing costs. This study, the first of its kind in Canada, establishes a clear connection between corporate ownership and the rising price of rental units across the city.

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Corporate Landlords and Premium Rents

The findings, released on Tuesday, indicate that companies owning rental properties, including private equity firms, Real Estate Investment Trusts (REITs), and other asset managers, are charging notably higher rents compared to the average rates in Toronto's neighbourhoods. Specifically, between 2022 and 2024, these corporate entities charged rents for multifamily units that were, on average, 44 percent higher than those offered by other types of landlords for similar housing.

This premium translates to an average additional monthly cost of $670 for tenants. Martine August, a professor at the University of Waterloo and one of the study's authors, highlighted the concern: "Most people can’t afford the housing they are living in, and these firms are in part responsible for pushing that change. They are buying up buildings and turning them into investment products, raising the rents and making communities less affordable for people."

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Disproportionate Effects on Vulnerable Communities

The research further reveals that the impact of these higher rents is particularly acute in low-income and racialized neighbourhoods. Cloé St-Hilaire, a co-author of the study and researcher at the University of Waterloo, explained that corporate landlords often target these areas. The rationale is that existing lower rents in these communities present greater opportunities for substantial increases when tenants vacate the properties.

"They will use the properties in lower-income neighbourhoods, do renovations upon turnover and then charge the highest rent possible," St-Hilaire stated. This practice not only contributes to gentrification but also alters the social fabric of these neighbourhoods.

Accelerated Rent Hikes

Beyond charging higher initial rents, the study found that corporate landlords also increase rents at a faster pace than other property owners. On average, they were asking for an additional $96 every three months, which represents an average increase of 5 percent. This rapid escalation further strains tenant finances and housing stability.

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The Call for Greater Transparency

The research project, which began compiling its dataset in 2022, focused on approximately 1,600 buildings in the Greater Toronto Area (GTA), analyzing ownership types. This process underscored a critical need for more transparent data regarding rental housing.

Ms. St-Hilaire noted the difficulties in accessing comprehensive information: "We had to pay for a private database and download information quarterly because it’s not archived." The researchers advocate for publicly accessible databases that would empower renters by allowing them to identify building owners, track rental price histories, and understand eviction patterns.

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Policy Considerations for a Balanced Market

In light of these findings, the study recommends policy interventions to counteract the erosion of housing affordability driven by corporate ownership. These include measures to regulate the rental housing sector more effectively, strengthen tenant protection laws, and increase support for social housing initiatives, regardless of the landlord's corporate or private status.

The researchers also pointed out a potential conflict in current government approaches. Professor August expressed concern that "the government has goals to improve housing affordability, but their programs give funding to organizations who eviscerate housing affordability." She suggested that entities contributing to unaffordability should not be beneficiaries of support from bodies like the Canada Mortgage and Housing Corporation (CMHC) or Canada’s National Housing Strategy.

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For prospective renters and those navigating Toronto's dynamic real estate market, understanding these underlying trends is crucial. The influence of corporate ownership on rental prices is a significant factor shaping affordability and community composition across the city.