Navigating the Twists and Turns of Real Estate Today

Ladies and Gentlemen, Tenants and Landlords, let's peel the curtain back on Canada’s current property rent situation taking a ride on the real estate rollercoaster. Statistics Canada’s latest report has brought out some jaw-dropping digits, as 'inflation is sleeping but rents are leaping', and somewhere in the mix, rent control rules are being pointed out. So, buckle up because it's time for a deep dive:

• Inflation is at a 3.1% increase as of November however, both mortgage interest costs and rent costs are soaring at 29.8% and 7.4% increases respectively.
• According to Stephen Brown from Capital Economics, migrations and rent control rules have worked together with rent-controlled units seeing ‘unusually large rent increases’ when re-leased.
• The rental increase cap of 2.5% in Ontario, Quebec, and British Columbia, Canada's three most populated provinces, is limited to buildings occupied before 2018. In Alberta, there are no rent control rules whatsoever; however, around 85% of Canadian tenants have some degree of rent control.
• New data suggests that when a tenant moves out, landlords tend to raise the rent vastly to match the market rate. For example, in Toronto, a rent-controlled apartment which rented at $1,700 in 2020 would be listed closer to market rent, currently around $3,500, once re-released.
• According to the Canada Mortgage and Housing Corporation, in 2022 landlords raised rents by 18% for new tenants, compared to only 3% for existing tenants.
• Changes in factors like immigration or labour market conditions could alter the rent inflation trajectory.
• Predicting the future, rent inflation might slide down from the current 7.4% to an average of 5.7% in 2024 and further to 4.3% in 2025.

So, what's my spicy take here? Totally thrilling! While this property pandemic (a term I just made up, you're welcome!) spirals on, it sure serves as a wake-up call for future tenancy agreements. Facing such rent hikes, tenants may start searching more diligently for properties built post-2018. However, don't let the skyrocketing rent costs get you down because remember, even the biggest rollercoasters have their dips! And as for landlords, it might be a good time to play the market and seize the opportunities while they last. Keep your popcorn popping because the ride is far from over!

Source: Storeys