Rent control in Canadian Real Estate is misunderstood
As it’s been speculated that rent control in Canadian Real Estate impedes construction of purpose built rental buildings out of which there’s a shortage in Toronto region.
Shaun Hildebrand, Senior Vice President at Urbanation said that at the end of first quarter of year 2018, they had recorded very close to the 8,000 purpose-built rental units which were under construction across GTA.
Through Q2, they have surpassed already around 10,000 units which are in the dedicated purpose built rental developments.
He is getting lots of interest from developers for feasibility work for purpose built rental developments for sites across to the wider GTA region, that extend into Montreal and Ottawa.”
There are 6 purpose-built rental apartment developments that comprises of 1,723 units which started occupying in year 2017, and 9 developments encompass around 2,669 units which are projected for delivery in this year.
As per Geordie Dent, an Executive Director, Federation of Metro Tenants’ Associations said that the numbers that prove profitability isn’t been hampered by the rent control.
Geordie Dent also said that increase in rents and future gouging have been stopped, but can still get profit. It is the biggest risk that has been a condo sector, which is profitable, but it is a long term investment.
If you look at the owners of rental housing in Ontario or even in Canada, you see lots of hedge funds and pension funds.”
In addition to long-term ROI i.e return on investment, rents rapidly have surged to the points even with rent control and reduced tenant turnover purpose-built rental buildings became too lucrative.
Dent said that the only reason is that you’re getting development because, if you are a company and looking to get into the real estate market here, it is very cheaper to build out rentals yourself. This is the reason that Canadian Real Estate Market is a profitable industry now.