For the first time in decades, buying a house is no longer looking like a sure path to financial security for Canadians.
The combination of rising interest rates and flatlining real estate markets have squeezed the wallets of prospective buyers – and squeezed them into the rental market. The ranks of renters, while still in the minority, are growing three times as fast as those of homeowners. And those renters may not be who you think.
For one, the rise of the rental nation is not just a big-city phenomenon. The growth of renters in smaller cities outpaced larger urban centres over the last decade, according to census data highlighted by a report from Royal Bank this month. And the rental nation is getting older: Boomers were the single-fastest growing group of tenants nationwide.
“We expect these demographic and behavioural trends to continue fuelling demand for rental housing in the years ahead,” the report states.
The rising number of renters underscores the need to change flimsy legal and financial protections – and to change how we think about lifetime tenants.
For a long time in Canada, home ownership was a signal of financial well-being and success. By extension, renters were the poor or at least those who hadn’t yet gotten financial traction in life. That narrative was never completely true. And it’s now become increasingly disconnected from reality.
Rapidly rising rents in urban cores means that hefty household incomes are needed to secure a lease. In Vancouver, according to apartment search site Zumper, the median cost for a two-bedroom is $3,500 a month – likely requiring a tenant making at least $120,000, if landlords are looking for people who won’t be spending more than 35 per cent of income on rental payments.
In Toronto that median rent is only slightly better, at $2,950 a month. And even in Montreal, where there has been historically more of a renter culture, the cost is nearly $2,000.
Vancouver and Montreal already are majority renter. In Toronto, nearly half of residents rent. Five-million households rent across the nation, up from 4.1 million a decade earlier, a trend that will intensify the debate over rent control. While twice as many households own their homes, the momentum lies with tenants.
These citizens deserve the same dignity and status as everyone else. While such a shift will take time, there are ways to start heading in the right direction.
A decade after Canadians could start using their mortgage payments to buttress their credit score, this option remains unavailable to many renters. In 2020, the credit bureau Equifax began working with the Landlord Credit Bureau, a reporting agency, to take rent payments into account. But this doesn’t apply in Quebec and a renter is out of luck if they’re using Equifax’s main competitor, TransUnion.
Faithfully pay the biggest item in your budget, month in and month out, and a credit bureau may not care. This is not reasonable.
Diligent rent payment also may not be enough to keep a roof over your head. In a number of jurisdictions, landlords can remove tenants so their own family can use the property. It’s a clause open to abuse by landlords wanting to find a new tenant and raise the rent. And the number of owner-use evictions is rising.
In British Columbia, the Tenant Resource and Advisory Centre says partial data for this year show that 36.3 per cent of calls for help with eviction were related to owner-use, up from 31.6 per cent in 2020/2021.
Stricter laws are needed to protect tenants from illegitimate eviction. B.C. is trying to clamp down on such abuses, bringing in a provision last year to allow for a fine equal to one year’s rent, payable to the tenant, though enforcement remains a challenge.
Ottawa recently boosted immigration targets to nearly 500,000 people annually. The majority will come to live in the country’s cities, which can’t simply sprawl to absorb them. Municipal leaders will have to push for more density, as Toronto Mayor John Tory is trying to do with a housing plan that allows for small multi-unit buildings everywhere. A greater focus on rental accommodation is also necessary.
Provincial and municipal politicians will have to move to protect tenants. And the rest of us will have to look at renters with a fresh perspective.