A new study from the University of Waterloo has found that financial firms are significantly driving up rental prices in Toronto, worsening housing affordability in Canada’s largest city. These so-called “financial landlords”—which include private equity firms, asset managers, and real estate investment trusts (REITs), are charging tenants, on average, 44 percent more than typical neighbourhood rents. That’s an estimated $670 more per month.
Martine August, one of the study’s authors and a professor in the University of Waterloo’s Faculty of Environment, says the trend is reshaping communities and putting pressure on renters. “Most people can’t afford the housing they are living in, and these firms are in part responsible for pushing that change,” August noted in a news release. “They are buying up buildings and turning them into investment products, raising the rents and making communities less affordable for people.”
The research compared rent premiums charged by different types of landlords. While “chain” and “chain managed” landlords charged about 30 percent above the average and single-property owners charged 22 percent more, financial landlords topped the list. Non-profit landlords, by contrast, charged slightly below the average rent. The study also found that financial landlords were most aggressive in raising rents in low-income and racialized communities.
Researchers say this is the first comprehensive study to quantify the impact of housing financialization on rent increases in Toronto. Using a newly developed dataset, the study evaluated rent patterns by property and landlord type across the city.
The findings raise concerns about government support programs. According to August, public housing initiatives like the National Housing Strategy may be inadvertently supporting firms that undermine affordability. “The government has goals to improve housing affordability, but their programs give funding to organizations who eviscerate housing affordability,” she said. The study calls for a reevaluation of how public funds are distributed and urges greater scrutiny of financial ownership in the rental market.
