Mississauga Rental Market 2017 – Outlook for 2018 & Beyond
Mississauga Rental Market 2017 presents a healthy picture in some aspects, but not all. The main area for concern is the shortage of rental unit supply, which is getting pronounced with a greater (and fast growing) tenant influx in the housing market. CMHC GTA Rental Market Report 2017 provides great insights into how the rental market is performing across the GTA. However, the report looks at both rental apartment buildings (apartment buildings with apartments specifically developed to serve as rental units) and condo apartment buildings (where individual owners may choose to live in it or rent out their condo suites). The former building type is entirely owned by a builder or an institution, and the latter is a regular condo building with condos owned by users or investors.
What is the government doing to address the shortage of rental supply?
The government recently announced the New Housing Plan, which aims to make affordable housing within reach of all Canadians. However, this plan comes with many caveats. The provinces must match the federal government grants. The plan is to take off in 1-2 years, which makes one wonder if this is a plan on paper only, as there could be a new political party in power at that time. We will just have to wait and watch.
Mississauga Rental Market 2017 – CMHC Report – Key Highlights
- Toronto CMA primary vacancy rate reached a 16-year low at 1.0%
- Average rent is up by 4.5%
- Home ownership affordability concerns kept more households in rental
- Supply of new private purpose built rental units was insufficient to meet growing demand
- Strong migration flows continued to boost rental demand
- Primary Rental Supply Growth Lagging Demand
- Condominium apartments continued to act as the de-facto new rental accommodation supplier
- Rising home prices also gave landlords capacity to raise rents for new tenants and still remain competitive.
The chart below looks at vacancy rates for the condo apartment category across the GTA. Notable item in the chart below is that the vacancy rate for Peel Region is down from 1.3% to 0.5%. However, we feel that the number shown below under Percentage of Units in Rental is skewed for some reason. At least for Square One, we know that 50 – 70% of condo apartments are leased out.
Mississauga Rental Market 2017 – A Closer Look at Renting in Square One
How big is the Mississauga Rental Market?
As we deal with condo apartment buildings in Square One, Mississauga, our focus will be on this segment only. The CMHC report says that close to 1/3rd of units are rented out, in our opinion this could be 50% – 70% for Square One, Mississauga condos. As a building matures, this ratio decreases, as more First Time Buyers move in. In the future, investor ratio will be less as many First Time Buyers are choosing to buy and live in condo apartments since low rise single family homes are fast becoming unaffordable. The new mortgage rules are also affecting investors as lending is getting tighter and it is not easy to carry multiple properties. This is creating more shortage of rental units for tenants.
Finding a rental condo apartment can be as painful as a tooth extraction.
Rents are more affordable in apartments exclusively made for renting. Recently, Daniels came up with one such tower in Erin Mills but there has been lack of interest from other builders and negligible rental apartment buildings have been added to the Mississauga rental market in the last decade.
Only chance for renters in Mississauga now is condo apartments owned by individuals who rent out their condos, and not institutions. There is a lot of competition in securing a Square One condo for rental. There are multiple offer scenarios even for condo rentals these days.
What are the Rent increase guidelines?
As per Ontario’s new rental rules, the rent increase is capped at 1.5% for 2017, it has been set to 1.8% for 2018. Landlords are supposed to ask this market rent for new tenants but not the same rent for existing tenant lease renewals. New tenants get faced with a price sticker shock when they find out that their fellow tenants in other condos on the same floor are paying much lower monthly rent only because they have been renting since the past 1-2 years. It all means that one condo tenant might be paying hundreds of dollars more than a neighbour who lives just down the hall.
Mississauga Rental Market 2017 – Tips for Tenants
If you are a renter and don’t want to buy a condo of your own since you may not have 5-10% down payment, just stay put your current rental unit. If you think of moving into a new rental unit, you will have to pay higher rent. What used to rent for $1,600 per month 1-2 years ago, now rents for $1,700+ per month.
But if you can afford to buy a condo, then by all means you should make that move. We have helped many of our tenant clients buy a condo of their own. Remember, as a buyer, you do not pay us any fee. We can also help you find another tenant for your landlord should it be required if you have to break your lease before one year.
Mississauga Rental Market 2017 – Tips for Landlords
Shortage of rentals leads to more choice for landlords when it comes to prudent tenant selection. The new rent increase rules can also make some tenants opt to rent their units for longer. Most landlords prefer a good tenant over a rent increase, someone who can take care of their investment. So the new rules do not affect investment in rental condos in Mississauga.