RENTT:
RENTT experts:
Rental look
According to several experts, some 2024 trends will continue into the new year. The Bank of Canada just cut its key interest rate to 3.0 per cent (down 0.25 per cent), following fve reductions in the interest rate in 2024. Lower interest rates, softer lending rates, and higher borrowing caps for mortgages should encourage new homebuyers to enter the market. However, some banks anticipate a wave of mortgage defaults, with mortgage renewals coming due when interest rates will be signifcantly higher than they were fve years ago.
David Hutniak, CEO, LandlordBC
Tony Irwin, President and CEO, FRPO (and Interim President, CFAA)
Cameron Choquette, CEO, SKLA
Kevin Russell, Executive Director, IPOANS
Donna Monkhouse, Executive Director, Alberta Residential Landlord Association (ARLA)
Rental housing associations ahead to 2025
By David Gargaro
Purpose-built rental growth is projected to slow to 3-4 per cent, according to CMHC data. However, rental prices in some Canadian markets are expected to decline. According to Rentals.ca, Canadian rental prices dropped by 3.2 per cent in December 2024 year over year. In addition to lower interest rates, other factors that will affect average rents include declining population levels due to federal immigration caps, an increase in the rental supply from newly completed purpose-built projects, and the oversupply of condos (particularly in Toronto) due to lack of buyer interest.
Technology should continue to play a more signifcant role in the rental housing industry. There will be greater demand for green homes, sustainable building materials, and energy-ef fcient appliances. Artifcial intelligence (AI) will also become more prevalent throughout the industry. For example, Edmonton will become Canada’s frst municipality to use AI for building-permit approvals. The city’s Auto Review program will allow builders to apply online and get sameday approvals for building permits for detached and semi-detached homes.
In this month’s issue, we asked our esteemed RENTT (Rental Executives
National Think Tank) panellists, who are leaders of rental housing associations across Canada, to predict what will happen in 2025 with respect to the rental housing industry. They provided their 2025 forecasts for the rental housing industry, the key challenges rental housing providers are expected to face, potential strategies for addressing these issues, and a wish list for the next Prime Minister of Canada after Trudeau steps down.
RHB: Welcome to RHB Magazine ’s RENTT panel. We appreciate the time and effort involved in participating in today’s discussion and sharing your experience. Our readers will benefit from your input. Today we’d like to look forward to what 2025 has in store for Canada’s housing market.
What is your forecast for the rental housing industry in 2025?
Tony Irwin: There’s positive momentum in Ontario’s rental housing sector as we head into 2025, with new and refurbished units coming online and some important policy changes aimed at increasing supply. Updates to the Ontario Building Code, reduction of red tape, along with lower interest rates and the approval of mass timber buildings up to 18 storeys to decrease the cost of materials, are encouraging steps that could help get more projects off the ground this year. That said, there are still some challenges to work through. Development charges, approval delays, and rising material costs continue to impact how quickly new units can be built. On top of that, with both federal and provincial elections on the horizon, some uncertainty remains around how new leadership might approach housing policy. Still, all parties have committed to making housing a priority, and we’re optimistic that by working together, we can keep building the purpose-built rental supply Ontario needs.
David Hutniak: The current operating environment for rental housing in BC is challenging with expenses outpacing the maximum annual allowable increase permitted by the province. LandlordBC did an analysis for the four-year period 2020 through 2023 and found that expenses increased 37.2 per cent for a sample of 186 buildings representing 7,800 units. During that period, the maximum annual allowable increase permitted by the province averaged 4.85 per cent. The disconnect is rather obvious and not sustainable. The sector is further challenged by increasing demands to retrofit existing stock to reduce GHG emissions with little support from the government to undertake the significant investments that will be necessary to achieve targets. The market is generally experiencing an uptick in vacancy rates, which has resulted in some softening of rents. A key factor has been the federal government’s move to reduce the number of international students and immigration in general. With additional new purpose-built rental supply coming on-stream in 2025, that may put additional downward pressure on rents. Only time will tell.
Cameron Choquette: According to recent CMHC data, Saskatchewan’s rental housing stock grew by 2.6 per cent last year, while vacancy rates remained steady at 2.6 per cent. This reflects a sustained strong demand for rental housing across the province. The primary driver of this demand is population growth, fueled largely by international migration to Saskatchewan. A balanced and healthy vacancy rate typically falls between three and four per cent, providing renters with a range of options in the market. However, despite the increase in rental supply, market conditions have continued to tighten. High demand has driven up average rents, yet Saskatchewan remains one of the most affordable provinces in Canada for renting a home. As we move into 2025, these trends are likely to persist. With ongoing population growth and consistent demand for rental properties, vacancy rates may remain below the optimal range, supporting further upward pressure on rental prices. However, Saskatchewan’s relative affordability compared to other provinces will continue to attract renters, making it an appealing choice for individuals and families seeking housing.
"Development charges, approval delays, and rising material costs continue to impact how quickly new units can be built."
Kevin Russell: It is challenging to provide a definitive forecast for the year ahead, as several potential negative factors could significantly impact the industry. Greater clarity will emerge once the outcomes of the federal election and the effects of U.S. tariffs on Canada’s economy become known. On a micro level, additional complexities arise from uncertainties surrounding property taxes, property assessments, development fees, bylaw regulations, and Residential Tenancy Act regulations. Currently, the industry is not operating in a rental housing provider-friendly environment, further complicating forecasts for 2025.
Donna Monkhouse: I pulled out my crystal ball but I don’t think we really need it in Alberta for now. Alberta is strong and I expect it to only continue with growth. Purpose-built rentals are being developed and there are options for tenants looking to rent. Rental rates are fairly stable right now but with costs still escalating for taxes, utilities, and operating expenses, this may lead to some further increases in the market but, overall, it will remain fairly stable.
RHB: What do you see as the biggest challenge for rental housing providers in 2025, and what strategies would you recommend to address this challenge?
Tony Irwin: The biggest challenge for rental housing providers in 2025 is undeniably rising costs, placing significant pressure on the sector. In Toronto, the proposed 3.45 per cent property tax increase adds another layer of strain, increasing operating costs for providers in the province’s most populous city. This comes as rent increases remain capped at 2.5 per cent for the third consecutive year, a figure dwarfed by current inflation rates. This widening gap between permitted rental increases and the actual cost of operating rental properties, coupled with higher interest rates, development charges, and material costs, makes building and maintaining a balanced rental market increasingly difficult. Addressing these challenges requires a collaborative effort between industry leaders and policymakers. A key priority is a more balanced approach to property taxation that doesn’t disproportionately burden rental housing. Further solutions include streamlining approval processes, modernizing development charges, and expanding financial incentives for purpose-built rental projects. These measures can help offset rising costs and stimulate new development. Ultimately, Ontario needs policies that support the creation of affordable rental units while ensuring the financial sustainability of housing providers.
Cameron Choquette: In 2025, rental housing providers in Saskatchewan may face various challenges, including navigating uncertain economic conditions, political unpredictability, rising costs, and potential vacancy risks. Despite robust rental apartment construction in the province’s largest markets, increased expenses for goods, services, labour, materials, taxes, and insurance are putting pressure on margins. Additionally, with unemployment rates exceeding six per cent in major centres like Regina, concerns about tenant stability and the risk of population outmigration remain top of mind. To address these challenges, rental housing providers will have to prioritize strategies that enhance operational resilience and tenant satisfaction. Building strong relationships with residents and focusing on retention can help reduce turnover, ensuring stable occupancy rates even during uncertain times. Providers can also explore operational efficiencies by streamlining internal processes, undertaking cost-effective renovations, and investing in energy-efficient upgrades to reduce utility expenses over the long term. Proactively
engaging with tenants, offering flexible solutions, and demonstrating value in a competitive rental market will be critical for mitigating risks and maintaining a steady demand for rental units in the face of economic and demographic uncertainties.
David Hutniak: The cost to deliver safe and healthy long-term rental housing will be the biggest challenge in 2025, exacerbated by the continuing risk of government intervention in one form or another from all levels of government. The most obvious strategy for owners and managers is aggressive cost management and that includes the highly undesirable option of taking a hard look at potentially deferring capital expenditures.
"Collaborating with industry associations to advocate for balanced policies and engaging with policymakers to streamline approvals and reduce taxes can create a more supportive environment."
Kevin Russell: The biggest challenge for Nova Scotia rental housing providers in 2025 will likely stem from a combination of rising operational costs, increasing regulatory pressures, economic uncertainty affecting tenant affordability, and shifting population dynamics. Key factors include escalating expenses such as property taxes, insurance premiums, and maintenance costs. Regulatory complexity, including rent controls and residential tenancy rules, adds operational burdens. Economic instability, inflation, and interest rate fluctuations may lead to higher tenant turnover and rent arrears. Labour shortages also complicate staffing, while a reduction in immigration and outward migration of skilled workers impacts tenant demand. Ultimately, the rental housing industry will need to navigate 2025 with a proactive and adaptive approach, balancing operational sustainability with the challenges of an evolving market and regulatory environment. Enhancing operational efficiency through property management software and regular audits can help reduce costs. Collaborating with industry associations to advocate for balanced policies and engaging with policymakers to streamline approvals and reduce taxes can create a more supportive environment. Building strong tenant relationships, offering flexible payment plans, and diversifying revenue streams, such as short-term rentals, can mitigate financial pressures. Investing in sustainability with energy-efficient upgrades and government incentives can reduce long-
term costs. Addressing immigration challenges and advocating for policies that attract and retain skilled workers will help stabilize demand. Proactive risk management, such as building financial reserves and staying informed on market trends, will also be crucial for long-term success.
Donna Monkhouse: Despite the increase in housing supply, Alberta still has a housing shortage and, with the further in-migration to Alberta, this will lead to further demand for rental housing. The question then is will we ever catch up. I am not sure but believe there will continue to be a balance between supply and demand that we will meet. Housing providers will continue to face fluctuations in the economy and possible political shifts that could impact the rental market. There has been some talk about further regulations for housing, but we are ready to advocate for changes that would impact our housing providers. Overall, I have only a positive outlook about where Alberta is going with respect to rental housing.
RHB: Now that Trudeau will be stepping down, what is your wish list for whomever comes in office next?
Tony Irwin: As political leadership changes at the federal level, our priority remains ensuring that purpose-built rental housing stays at the forefront of the national housing agenda. Regardless of who takes office, FRPO is committed to working collaboratively with all levels of government to advance policies that increase rental supply, reduce regulatory barriers, and address the affordability crisis in Ontario. Our wish is for a renewed emphasis on purpose-built rental housing as the key to bringing stability back to the housing market. Policy stability that streamlines development processes and financial incentives that spur the construction of purpose-built rental housing are tools that any new leader or government should use. These efforts are essential to creating a more balanced market, supporting economic growth, and ensuring Ontarians and Canadians have access to safe, professionally managed rental homes.
David Hutniak: We hope that the increased capital gains measure will be eliminated retroactively. While we were encouraged by the degree to which the Liberals were investing in housing, we would like to see market rental getting more support in the form of access to lower cost financing, without endless strings attached, for new purpose-built rental construction, and robust incentives and supports for energy retrofits to the existing stock. There’s more but if we saw action
on these areas that would be a positive.
Kevin Russell: The next government must prioritize practical and impactful initiatives to address pressing challenges. Key focus areas should include lowering staffing levels and streamlining government operations to enhance efficiency, promoting development-friendly housing policies to address supply shortages, implementing tax policies that increase workers’ take-home pay, and focusing on skilled immigration to address labour shortages in key sectors, ensuring a steady flow of talent to meet workforce demands. By addressing these priorities, the next government can foster economic growth, improve housing affordability, and strengthen the country’s position in an increasingly competitive global landscape.
Cameron Choquette: With Prime Minister Trudeau stepping down, RHSK remains committed to advocating for the removal of barriers to building purpose-built rentals in our province and across Canada. While we are disappointed that the proposed increase in the capital gains inclusion rate remains under consideration despite lacking parliamentary approval, we see this transition as an opportunity for meaningful change. We hope the next Prime Minister prioritizes addressing the housing crisis through collaborative efforts between federal, provincial, and municipal governments. This includes introducing incentives for rental housing development and streamlining permitting processes to accelerate construction timelines. RHSK also urges a reconsideration of the draft legislation on capital gains tax increases, recognizing the significant financial pressures already faced by rental housing providers. Furthermore, we advocate for a balanced review of policies such as the carbon tax, which imposes additional costs on businesses. Achieving climate goals is vital, but it must be done in a way that does not disproportionately burden the housing sector. Ultimately, we wish for a leader focused on housing affordability, economic stability, and a balanced approach to policy-making that supports the rental housing industry while addressing broader national priorities.
Donna Monkhouse: With respect to Trudeau leaving, I am not sure if his renters’ rights will even be an issue in the future, but we will continue to monitor this. I only hope that the next leader of Canada initiates quick solutions to our housing shortages and economy and they work with Alberta to keep it strong.
RHB: Thank you for your input.