Canadian renters signing new leases have paid $1,360 on average over the past two years, according to a recent report by Statistics Canada. The report, which draws data from a 2021 survey, also reveals that one-third of Canadians are renters.
“Rental cost data warrant further attention,” said the report titled “What’s included in Canadians’ rent?” The report, released on Aug. 23, said renters typically experience less favourable socioeconomic outcomes, a weaker sense of community belonging, and poorer health outcomes compared to homeowners. Additionally, there remains a lack of affordable housing among lower-income earners in Canada.
It also highlights a noteworthy trend: Rental costs are negatively correlated with the duration of residence. Specifically, the average Canadian rental cost for dwellings rented within the last two years is $1,360, whereas for dwellings that have had the same tenants for 10 or more years, the average cost is significantly lower at $840.
A separate report, published in August by Rentals.ca and Urbanation, shows the average asking price for a rental unit in Canada reached a record $2,042 in June, amid rising interest rate hikes and population expansion. This report noted that over the past two years, average rents in Canada have increased by 20 percent, or by an average of $341.
‘Financialization of Housing’
The Statistics Canada report draws on a survey of tenants in the 10 provinces and the territorial capitals of Whitehorse, Yellowknife, and Iqaluit. The landlords’ profit margins, however, were not included, as reported by Blacklock’s Reporter.
In a submission dated June 6 to the House of Commons Human Resources Committee, the Canadian Federation of Apartment Associations (CFAA), which represents the owners and managers of rental suites across Canada, estimates this margin to be about 8 percent on average.
“Some people picture all or most of the rent money going into the landlord’s pocket,” CFAA President John Dickie testified at the committee on June 6. “The truth is far from that.”
Mr. Dickie said that, on average, 19 percent of rental revenue goes toward covering operating costs, 14 percent is allocated for property taxes, and 12 percent is designated for utilities. This means 45 cents out of every dollar of rent is utilized to cover operating costs, leaving 55 cents as the net operating income.
However, he emphasized that there are additional expenses to consider. On average, another 36 cents is directed toward mortgage payments and 11 cents is reserved for major repairs and building modernization. Consequently, only eight cents out of every dollar of rent remains as the pre-tax return on each dollar of revenue.
The House of Commons Human Resources Committee is studying the “financialization of housing.”
“Good luck finding a $1,700 apartment in any urban centre in the country right now,” said Ray Sullivan, executive director of the Canadian Housing and Renewal Association, who also testified at the committee on June 6. He highlighted that this rental cost is actually the minimum level of affordability for the median income in Canada.
“Half of all people in the country cannot afford any rent higher than that,” he said.
Mr. Sullivan emphasized the importance of the private sector’s involvement in achieving a balanced approach when considering the rapid increase in housing starts and the expansion of the housing supply. He said there is a necessity to allocate a substantial portion of this supply toward non-market and community housing.
“We are not going to solve the housing crisis by adding five million $1 million homes or five million $3,000-a month rents for one-bedroom apartments,” he said.
In addition to factors such as rental location, residence size, and condition, the Statistics Canada report examines the impact of non-financial inclusions, including utilities, parking, appliances, and air conditioning.
“Rental inclusions are important considerations when comparing rental costs,” the report said. “Commonly cited rental costs are rarely adjusted for qualitative housing differences including rental inclusions.”
Figures showed rents in Ontario and Québec typically included air conditioning while Manitoba rents usually covered electricity charges. Sixty percent of Saskatchewan rents include parking compared to 55 percent in British Columbia.
Inclusion of oil, gas, and other fuel differs more substantially across regions, according to the report. The inclusion of fuel-based utilities is most common in Prince Edward Island (55 percent), the territories (54 percent), Nova Scotia (41 percent), and Alberta (40 percent). Conversely, these utilities are least widespread in Quebec (12 percent), Newfoundland and Labrador (15 percent), and New Brunswick (18 percent).