The GTA needs to add 300,000 new rental homes in the next decade to close supply gap.

A new report co-authored by the Federation of Rental-housing Providers of Ontario, the Building Industry and Land Development Association, Urbanation, and Finnegan Marshall found that while rental households have grown at more than three times the pace of owner households in the past decade, currently available and projected supply of rental housing in the GTA is not enough to accommodate demand now and in the future. As population increases are expected to continue, the number of rental households is expected to increase by 400,000, reaching 1.3 million by 2031. That means that the GTA will need more than 300,000 new rental homes in the next ten years to close the supply gap, equating to approximately 8,000 units per year higher than the current supply of new units.

While new purpose-built rental starts reached a 28-year high in 2020 with 5,958 units, the number of new starts has begun to stall since then. This is due to challenges like rapidly rising construction costs and the less favourable business case for building purpose-built rentals compared to other forms of housing developments. While condominium projects can count on quick profitability, it takes purpose-built rental projects 7 years or more to reach the break even point.

The report calls on all levels of government to take the steps necessary to make building more purpose-built rental housing easier and cheaper. This includes updating zoning rules and bylaws, accelerating approval processes, changing the fees and tax structures, and providing more assistance to make purpose-built rental developments more attractive to investors.