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High rent and low vacancy are squeezing renters in Canada’s largest cities

John Lehmann/The Globe and Mail

'I can't set down roots'

Canadians who rent are forced to scrap over a dwindling supply of housing that has never been more expensive, writes Frances Bula

Lesley McKechnie has never felt so shut out of her own city as she has the last several weeks.

As the 43-year-old mother has slogged to find a place to live for her family, she's done the tour of dingy basements, sketchy triplexes and overpriced condos in far-flung corners of suburban Burnaby, next to Vancouver, that are anywhere from $200 to $900 more a month than what she's now paying.

NO VACANCY

The rapidly rising cost of rental units in Canada’s largest cities, along with vacancy rates near zero, mean it’s increasingly difficult for people who rely on rental units to find – and keep – their housing. Like the real estate market, rental prices have become detached from incomes and are forcing people to live in cramped apartments, find roommates well into adulthood or simply move away.

The Globe and Mail is spending the summer examining how those factors have shaped the lives of renters, landlords and their cities.

She's had potential landlords hang up on her and she's been left waiting for them to show up for viewings. She's been asked for criminal-record checks and credit checks. She's found herself amid standing-room-only crowds with people scrambling to get approved for an empty apartment.

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And she hasn't found anything yet.

"There's nothing out there," says Ms. McKechnie. "I show up at these viewings and it's a mass herd."

A huge amount of attention the last two years has gone into discussions of the country's increasingly bizarre real-estate market, where prices have risen as much as 30 per cent in Vancouver and 17 per cent in Toronto.

What's attracted far less attention is the pressure that's creating on the rental market.

As people are shut out of the housing market, more people have no choice but to remain as renters who are competing for a limited supply of housing in a system that has treated renters like second-class citizens for decades.

Vacancy rates in Vancouver and Toronto are at historic lows, under 1 per cent in most of the Lower Mainland markets, including even as far away as Abbotsford, and at 1.6 per cent in Toronto.

Rents are increasing dramatically on units when tenants leave and, under current rent-control laws across the country, landlords are free to raise prices to whatever the new normal will bear if there is a new tenant.

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That has created a two-tier rental world. In one, people who have been renting the same place for years and whose rents have been limited to legal increases, life is fine, as it was for Ms. McKechnie's family until now.

Lesley McKechnie with husband Stan at their rental in Burnaby.

Lesley McKechnie with husband Stan at their rental in Burnaby.

John Lehmann/The Globe and Mail

In the other, new renters find themselves facing limited choice and often the sticker shock of much higher rents than the statistical average.

The situation is especially acute if the prospective tenant is poor, disabled, non-white, very young, suffering from mental-health issues, fresh out of jail, or newly immigrated. Study after study has shown they will be the last chosen by a landlord.

Discrimination in housing

When Siobhan Yearwood, 24, first arrived in Toronto from Barbados in 2014, she stayed at friend's house before moving to a youth shelter. From there she ventured out in search of her own place.

She didn't expect it to take eight months.

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"It's ridiculous," she says. "The issue isn't availability. It's about discrimination."

Ms. Yearwood says landlords seemed hesitant to rent to her because she was a black woman. Housing units that were advertised soon disappeared when she indicated she was on government aid.

In some cases, the rebuffs were subtle. In others, the landlords were clear.

"My friend and I, we were with our housing worker and we called a landlord. He said he's not renting to us because we're on social assistance."

Unsure of what recourse she is entitled to, she was put in touch with the Center for Equality Rights in Accommodation, a non-profit with the aim of preventing evictions and ending housing discrimination.

Together, they scoured listings on Kijiji, until they managed to find an appropriate apartment in Scarborough.

She got help. Many don't.

Pattern of rental building

Unlike in the build-to-sell market, where there is at least some faint hope that enough supply could help lower the boiling point on prices, construction of buildings intended as long-term rentals is happening at the slowest possible drip in Canada.

"It's so difficult to get anything built," says David Hutniak, the CEO of LandlordBC. "I go from municipality to municipality arguing that [rental buildings are] the most affordable. We should all be very concerned about where the hell are we going to house our young people."

The current dismal situation is a startling contrast with 1960s Canada, where, as Toronto researcher Greg Suttor has documented, sometimes as much as half of all housing built would be rental apartments, as many as 110,000 units in a year.

That historic pattern of rental building means that the highest proportion of renters typically live in central cities and inner suburbs. It's not necessarily because they love those areas. But that's where the rentals were built and where they remain.

It's also why newer cities, like Vancouver, have dramatically fewer two- and three-bedroom, family-suitable apartments, than Toronto and Montreal do.

And it's why outer suburbs developed after the 1970s, dominated by single-family homes, can sometimes have exceptionally low vacancy rates and big affordability problems for renters.

Rental rankings

The Canadian Rental Housing Index, a project launched by a number of non-profit groups and credit unions, measures the health of rental markets across the country. The index uses a combination of factors including affordability – the percentage of renters' income required to pay the bills – and overcrowding, among others, to come up with a score out of 50. The higher the score, the more unhealthy the market:


Most healthy

Cornwallis, Man.: 0

Shannon, Que.: 1.04

Grande Prairie, Alta.: 2.43

Petawawa, Ont.: 2.79

Nipawin, Sask.: 4.35

Princeville, Que.: 4.45


Least healthy

Vancouver: 34.98

Richmond: 35.44

Toronto: 35.56

Markham: 36.31

Coquitlam: 36.96

Burnaby: 39.88

SOURCE: Rental Housing Index

In recent years, a few cities that have put in special incentives such as density bonuses or fee waivers to entice developers into building rentals have seen a slight bump. Vancouver and New Westminster get kudos from housing advocates for their efforts on that front.

The Canada Mortgage and Housing Corporation noted last fall that Vancouver saw the highest number of apartments built in the region in 30 years. That was 834 units. In the meantime, 33,013 people moved to B.C. last year, well over half of them destined for the Lower Mainland.

Toronto saw 1,850 rental units started in 2015. That's in a city where, Mr. Suttor estimates, 50,000 new low-income households arrive every decade.

What all that means is that the country's renters, whose population is swelling daily through immigration and the boom of millennials entering their prime years for moving out of parents' or collective houses and forming their own households, are having to scrap over what they can get from a housing system that hasn't favoured them for several decades.

"Our whole housing system is weighted in favour of homeowners," says Kishone Roy, the executive director of the B.C. Non-Profit Housing Association, echoing what Canadian housing researchers say. "We haven't done anything to support renters."

David Hulchanski, a University of Toronto professor who is one of the country's pre-eminent housing experts, says things fell apart when the federal government abandoned tax-incentive and other programs that enticed builders and investors into constructing rental apartments, which produced tens of thousands of units a year in the 1960s and '70s. The last program like that was cancelled in 1984 under the Progressive Conservatives.

Then, in 1994, the Liberal government ended social-housing programs, which had been helping produce 20,000 units a year to help fill in missing supply for the country's poorest renters.

Since then, the emphasis has relentlessly been on pushing households into home ownership, says Mr. Hulchanski.

That's in contrast to Europe – In Germany, 57 per cent of residents happily remain as long-term renters – and even some Asian countries that have strong protections for renters and controls on the housing market to prevent buyers from using it for investment and speculation.

There are about 11 million people – 31 per cent of the non-homeowners in Canada – who rent their homes, with a sizable proportion of them in every age group.

According to the 2011 census, people between the ages of 35 and 64 accounted for half of all the renters in the country. Under-35s accounted for 30 per cent of the renters; those over 65, the remaining 20 per cent.

They range from the destitute, renting rooms in Vancouver's Chinatown for as little as $175 a month, to the one-percenters, who this week have available to them a three-bedroom penthouse on Yonge Street in Toronto, complete with a Sub-Zero wine fridge, a fireplace, and a pool in the building, for $9,995 a month.

There is a fair amount available for the better off. As a recent Metro Vancouver report noted, there are more than enough new condos in the rental market to absorb the higher-income people who move to the region.

But for the vast majority – from millennial couples pulling in $90,000 a year between them to service workers living on $25,000 to people on welfare allocated $375 a month for housing in B.C. and Ontario – there is a limited number of rental sources available:

There are the remains of the vast swath of apartments built throughout the country prior to the 1980s.

There's the small stock of remaining subsidized social housing.

There are basement suites and laneway houses – in the cities that allow them. Others, like Calgary, are still scrapping over them as homeowners fret that allowing renters into their neighbourhoods will result in an invasion of undesirables.

There is older housing in inner-city suburbs – the bungalows and split-levels that have been converted to rentals as they've aged.

And there's the roughly 25 per cent of new condos that get built every year, which tend to be higher-priced.

Much of that is precarious.

Condo investors often rent only for short periods, until the time is right to sell. Older houses get sold for re-development in hot markets. Basement suites appear and disappear as homeowners' need for extra income changes.

Purpose-built apartments are more stable, but, as the market has heated up, some landlords, impatient at having to limit their rent increases to the rate of inflation, have found loopholes, such as renovictions or fixed-term leases to be able to raise rents.

And even social-housing providers and co-op housing projects have found themselves having to limit subsidies for their tenants and rent fewer units at rock-bottom rates to cope with rising maintenance bills.

All of that creates an insecurity that pushes people into becoming homeowners, even when it's sometimes a financial stretch.

The rate of home ownership in Canada has increased from 60 per cent in 1971 to 69 per cent in recent years.

That's not just because the Canadian and provincial governments have any number of policies in place that tip the scales in favour of home ownership, such as the capital-gains exemption for any profits made on a principal residence, homeowner grants, permission to use RRSPs for down payments, and more.

There's also a stick – the fear of being forced to move at any time – along with the carrots.

landlords give notice

Ingrid Cheung and her partner, Greg, found themselves in a panic over precisely that situation.

The two, who work in public relations and communications respectively, had been renting a 625-square-foot apartment in Coal Harbour for two years at $1,800 a month. It was a place they loved because it was at the end of a row of small townhouse-like apartments with patios outside, giving them some outdoor space and privacy for playing their musical instruments.

Then their landlords, a pleasant couple from Toronto, decided to sell.

"We freaked. We're thinking, if we move, we'll have to pay even more." So, with help from both sets of parents, they bought their condo for $580,000 earlier this year.

That's not a possibility for Lesley McKechnie and her family.

After 12 years in the same comfortable three-bedroom rental on a quiet street in the Vancouver suburb of Burnaby, Ms. McKechnie, her husband and her teenaged son are having to leave after their landlord gave her notice in early May that he needs the unit back by September to accommodate his extended family.

The McKechnies have been paying a very affordable $1,283 a month in rent, but she knows she won't find anything for her family that will match that now.

Even though her husband, Stan, makes a respectable $80,000 a year as a technician at an auto dealership on Kingsway, that's not enough to buy a place anywhere near the high school their son is about to enter, Burnaby Central.

Ms. McKechnie, in desperation, started training this week for a service-worker job in a local fast-food restaurant to cope with what she expects will be much higher living costs.

In the meantime, she can't sleep at night and she says the whole situation has "caused friction in our marriage."

"One thing I cannot handle is not knowing where I will live," says Ms. McKechnie, who grew up in a single-family house in the Edmonds area of south Burnaby, a place where her parents, both retired government employees, still reside.

Searching for solutions

Renters have different ideas about the solutions they'd like to see.

Michael Cawston-Stewart, a 32-year-old software engineer who was just evicted from his $1,400-a-month basement suite in Burnaby's Metrotown after only a year, is now reluctantly parked in a for-renters-only tower nearby at Patterson, paying $1,900. He and his girlfriend, who works in human resources, have about $100,000 in household income between them.

But they are forced to rent for now because they can't see any way to buy in the current surreal Lower Mainland market. He expects they won't be able to buy anything until they are maybe in their 40s.

That makes him miserable.

"I can't set down roots. I can't connect with the neighbourhood. I want to live in a community."

But not far away, Christopher Langmuir doesn't care about owning.

The 34-year-old, who owns a small video-game company, lives in a rented triplex in Vancouver's uber-hipster Mount Pleasant neighbourhood with his girlfriend and a friend, at $1,400 a month for the three of them.

He's not interested in buying, since he'd never be able to afford to be in the neighbourhood he wants to be in.

That's a common sentiment in Vancouver. A survey by GWL Realty Advisors, which manages 11,000 rental units across Canada, found that a startling 79 per cent of Vancouver renters said they rented to be in a neighbourhood they liked but that they couldn't afford as owners. That was almost triple the national rate and 50 per cent higher than for downtown Toronto renters.

He finds the prevailing Canadian attitudes towards housing puzzling.

"A lot of discussion around ownership is weird. It's an investment situation and it seems to be related only tangentially to living. And, culturally, there is this idea it's better to own."

What he'd like to see: a city that puts renters on the same footing as owners, where more areas of the city are available for rental construction, renters get the benefit of tax breaks, and there is just more rental everywhere.

"That's what would help most people. Everyone would be better off if there was more rental."

With a report from Leyland Cecco; Frances Bula is a freelance writer

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