Photo: James Bombales
This week, the federal government revealed the 2018 budget, complete with $1.25 billion in funding for a program offering low-interest loans to builders of rental housing.
But, according to the Toronto Region Board of Trade (TRBOT), the money won’t be enough to make a dent in the GTA’s rental shortage.
“The government’s focus on housing, particularly providing loans for rental construction, is important. However, until other orders of government change their policies, its impact will be limited,” reads the board’s recent 2018 federal budget report card.
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According to TRBOT policy manager Jeff Parker, the federal funding won’t be enough to meet the growing demand in Toronto’s rental market.
“The funding is set to create 14,000 units over the next three years,” Parker tells BuzzBuzzNews. “Even if we assume that 7000 of the units will be in the GTA market, that is significantly less than what is needed to match even a year’s worth of demand.”
Parker believes that the only way to create the amount of rental housing Toronto needs is private investment.
“We know from speaking with our partners that investors are not investing in rental property because of red tape and rental control,” he says.
According to a report from the Federation of Rental-housing Providers of Ontario, more than 1,000 planned purpose-built rental units were converted into condos last year, after the new rent control legislation came into effect in April.
“Ultimately all the federal government can do when it comes to rental housing is to provide funds,” says Parker. “We need provincial and municipal governments to be aware of what policies like rent control can do to the market, and take steps to ensure that investors are encouraged to invest in purpose-built rental.”
A report from the Toronto Real Estate Board found that the average rent for a one-bedroom GTA condo went up 10.9 per cent year-over-year to $1,970 in Q4 of 2017.
“We continue to have concerns that rent control legislation announced in conjunction with the Ontario Fair Housing Plan will preclude additional rental supply coming on stream, both in the purpose built and investor-held condominium apartment segments,” wrote TREB director of market analysis Jason Mercer, in a statement.