Building industry calls for increased focus on purpose-built rentals

Ontario Construction News staff writer

Building Industry and Land Development Association (BILD) and the Federation of Rental-housing Providers of Ontario (FRPO) are urging all levels of government to implement policies to stimulate the development of purpose-built rental (PBR) housing to meet rapidly growing demand.

A new report by BILD and FRPO estimates that the deficit of rental housing supply in the Greater Toronto Area will double in the next 10 years to 177,000 units.

“There was a surge in purpose-built rental starts in the region in 2018, but that appears to be stalling out,” said Dave Wilkes, President and CEO of BILD. “Purpose-built rentals represent a vital segment of the GTA and Ontario’s housing stock.

“They are dedicated rental housing and provide security of tenure. Unfortunately, we are just not seeing purpose-built rentals being built at the scale that is required. It comes down to the economics of building and managing these type of buildings.”

In the GTA, purpose-built rental units represent approximately a seventh of all the housing stock available, rental and owned, but slightly less than half of the number of units available for rent.

The region’s stock of purpose-built rental housing is aging and new supply is coming to market at much lower levels than other forms of housing. Almost 90 per cent of the GTA’s purpose-built rentals date from more than 40 years ago, between 1960 and 1979, when 223,954 PBR units were built.

By comparison, only about 23,590 purpose-built rental units were built between 2000 and 2022. The rate of purpose-built rental construction increased after 2018, but that surge appears to be abating.

The report finds that building purpose-built rentals, particularly in major cities in the GTA, is more expensive for developers than building other forms of housing because they have to invest more capital upfront and have to wait longer for the project to become profitable. These challenges are exacerbated by the way in which taxes and charges are applied to purpose-built rentals.

“In order to tackle our housing crisis, we need to build much more purpose-built rental housing, faster,” said Tony Irwin, president and CEO of FRPO. “The majority of Ontario’s purpose-built rental housing stock was built before 1980, so new units are essential to provide more choice and take the pressure off aging units.

“We are calling on all levels of government to make new purpose-built rental housing a priority and to create a policy regime that recognizes the unique nature of this type development and stimulates the addition of PBR supply.”


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