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In tight rental market, here's how to prepare for a potential increase at renewal

The rate advantage city renters saw during the pandemic is fading, making it important for those without rent controls to plan ahead for potentially substantial increases.
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A for rent sign is seen in front of an apartment building in Saint-Eustache, Que., Wednesday, June 30, 2021.The rate advantage city renters saw during the pandemic is fading as rents rise across the country, making it important for those without rent controls to plan ahead for potentially substantial increases. THE CANADIAN PRESS/Ryan Remiorz

TORONTO — The rate advantage city renters saw during the pandemic is fading, making it important for those without rent controls to plan ahead for potentially substantial increases.

List prices for new rentals were up about 20 per cent in May for cities like Toronto, Vancouver and Calgary compared with a year earlier, data from Rentals.ca showed.

The price hike was attributed to students and remote workers returning to urban centres, immigration numbers rising, and house hunters turning to rentals while waiting out market uncertainty.

The combined pressures mean that existing tenants in provinces without, or with limits on, rent controls can expect jumps at renewal, and could benefit from negotiations with a landlord to limit that increase.

There is no limit to how much a landlord can increase rent prices in Alberta and Saskatchewan. A growing number of people in Ontario are also subject to a limitless increase as rent controls don’t apply to units first occupied after Nov. 15, 2018.

Nova Scotia and New Brunswick had no limits on rent increases going into the pandemic, but a spike in migration and property buying led to soaring rental rate increases, prompting the provinces to bring in legislation for this year.

Newfoundland and Labrador as well as the territories also have no limits on how much rent can increase, while other provinces have various systems that limit or cap rate increases for existing tenants.

For those subject to unrestricted increases, experts say there are some approaches worth trying to limit the price hike, but they warn that those renting in hot markets shouldn’t bank on discounts.

“Even if you have an awesome tenant that you want to encourage to stay, we're suggesting our renewal rates based on the market rent,” said Kerry Hunter, owner of Property Solutions Real Estate Group Inc. in Calgary.

However, Hunter, whose company works both in real estate sales and property management, said that many landlords are open to some discount if asked.

“A tenant can appeal to the landlord, perhaps accepting an increase but asking for some acknowledgement for being a great tenant that pays consistently on time, that always takes care of protecting the property. And most of our owners are willing to do that.”

Tenants can also ask about what the best term would be, and possibly get a better rate by signing on to a longer-term lease, said Hunter.

She said however that with rising costs there is a smaller window for reduced prices, and that most of her clients are increasing prices between five to 10 per cent for existing tenants, and even more for new ones.

Cost increases, including rising interest rates, is also narrowing options for landlords in Toronto, said Christan Bosley, president of Bosley Real Estate, but there’s still the opportunity to ask.

“If your landlord is an investor, they are probably much more likely to try and maintain that market value over time. But they will usually be more lenient to somebody who is qualified, consistently pays on time, takes care of the property, all that kind of stuff.”

She recommends reaching out to a landlord early to know where things stand, which given landlords need to provide 90 days notice for rate increases means thinking quite a bit ahead.

“I think it's better to go into any sort of contract renewal with transparency. So if I were a tenant today, I would be starting that conversation five to six months ahead.”

While it depends on how a property is managed, Bosley recommends an actual conversation to get the clearest picture.

“My viewpoint is always email and text message can be misinterpreted very quickly. And if you're just looking to have a dialogue about what the expectation is at the end of the lease, you're much more likely to end up on the same page with a phone call.”

Having that conversation can also reveal other smaller areas a landlord might be flexible in, said Bosley, such as damage deposits or pet fees.

Before approaching the landlord it’s important to know the market, said Geordie Dent, executive director of the Federation of Metro Tenants’ Associations.

“You want to look at what's being advertised and what's normal. And you kind of want to try to use that to negotiate with your landlord … Would I be able to find anything cheaper than what a landlord's offering, that's what you kind of want to get a handle on.”

He said that in Ontario it can be worthwhile pointing out the provincial rent increase guideline, which stands at 1.2 per cent for 2022, and 2.5 per cent for 2023 as a sort of reference.

While the tight market means there’s little threat of an apartment staying empty for a long stretch, it’s still worth noting the stress of switching tenants, said Dent.

“Somebody else moving in can be stressful and difficult for a landlord too, so sometimes you can convince them that it's easier to just keep you in at a reasonable rate.”

Ultimately though, even the uncertainty itself created by uncontrolled rent, let alone the threat of economic eviction, points to a problem in the system, said Dent.

“The kind of security of tenure element which is supposed to be kind of a bedrock of rental has been totally eroded. Right now landlords just want the highest rent they can get on the market as quickly as possible … it’s just creating all kinds of pressure.”

This report by The Canadian Press was first published June 30, 2022.

Ian Bickis, The Canadian Press

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