'Great for landlords, horrible for renters': How a runaway rental market has become Toronto's latest housing nightmare

Shivin Kaul and his three friends have been looking for a house to rent in Toronto since July. The group of young professionals has found several that fit their needs, the only problem is they keep getting outbid — three times in a single week, at one point.

“(We’re) getting tired of viewing about 10 houses, liking a couple of them and then losing out on the ones you like to someone who outbid you for $300 or $400,” Kaul said, explaining that he and his friends have started to overbid listings in an attempt to secure a place they can move into by September.

Last week, Kaul’s group told a landlord they’d be willing to pay $4,000 for a three-bedroom house that’s listed for $3,600 plus utilities per month after being asked for their “best offer.” The rental ended up going to someone who offered $100 more.

Overbidding for rent is not new but it has become more common with the current hot market, in which rents have surged by more than 20 per cent in some cases since this time last year.

Conrad Rygier, a Toronto real estate broker with Right At Home Realty, said in the past month he’s seen overbidding for rental properties “at least 90 per cent of the time.”

Market watchers, such as Rygier, say that with interest rates rising, many Canadians who were planning to buy homes are now either thinking twice due to market uncertainty or realize they can no longer afford to buy and are flooding back to the rental market. This surge in demand has caused “absolute havoc” in the rental market, Rygier said.

“What I’ve seen in 14 years of doing this, these last couple of months have been the worst, craziest (time) to represent a renter,” said the broker, who works with both renters and landlords. “It’s been great for landlords, horrible for renters.”

Rygier called it a “frustrating period” for renters, who are being forced to take risks by submitting offers based on photos — without even seeing the property in person — because so many get rented on the same day they are listed. Often, they are competing against a number of different offers for the same property.

“Landlords are being super, super picky on who they accept because it’s a landlord’s market,” he said, adding that he’s represented “excellent tenants” who were rejected because the landlord was looking for “something else.”

Often, that means tenants with six-figure incomes and impeccable credit scores, leaving those with less-than-perfect credit and even high five-figures incomes — not to mention those with pets — in the lurch.

The average rents for one- and two-bedroom apartments in Toronto are now both at record levels, while average condo rents are up by double digits annually for all bedroom types, according to recent rental market data released by the Toronto Regional Real Estate Board (TRREB). Meanwhile, rental listings on the board’s MLS system have dropped by almost 30 per cent year-over-year, giving renters less choice.

Those looking to rent a bachelor or one-bedroom apartment in the Greater Toronto Area have to pay at least 20 per cent more than they would have a year ago. The TRREB report found that rent for bachelor apartments now averages $1,829, up from $1,462 a year ago, while one-bedroom apartments average $2,269, up from $1,887. This rate of increase surpassed the previous peak in the third quarter of 2019.

The prices seem to be going up every month,” Yolevski said.

She added that the company’s list calculations show an over $400-per-month increase in Toronto rental prices on all types of properties this year — not far off from the real estate board’s numbers in June.

Yolevski said there are more renters than properties on the market. She attributed the increase in demand to the number of people returning to major urban centres as they go back to working in the office, as well as immigration numbers rebounding after tight COVID-19 restrictions.