Toronto once again crept up to the top spot for annual rent appreciation, according to a new national rent report. What’s more, experts are cautioning that the market will only heat up more in the months to come as interest rate realities continue to chip away at home buying power and the Canadian population continues to see record-breaking gains.
This means that post-secondary students in need of rental housing are in for a scramble ahead of the school year. And while you could argue that in a city like Toronto -- where housing supply has lagged behind the demand for it for decades -- finding short-term housing on a student’s budget has always been something of a crunch, it’s clear to experts and consumers alike that conditions are only getting worse.
“If a student without a steady income is applying to a rental unit and they’re up against someone in their 30s with over 10 years of work experience and a stronger salary, it becomes very difficult for them to come out on top,” she says. “Many times, they will need to have a parent step in to act as their guarantor and provide their own personal documents to show that they’re able to cover the monthly rent.”
For international students, the challenges often pile on.
“One of the required documents when applying for a rental is a full credit report with a score, but because they’re new to the country, they don’t have any established credit yet,” says Parrell. “In these situations, I find that they’re more likely to provide several months of rent upfront for the deposit in order to be competitive and show the landlord they are able to make the monthly rent payments. But that requires them to have more cash liquid so it’s not always possible.”
Isaac Garcia-Sitton, Executive Director of International Student Enrolment, Education, and Inclusion at Toronto Metropolitan University (TMU), adds that international students are often up against lengthy processing times when obtaining a visa, and that can all too easily cut into time spent securing living accommodations.
What’s more, as housing shortfalls intensify, Canada is admitting international students in increasing numbers.
“In 2022, an unprecedented 807,750 international students were in possession of valid study permits, representing a 31% surge from the previous year,” says Garcia-Sitton. “And then there is a limited supply of purpose-built student housing that caters to the unique needs of international students.”
Although conditions are certainly worsening, the housing challenges confronting all students are nothing new, and they’re not exclusive to Canada. Garcia-Sitton points to the United States, where a similar narrative is unfurling. In Europe, some strides have been made -- “there has been a growing trend in European countries for developments built specifically for student renters,” he says -- but not nearly enough to answer demand.
“Capacity constraints persist and are partly attributed to a greater number of students returning to study on campus post-pandemic,” he says. “Surging demand and higher rents are also experienced across other popular study destinations, such as Germany and the Netherlands with oversubscribed accommodations, with calls in the Netherlands to restrict international student recruitment due to growing concerns around limited housing options.”
In an ideal world, post-secondary institutions would be creating the housing their students so sorely need -- and there are some strides being made to that end -- but Frank Clayton, Senior Research Fellow, Centre for Urban Research and Land Development at TMU, says it’s not so simple.
“Universities are struggling,” he says. “They can't afford to provide housing at below market rents to students, because as well as building the accommodation, they then have to cover the costs to maintain the building over time. So it's a tough situation.”
Leaving the task up to the private sector comes with complications too. As Clayton points out, there’s just not enough incentive for developers to invest in student housing. In order for it to be a worthwhile endeavour, the rents charged would have to be competitive, which doesn’t do much to answer the needs of budget-strapped students.
Still, there are various private players with skin in the student housing game.
Taking the scope Ontario-wide, there’s ALMA, which is a purpose-built rental project available to students in Guelph. The 177-bed project -- made possible through the adaptive reuse of a former Holiday Inn -- comes from Toronto-based Forum Asset Management. It adds to their portfolio of student housing including The Quad, which is located on the York University campus.
Acknowledging that the need for student-centric projects runs quite deep, Aly Damji Managing Partner, Real Estate at Forum says that they have more projects like this one in the pipeline.
“The increasing number of international students, combined with the ongoing housing crisis in Canada, has created a shortfall of over 450,000 purpose-built student housing beds. And occupancy rates for purpose-built student accommodations are near or at 100% across major Canadian markets,” says Damji. “However, developing and managing student housing requires expertise, and building a sense of community and implementing enhanced security measures are crucial. Consequently, traditional players may choose to stay out of this sector.”
To a similar tune, Sanjil Shah, Managing Partner for Alignvest Student Housing -- they own and operate 12 university-focused properties in six different markets across Canada, including Ottawa, Oshawa, Hamilton, and Waterloo -- calls student housing a niche, location-specific business and an “operationally-intensive real estate sector.”
“Unlike traditional apartment buildings, student housing experiences high turnover -- approximately 50% per year -- which requires a continuous leasing effort,” he continues. “With the higher turnover and student population, maintenance costs tend to be higher.”
Though you can’t quite argue that the student housing disparity is being ignored, it is clear that what's being done is a drop in the bucket. So the consensus amongst experts is that it’s high time to get collaborative and inventive.
“Developers will be more interested in building new product if there is support from the universities and campuses. Support can be in the form of occupancy guarantees, management partnerships, or affiliations,” says Shah.
He also calls on governments to rethink stringent policy levers.
“At the municipal level, reducing zoning restrictions to reduce the development risk, and easing property tax burdens, to reduce operating expenses, could encourage development. At the federal level, making it easier to obtain CMHC financing for student housing development would encourage more construction of student housing.”