What the Toronto Long-Term Renting Trend Means for Landlords
According to a recent report by Point2Homes, we’ve reached the highest percentage of tenants in Canada since the 1960’s. The picture in Toronto especially fuels the long-term rental trend. Between the last two government censuses, single-family rentals in Toronto grew by 9,000 units, while multifamily grew by 23,000 units.
What all of this boils down to is that high cost of living areas (HCOL) such as Toronto have become “forever renter” zones, similar to other HCOL areas like Hong Kong or Singapore. This means that if you get a tenant into your property, there’s a good chance that they will stay put for a very, very long time. This means some adjustments in how you do pricing, screening, and everything else you do as a landlord.
The Pros of Long-Term Renters
There are a few positives to this trend for landlords. Long-term tenants tend to:
-Treat properties better than those who are only staying for a few years
-Be a consistent and reliable source of income, since they won’t want to risk evictions
-Have better relationships overall with landlords
Preparing Your Property for Long-Term Rental
- Think Critically About How Long You Want to Keep Your Property
First, you’ll have to decide how long you want to hold on to a property. Selling a tenanted property can be difficult unless you are selling to another landlord. Sure, the buyers can file an own-use eviction, but most aren’t going to want to do that. If you’re only planning on holding onto a property for a few years, you may want to consider turning it into a short-term rental rather than getting involved with tenants who are governed under the Residential Tenancies Act.
2. Hire a Property Management Company to Screen Tenants and Set Prices
In this climate, every renter could potentially be a long-term tenant. The two things that are absolutely critical when considering this are setting the right prices and screening tenants. Small landlords, while usually savvy business people, tend to get at least one of these two things wrong. As a property management company, we know exactly what you should be charging in each neighbourhood and how to select the right tenants that will pay rent reliably and not damage your unit. This alone more than justifies our cost.
3. Have a “Everything is Breaking All at Once” Fund
With long-term renters especially, something like an appliance breakdown will usually be chalked up to wear and tear. Make sure you are setting aside funds to replace heaters, AC units, appliances, repair roofs, and other major expenses. These things tend to happen in clusters, so you won’t want to reach in your pocket when the time comes.
You will probably also have more to clean and repair in the unit after a long-term tenant moves out which will be viewed as normal wear and tear under the Residential Tenancies Act (RTA). Long-term renters are more likely to have small children and pets, both of which can be harder on a property. You will want to get videos and photos of the property before anyone moves in just to cover yourself in the event of actual damages.
4. Do Not Renegotiate Rent Downwards
You may have seen reports about rents declining in Toronto and the GTA. While this may be true, the lack of supply means they aren’t declining much. If a tenant comes to you to negotiate their rent rate, don’t do it. This could be the rate you’re stuck with for years, and you can’t legally raise it over the mandated amount annually if your property was built prior to 2018. This is true even if you negotiate a rent reduction – so you can’t raise it back to the original level, plus the mandated rent increase amount under the RTA, for example.
5. Be Proactive About Maintenance
While you don’t want to do things like change lightbulbs, you do want to get into your property about twice a year to see if anything needs to be done. The best time for this is fall, to prepare for winter, and spring, to assess any winter damage and prepare for summer. This is the best way to stay on top of potentially larger issues such as leaks and mold. If you are hiring us as your property manager, we will do this for you.
We can’t stress enough how much you will want a property manager if you have long-term tenants. We keep problems from becoming large issues, we make sure you are paid reliably and on time, and we instinctively know how to pick good tenants. Plus, we’re more affordable than you think. Contact us today to get started.
