Toronto’s rental market has experienced increasing pressure due to high demand and a limited housing supply. In response, the federal government introduced a policy to cap international student visas, reducing the number by 35% for 2024 – limiting it to 364,000. This policy aims to ease some of the pressure on rental properties by reducing the number of students entering the market. While this might provide some temporary relief, it is unlikely to address the deeper, more structural challenges facing Toronto’s rental market.
Impact of International Students on Toronto’s Rental Market
International students have long played a pivotal role in driving demand for rental housing. Each year, thousands of students come to study at renowned institutions such as the University of Toronto and Ryerson University. These students typically rent properties near campus, leading to a significant increase in demand in certain neighbourhoods. Areas like North York, Kensington Market, and the Annex are known for their high student populations. With fewer students expected to arrive due to the visa cap, landlords in these areas may see a slight reduction in demand.
However, while fewer international students may reduce competition in certain student-heavy areas, the overall effect on the broader Toronto rental market is expected to be minimal.
Will the Cap Improve Affordability in Toronto?
The student visa cap was introduced as part of the government’s effort to address affordability issues in the Toronto rental market. With the average monthly rent exceeding $2,178 by the end of 2023, the city has become one of the most expensive in Canada.
While reducing the number of international students might slightly reduce demand, many experts argue that the core problem in Toronto’s rental market is the limited supply of housing. Without a significant increase in the construction of affordable rental units, prices are likely to remain high despite the policy. Toronto’s population continues to grow, and the supply of rental properties has not kept pace with demand. New construction, particularly of affordable units, is crucial to stabilizing the market.
Long-Term Solutions
Although the cap on international students may offer some short-term relief, it is clear that Toronto’s rental market requires long-term solutions to ensure housing stability and affordability. Policymakers, developers, and local authorities must collaborate to increase the supply of rental housing and address the city’s growing needs.
- Incentivizing Affordable Housing Developments: To stabilize Toronto’s rental market, it’s essential to increase the supply of affordable rental units. Offering incentives to developers, such as tax breaks or streamlined approval processes, can encourage the construction of more affordable housing.
- Zoning Law Reforms: Toronto’s zoning regulations have limited the types of housing that can be developed in many areas. By reforming these laws to allow for higher-density developments, particularly in areas well-served by public transportation, the city can create more rental housing and alleviate pressure on the market.
- Expanding Rent Control in Toronto’s Rental Market: Rent control could also play a key role in stabilizing the Toronto rental market. Currently, rent control only applies to buildings constructed before 2018, leaving many tenants vulnerable to sudden rent increases. Expanding rent control protections to newer buildings could provide relief for renters.
How Landlords Can Adapt
Landlords who typically cater to international students may need to rethink their strategies due to the visa cap. With fewer students entering the market, some landlords may face higher vacancy rates in areas close to universities. Landlords can adapt by targeting a more diverse group of tenants, such as young professionals or families, instead of relying solely on students. Offering longer-term leases and adding modern amenities can help landlords remain competitive in Toronto’s rental market.
The Future of Toronto’s Rental Market
While the cap on international students may temporarily ease demand in certain areas, the overall Toronto rental market will continue to face challenges. Population growth, limited housing supply, and rising rental prices are ongoing issues that will require more comprehensive solutions. To truly address the crisis, Toronto must focus on developing more affordable rental units. The city’s zoning laws must be reformed to allow for higher-density developments that can meet the needs of a growing population.
Conclusion: A Partial Fix for Toronto’s Rental Market
The student visa cap is a step toward reducing rental demand in some of Toronto’s neighbourhoods, but it is not a complete solution to the city’s housing challenges. The broader issues in Toronto’s rental market such as population growth and limited supply will continue to drive rent increases unless more significant measures are taken. Long-term solutions, including the development of affordable housing, expanded rent control, and zoning reforms, are essential to creating a more stable and affordable rental market for all residents.
