Canada’s rental market
is undergoing a significant shift. After years of rising costs and tight
supply, recent federal actions are showing early signs of stabilizing rental
prices. According to the latest Rentals.ca Rent Report, the national average
rent has decreased by 3.3% year-over-year, bringing it to $2,129 in 2025.
This drop, seen even in
high-demand urban centres like Toronto and Vancouver, signals a
potential turning point—driven in large part by bold new government strategies
to address the ongoing housing crisis.
Federal Government
Steps Up with Affordable Housing Programs
In response to growing
public pressure and long-standing affordability concerns, the Government of
Canada has launched a suite of programs to expand rental housing and
improve affordability:
·
$2.55
Billion in Low-Interest Loans:
Announced in March 2025 through the Apartment Construction Loan Program (ACLP),
this funding will support the creation of 4,800 new rental units in
Toronto—including 1,000 affordable housing units.
·
National
Housing Strategy Expansion: First
introduced in 2017 and updated in 2024, this long-term initiative has now
exceeded $82 billion in commitments.
·
Build
Canada Home (BCH) Plan: With
the goal of completing 500,000 housing units annually, the BCH Plan emphasizes
prefabricated construction and includes $40 billion in financing to speed up
development and reduce costs.
Local Support:
Toronto Incentivizes Developers
In addition to federal
efforts, Toronto is providing $235 million in local incentives to
accelerate housing construction. These measures include:
·
Reduced
development fees
·
Property
tax relief
·
Waivers
on municipal charges
Mayor Olivia Chow has
stressed the importance of removing development barriers to provide affordable
homes for generations.
What This Means
for the Rental Market
The coordinated effort
between federal and municipal governments may finally provide relief to
renters. Experts believe that increased supply—particularly of purpose-built
rental units—could lead to:
·
Higher
vacancy rates
·
Slower
rent growth
·
Improved
affordability
While apartment
construction remains strong, some projections indicate a slowdown by 2027.
However, the influx of affordable and mid-range units could reduce pressure on
detached and semi-detached housing, offering options to both renters and
first-time homebuyers.
Challenges Ahead:
Labour, Zoning, and Implementation
Despite the optimistic
outlook, the success of these initiatives hinges on execution. Several factors
could impact timelines and overall effectiveness:
·
Labour
shortages in the construction sector
·
Slow
municipal zoning approvals
·
Infrastructure
capacity in growing urban areas
Industry groups have
voiced concern that red tape and local bottlenecks may undermine
progress. They urge streamlined approvals and coordination across all levels of
government.
Shifting Investor
Behaviour and Limiting Short-Term Rentals
To support long-term
rental supply, the federal government is also:
·
Discouraging
speculative investment
through tax reforms and regulatory changes
·
Cracking
down on short-term rentals in
high-demand cities
These measures could
free up more units for local tenants and stabilize the market further.
Key Takeaway:
Implementation is Critical
Canada’s federal
housing push—powered by ACLP loans, GST rebates, the BCH plan, and
investor-focused regulations—is a comprehensive response to the affordability
crisis. But its success will depend on timely implementation,
inter-governmental coordination, and ongoing evaluation.
If rolled out
effectively, these measures could transform the rental landscape in Toronto and
beyond, providing much-needed affordability, stability, and housing access
for millions of Canadians.
Looking to Invest
or Rent in Toronto’s Changing Market?
Whether you're a renter,
investor, or developer, understanding the impact of these housing policies
is essential. Stay informed and make smart decisions—contact our real estate
experts today for up-to-date guidance and opportunities.
