Rental incentives rise as condo supply soars, but experts say tenant-friendly conditions may be short-lived
In a bid to fill vacant units amid record-high condominium completions and falling rents, landlords across the Greater Toronto and Hamilton Area (GTHA) are increasingly offering incentives like rent-free months, free Wi-Fi, and $500 gift cards to attract tenants.
The perks reflect a shift in market power to renters, mirroring trends seen during the COVID-19 pandemic and the 2008 financial crisis, according to housing experts.
“This has created a lot of competition between condo owners. They're very motivated to get tenants in to help pay their mortgage after closing on their new condos,” said Michael Niezgoda, senior manager of market research and development at real estate firm Urbanation.
Surge in supply
A record 29,000 condominium units were completed in the GTHA in 2024, with an estimated 40% entering the rental market, Urbanation reported. That has driven a notable spike in rental listings. As of the end of Q1 2024, there were 6,549 condo units available for lease, a 29% increase from the previous year and a 160% jump compared to two years ago.
Urbanation’s research also found that 63% of buildings are offering renter incentives, more than double the rate from a year earlier. These perks often include two months of free rent, free parking, and gift cards for food delivery or public transit, benefits now widely advertised on Toronto-area rental platforms.
The vacancy rate for purpose-built rentals completed since 2000 in Toronto and Hamilton reached 3.5% in Q1 – the highest since early 2020.
Condo rents are currently about 10% lower than their 2023 peak, with more potential declines expected in the second quarter. Still, many landlords appear reluctant to slash prices directly.
“Looking at all this supply hitting the condo markets and [they] are thinking this could be a short-term market impact,” Niezgoda said. “To stay competitive in this short-term market, let’s offer incentives instead of dropping rents.”
The trend is extending beyond Toronto into surrounding cities in the GTA and Greater Hamilton Area, giving renters broader negotiating power and more options.
Renters’ market
Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board, noted the similarities to previous market disruptions like the pandemic and 2008 recession, both of which temporarily shifted leverage to tenants.
“You also just benefit from a lot of choice, so it’s easier to find an apartment, for example, that perfectly meets your needs,” Mercer said.
Despite federal efforts to curb housing demand, including reductions in immigration levels and international student permits, Mercer emphasized that population growth remains strong, especially in the GTA, a consistent magnet for newcomers.
The board has reported an increase in lease transactions, further signaling that rental demand is far from fading.
Read next: Silver lining to Toronto's condo crisis: Affordability is finally improving
The average asking rent across Canada fell for the seventh consecutive month in April, according to data from Rentals.ca and Urbanation. Ontario saw the sharpest decline, with asking rents falling 2.7% year-over-year to an average of $2,338.
Zumper, another rental platform, found that Toronto rents for one-bedroom and two-bedroom units declined by 8.4% and 10.6%, respectively, in April compared to the same month in 2023.
“Many people were priced out of the city when rents surged dramatically in 2023,” said Zumper spokesperson Crystal Chen. “All of this together—the new supply, the weaker demand drivers—has resulted in a slower market.”
Chen added that current conditions have opened up options for renters.
“[It’s] a great time for a Toronto renter to find an amenity-rich apartment that may have previously been out of reach,” he said.
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