Rent Rate Cap
Many of you know that in 2018, the Ontario government implemented a rental rate cap that would be given each year to landlords and tenants. Meaning there would be a limit on the amount that rent could be raised by the landlord on the tenant’s rent.
Rent Rate Freeze
Last year, the rental rate increase cap was 2.2%. As many of you might have imagined, there was a ‘rental rate freeze’ implemented in October 2020 to freeze rental rates in 2021, due to the pandemic. Of course, this makes sense as there is a plethora of condo vacancies on the market at the moment. There are more vacant units than I have ever seen and any landlord that is in the know will not raise rent as their tenants will just go rent somewhere else that is cheaper.
Exemptions from Rent Control
Something to note: new condo buildings, buildings, new basement apartments and additions to existing buildings that are occupied after November 15, 2018, are exempt from any type of rent control.
If you are thinking about purchasing pre-construction but nervous about the “rent caps” hear me out. Yes, you are going to have to have lower your tenant’s rent in the beginning to find a renter, but eventually, you will be able to raise the rent to fair market which will go up when students come back to the city, people go back to work and immigration soars!
Buying a pre-construction condo right now is approximately at a 30-35% premium compared to resale. Resale condos are selling at about 900 per sqft whereas pre-construction is selling around 1300 per sqft. I do think that the cost will catch up once those pre-construction units are granted occupancy. But for now, it seems a bit drastic to buy pre-construction over a resale.