The market for rental condos is becoming almost as hot as Toronto’s resale housing market with bidding wars breaking out among tenants trying to snag prime units.
While some 21,000 units are now under construction in Toronto — 5,707 of them in the downtown core — demand for rental condominiums continues to far outstrip supply, housing experts say.
That’s driving some tenants to offer up to six months’ rent in advance, or more rent than condo-owners are asking, especially for increasingly rare two-bedroom units.
In fact, the condo rental market has become so fiercely competitive the last year in particular that would-tenants are being urged to not even look at prime downtown units without bringing along a printout of their credit rating, proof of their annual salary and a willingness to pay more rent if need be.
“It’s a form of key money,” acknowledges realtor Brad Lamb who put a new, 480 square foot studio up for rent last week and had three takers within three hours.
One 26-year-old man offered $1425 a month — $30 more than Lamb was asking — and agreed to have his Mom co-sign the lease as security.
Lamb expects to see similar offers on 12 other studio units he plans to rent out soon, all of them in the King St. W. and Stafford St. Parc Lofts and Condos building his company, Lamb Development Corp., has just built.
“It’s not just bidding for price, this means that as landlords we’re able to pick excellent quality tenants from a credit standpoint as well,” says Lamb.
The increasing competition for rental condos — especially in hip new hardwood- and granite-clad units just blocks from the downtown core — doesn’t come as any surprise to Lamb.
He’s been tracking Toronto’s rental market monthly and says two years ago there were an average of 1,300 condos for rent on MLS, the listing system preferred by many investors who don’t want the hassles of renting units themselves via Craigslist or Kijiji.
That’s now slipped to less than 500 for rent.
Bidding wars have become most common in the two-bedroom rental market which is being all but abandoned by developers in favour of one-bedroom and studios which are cheaper and easier to rent, according to market research firm Urbanation.
Real estate agent Mark Savel was involved in four condo rentals last month and three resulted in bidding wars. One couple ended up paying $2,000 for a furnished one-bedroom plus den in Liberty Village that had been listed for $1,900.
In another case, a woman offered a $25 per month premium on a one-bedroom plus den listed for $1900. But her biggest advantage was that she came to the viewing with all the right paperwork, including a list of personal references, said Savel.
Realtor Dominic Calla warns renters the competition for good condos can be just as intense as for a good house, and he knows agents who’ve backed out of the rental market altogether.
“We’re pretty used to getting into multiple offers on houses, but for a lot of us this is becoming the exact same amount of work as a sale. Having to take tenants out again to look at properties and draft all the paperwork can be extremely frustrating.”