Poll: Tighter mortgage rules mean rent increases


Written by  Vernon Clement Jones | Canadian Real Estate Magazine

 

The majority of property investors are already licking their chops, anticipating tighter mortgage rules will allow

them to bump up rents, suggests a new CREW poll.

 

Just under 60 per cent of those responding to an online survey this week answered “yes,” they will indeed raise

the rent because of the new mortgage rules. That, of course, is only where the law permits, most likely with empty

units and not sitting tenants.

 

The anticipation is based on an expected bump-up in the number of Canadians -- in particular, first-time buyers --

who'll now find themselves shut out of the housing market.

 

Such a development would be pegged to Ottawa’s decision to limit maximum amortizations to 25 years for

insured mortgages.

 

For first-timers in pricey markets such as Toronto and Vancouver, that may effectively block them from purchasing

even starter condos, which already strain affordability.

 

While economists expect some price declines because of the tighter mortgage rules that may not come soon

enough to encourage young Canadians to buy instead of rent.

 

Since the new rules were announced last week, investors have also been grappling with them, trying to decide

whether they afford a net negative or benefit to landlords, already enjoying relatively low vacancy rates in most

markets.

 

“Since rental properties require 20% down, therefore not a CMHC insured mortgage, the rule will have no effect on

most investors in terms of obtaining financing,” writes “shaune,” in responding to the CREW poll question. “The

upside is that less people can afford homes therefore more renters. The downside is that it may reduce prices if

the demand softens.”

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