OPINION: More action needs to be taken to get more rental buildings constructed in cities
It's long been said that millennials have the power to disrupt and reshape industries - they're saying goodbye to purchasing printers, cable TV, cars and even napkins. Not only do millennials demand convenience, but they can rent almost anything they want anywhere, and anytime, from transportation to furniture to clothing. Renting a home has always been top of that list, and it's growing in popularity — not just as a last resort, but as a preference.
What's motivating this change in attitude?
For many millennials who are just starting out on their career path and looking to progress in their chosen field, being able to relocate for better opportunities is essential.
Most young professionals are also time-poor, and the ability to live in a serviced building gives them peace of mind. Millennials are working long hours to secure their positions in a precarious economy, and many simply don't want the time drain of homeownership, preferring instead the freedom of renting.
There is a certain quality of living standard renters expect, particularly with the rising cost of rent. As a tech-savvy generation, millennials expect more from rental-housing providers, such as 24-hour maintenance helplines and apps to manage their tenancy and report issues. The growing appetite for the community experience means tenants want amenities beyond a rented space, including concierge service, a gym, social and common spaces, and social events for residents.
Do these trends signal the end of ownership? Definitely not. Millennials may still follow the same path as previous generations (certainly most of them still like the idea of homeownership at some point in the future). But with house prices continuing to rise, they need more time than previous generations to save enough for a down payment, while still wanting to move out of their parents' basement. It's clear the industry is in for further change to keep up with new reality facing millennials (and likely Gen Z after them), and the fact that a greater number are renting out of preference and lifestyle choice rather than as a last resort.
On the face of it, we have a classic supply and demand problem: an increasing number of renters, and not enough rental housing. Over the past several decades, governments created a policy environment in which it made more sense to build condos than new rental apartments.
What is the solution?
The provincial government has already taken dramatic steps in the right direction with policies that encourage developers to build rental units (instead of strictly condominiums), increase choice for tenants and reduce long-term pressure on rents.
We need municipal governments to follow the provincial government's lead by cutting red tape on approvals, reigning in skyrocketing development charges, and unlocking land for development.
We also need to address density. The tide needs to turn on NIMBYism. We can't have it both ways, especially in Toronto and the GTA. We can't complain that there's not enough housing, and then organize against future development in residential neighbourhoods.
The rental industry needs to do its part too. Millennials aren't just 20-somethings anymore - many are in their 30s, with young families, and are seeking 2, 3 or 4-bedroom rentals. Younger millennials are more likely to have roommates, and with two-bedroom, two-bathroom units at a premium, rental housing developers need to create more of this stock.
But the economics of large units are challenging and make it all the more essential that governments fix polices that inflate prices for tenants - including the huge property tax bias against rental housing.
The fastest growth in millennial population is in Toronto and the GTA. To keep up with the demand, builders, owners, operators of rental housing and government must create an environment for more rental supply. Adequate housing supply is the only way to provide homes for the growing millennial tenant population, and the generations to follow.
By Tony Irwin, President and CEO of FRPO