The Canadian rental conundrum

Renters who recently moved into their dwelling can pay substantially more than longstanding renters. This tenure-based discrepancy in rents paid can have important implications for affordability and residential mobility. A recent study found that the gap between recent and long-term renters’ shelter costs widened from 1996 to 2021.

Rent gap between new and longstanding renters is growing

Approximately one in three Canadians rent their primary residence.

Rental costs can vary significantly, with new renters facing substantially higher rents than longstanding renters. This partially reflects the contrast between rapidly rising rents for new rentals and capped rent increases for existing renters, whose rent may be subject to controls.

The gap in rent paid between new renters and longstanding renters has grown substantially over a 25-year period.

In 1996, for example, renters with a tenancy of less than one year were paying monthly average shelter costs of $640, $40 more than those with tenure of five or more years ($600).

By 2021, this gap had widened to $380 per month; renters with tenure of less than one year were paying average shelter costs of $1,480 per month, compared with $1,100 per month for those with tenure of five or more years.

Renters less likely to move compared with three decades earlier

Fewer people moved between rentals as the rent difference between new and long-term tenants grew. This marks a shift toward a larger proportion of tenants living at the same address for five years or more. Indeed, the share of renters who lived at a different address a year earlier fell from 29.5% in 1996 to 19.9% in 2021.

Toronto and Ottawa have largest rental gap between new and established tenants

The average monthly shelter cost gap between recent renters (that is, those with less than a year of tenancy) and established renters (that is, those with tenancies dating back five years or more) across Canadian cities rose from 7% in 1996 to 34% in 2021.

The monthly shelter cost gap between recent and established tenants was largest in Toronto (52%) and Ottawa (39%) in 2021, while it was in line with the national average in Vancouver (31%). However, it was well below the national average in Montréal (10%) and Calgary (10%).

The continued fast-paced increase in rental costs seen since 2021 suggests that the shelter cost gap between recent and established tenants may have widened further in recent years. Since May 2021, many of the temporary provincial rent control policies and tenant protections enacted following the onset of the  pandemic have come to an end.

Are higher rents eroding the life satisfaction of younger Canadians?

Higher rental prices may not just be pinching pocketbooks or stifling mobility—they may also be affecting the life satisfaction of younger adults according to another StatCan study.

In early 2024, just under half (48.6%) of Canadians aged 15 years and older reported that they were highly satisfied with their lives, down more than 5 percentage points from three years earlier.

However, the decline was much more pronounced among younger Canadians aged 18 to 34, with approximately one in three reporting high levels of life satisfaction in early 2024, down approximately 12 percentage points from three years earlier.

One-third of Canadians experienced financial difficulties in 2024

Life satisfaction can be considered a pulse check on the overall well-being of Canadians, one that is strongly associated with their self-reported ability to meet financial needs.

Despite robust income gains as pandemic-related restrictions eased, the share of Canadians experiencing financial difficulties rose from 18.6% in 2021 to 32.8% in 2024.

Among those experiencing financial difficulties, rates of high life satisfaction fell 2.1 percentage points per year, with reductions among both younger Canadians and those 35 years of age and older.

Young renters report moving decisions negatively impacted by higher prices

Heightened financial barriers to homeownership have relegated many younger Canadians to the rental market at a time when many current and potential tenants were contending with sharp increases in asking rents.

Nearly two-thirds of Canadians aged 15 to 29 are renters and, as a group, spend relatively more of their income on shelter-related costs.

One direct impact of the deterioration in both housing and rental affordability is that it creates substantial barriers to shelter mobility, impeding or delaying the ability of families to move.

The impact of rising prices on the moving decisions of younger Canadians was broadly felt. Among Canadians younger than 35 who indicated that they were not experiencing financial difficulty, about one-quarter reported wanting to buy a home or move to a new rental but did not because of rising prices.

Among young Canadians experiencing financial difficulty, 45% reported that their moving decisions were negatively impacted by rising prices.

Among young renters who indicate that they are experiencing financial difficulty, over one-half (55%) reported wanting to buy a home or move to a new rental but did not because of rising prices.