Forget large corporations. It's small-scale investors who hold reams of Ontario's rental value

On the other hand, institutional investors — pension funds, real estate investment trusts, private funds, businesses — did not hold a large share of rental stock in Ontario, the report says. These investors held a larger share of the total value of rental properties in Nova Scotia (38.0 per cent) and Manitoba (33.6 per cent) than in the other provinces.

The reason why small-scale investors own more rental stock in Ontario and B.C. is likely due to the high number of condos, according to the report.

“The secondary rental market (the condo segment) has increased as the share of the rental market since the ‘90s. And this increase could be related to the increase of the presence of small-scale investors, because it’s easier for them to buy condo,” said report author Joanie Fontaine, economist at Statistics Canada.

During the pandemic, investors rushed into the market when interest rates were at historic lows and rents were rising, resulting in better cash flow for investors.

From 2011 to 2021, condos accounted for almost 40 per cent of the housing units built in Ontario over this period, compared to 10.6 per cent of purpose-built rental units.

The condo stock accounts for why Ontario has more small-scale investors pouring money into real estate compared to institutional investors who own 0.4 per cent, or four out of 1,000 houses in the province. 

However, due to the glut of condos on the market in the GTA, more private funds are bulk buying condos, which could be a growing trend in the coming years. 

Nemoy Lewis, assistant professor at Toronto Metropolitan University’s School of Urban and Regional Planning, said he’s also found in his research that institutional investors aren’t involved in acquiring small units or detached homes, but rather acquire housing stock at scale to improve their investment to their shareholders. 

“Having hundreds and thousands of units under portfolios is important to them,” Lewis said, adding that institutional investors are typically invested in purpose-built rental and medium to large size apartment buildings.

The report noted that competition around pricing has remained fairly strong in Toronto’s rental market as institutional investors do not monopolize it. 

Rent in Toronto has been steadily declining over the last two years, falling for 28 months, but remain three per cent higher than four years ago, according to Rentals​.ca’s June report. 

However, the StatCan report studies the Toronto Census Metropolitan Area (CMA) which encapsulates not just the city of Toronto, but also Peel, York, Halton, Durham, Simcoe County and Dufferin County, which can be misleading, said Lewis. 

Neighbourhoods can experience a high concentration of institutional investor activity, impacting rental costs, which Lewis has studied in areas such as North Rexdale and northwest Toronto’s Weston and Finch neighourhood. 

“I would be careful in terms of saying competition is healthy because it hides the unequal experiences that tenants have, especially if you operate at such an aggregate level,” he said.

Overall, the StatCan report helps dispel a common narrative that the only obstacle for home affordability is to build more, said Ricardo Tranjan, Ontario research director at the Canadian Centre for Policy Alternatives (CCPA).

“Much of the housing debate in general is still based on the fantasy that house prices and rents are so high because we don’t have enough housing for everyone,” he said.

“Whereas studies like this show that it’s not only families that are chasing housing, it’s investors of all sizes.”