March 22, 2011
Would you be more inclined to rent an apartment if the landlord threw in a flat-screen TV? What about a month of Tim Hortons coffee or a free tour of shops and amenities in the neighbourhood?
The vacancy rate in Toronto is expected to remain steady at about 2 per cent — but the pool of tenants has changed. As more and more people ditch their rented digs in favour of home or condo ownership, landlords are on the hunt for the cream of what’s left.
That means you’re in the drivers seat if you’re a renter with a good credit rating and steady income. Incentives like free TVs, coffee, TTC passes, cable, utilities and rent are making signing a lease as attractive as possible. But how much of a deal are you really getting?
The key for apartment hunters is to look beyond the incentive and focus on some basic questions:
• Is the location good?
Can I afford it?
How well is the building maintained?
Would I rent it if there was no incentive?
What are the conditions of the incentive?
Putting a dollar amount on the incentive gives you a better idea of what you’re really getting. For example, the 32 inch LCD Toshiba TV being offered in some buildings costs about $400. Free Tim Hortons coffee for a month would be worth about $50.
Incentives can also be quite substantive. Moving expenses or a month or two of rent can add up to hundreds — even thousands — of dollars.
Sometimes incentives are conditional on signing a 13- or 16-month lease which means you’ll be locked-in for longer than the standard one-year lease. Read the fine print and contact the Landlord and Tenant Board or a legal clinic to go over your rights and responsibilities.
Andrew Ganguly is a landlord with an eight-unit building in South Etobicoke. He’s seen the ads for freebies but doesn’t offer them himself, preferring to rely on his rents as incentives.
Ganguly said the cost of an incentive can be deceptive because it’s worked into the price of rent. He said he thinks renters are too savvy to be taken in by what he says could ultimately end up being a bad deal.
“If the building isn’t well-kept, who cares if you get a free TV?” Ganguly said.
“The real incentive is finding a great apartment.”
Staff lawyer Harry Cho of the Advocacy Centre for Tenants Ontario also cautions tenants about getting caught up in incentives, saying there’s no such thing as a free lunch — or free TV for that matter. Cho said a reduction in rent over the long-term would be better than something free in the short-term.
“We’d really like to see better apartments, better services and affordable rents,” Cho said.
But the owner of a public relations and marketing firm whose clients include corporate landlords from across Canada says incentives are simply a creative way of getting prospective tenants in the door — and the tactic has paid off.
“It’s done very, very well for them,” said Bonnie Hoy, whose clients include Trivest Developments Corporation, a building management company with 34 properties in the GTA, and Concert Properties, a developer with more than 2,500 rental home in B.C., Alberta and Ontario.
For example, Hoy said a recent promotion by Concert Properties offered prospective tenants $10 gift cards from Tim Hortons and Starbucks just to visit one of their rental units, at 5145 Dundas St W.
“Who makes $10 in 15 minutes?” asked Hoy, who said the promotion attracted foot traffic during the cold winter months.
Tony Marner, the vice-president of Trivest, said he’s given away about 300 TVs in the past year as part of an incentive offered in some of his buildings. Marner says cost of the free TVs isn’t built into the rent, but is rather “saying thanks for renting from us.”
“Every time they walk into the apartment they’re reminded of what they got when they rented.”
Marner buys the 32 inch HD LCD televisions are well worth it because “it’s a tough market out there.”
You would think that more people getting into the housing market would free up rental units and drive up the vacancy rate, but the vacancy rate in Toronto is projected to remain steady at about 2 per cent, said senior analyst Shaun Hildebrand of the Canada Mortgage and Housing Corporation.
Hildebrand said there are many factors to explain why, including the fact new rental buildings are seldom built. Twenty-five per cent of new condos are rented out, but are easily absorbed by market demand.
High levels of immigration, demographic considerations and contract positions rather than permanent jobs also lead to a steady number of people renting.