Why there's a need for more rental townhomes

by Gerv Tacadena04 Feb 2020

There is a need for more townhouses or row homes in the rental market to provide more suitable and affordable options for larger renter households, according to the latest study by the Canada Mortgage and Housing Corporation.

The study analysed the evolution of the purpose-built rental row market in Ontario, where incidentally, around half of townhouses are located. It found that the inventory of townhouses in the province fell significantly in the 1990s. While it has increased slightly in the past few years, inventory remains low.

The decline left a gap that was filled by condominiums and apartments in the secondary rental market. However, rents for rented row condominiums in the province were actually affordable to fewer households than their purpose-built counterparts.

"For larger families, overcrowding was less common in rental row units than in apartments. This suggests that the row units provide accommodation that is more suitable for such households," the study said.

In fact, 45% of couple households with children living in apartments were overcrowded, significantly higher than 15% in townhouses. Lone-parent households manifest the same trend — the share of overcrowded households was 37.2% in apartments and only 15.8% in row units.

Also read: Investors eye rent-to-own strategies as Canadians look for more ways to home ownership

CMHC said rental row units are a suitable option for larger households. These purpose-built rental row units offer a higher bedroom count than most apartments.

"Rental row units were most likely to be occupied by larger households, like couple households with children and lone-parent households. This preference among larger households is likely because, on average, row units offered a higher bedroom count compared to apartment substitutes. As a result, row units were more likely to provide suitable housing," the study said.

The study said a disproportionate number of households who experienced overcrowding were immigrants. Within this group, overcrowding was less common in rental row units.

"As interest in the construction of purpose-built accommodation continues to grow, it is worth revisiting the merits of purpose-built rental row homes. The data suggests this type of structure can provide a suitable and, in certain cases a relatively lower cost accommodation for larger renter households, in particular, for newcomers," the study said.

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