Canada’s surging rents have more to do with financialization than fundamentals, according to a new University of Waterloo study. Researchers from the School of Planning conducted a deep dive into Toronto’s rental market and found the most aggressive rental hikes came from large financial landlords. By using techniques like vacant units, algorithmic pricing, and systematic tenant displacement, these firms behave similarly to an oligopoly—coordinating towards a single goal: maximum rent extraction. The study warns that shelter instability will worsen as these firms get even larger.
While the study was done in Toronto, this has become a global playbook. As housing is increasingly financialized, these firms are scaling up—often with the assistance of policymakers. That’s the case in Canada, and likely a number of countries where the problems are often pitched as the solution.
About The Study
Researchers analyzed Toronto real estate data for 1,600 apartment buildings between 2022 and 2024, then broke it down by neighbourhood and landlord type. They compared rent charged by financial landlords—REITs, private equity, and large asset managers—to those of traditional rental operators, like family-run firms and single-operators (also known as mom & pop landlords).
Most importantly, they went much deeper than spreadsheets and efficient market assumptions: they gathered additional insights from interviews, corporate filings, and transcripts from real estate events. Instead of assuming the market is driven by supply and demand, they got the perspective of the people pulling the strings. As you’ve probably guessed, the problem is a little more complicated than supply and demand.
Higher Rents, Steep Premiums: Toronto’s Financial Landlords Seek Steep Rental Price Increases
The rental price premium over the average rent in a neighbourhood. Broken down by City of Toronto designated Neighbourhood Improvement Areas (NIAs) and non-NIA neighbourhoods, and landlord type.
Source: August & St-Hilaire (2025).
The study found that financial landlords charge 44% more than the average neighbourhood rent—about $670/month more. That’s well above the premium charged by family chains (30%) or individual landlords (15-22%). Because financial landlords tend to cluster and set prices based on comps, this behavior compounds and accelerates rent inflation across entire neighbourhoods.
At the property-level, the gap for quarterly rent increases by landlord type is mind blowing:
- Financial landlords: average 5.04% (+$93) per quarter, or a 21.52% annualized growth rate
- Family-run chains: 4.99%
- Single-property owners: 3.61%
- Non-profits: 1.0%
Using regression models, researchers found the same unit would be 13.8% more expensive if owned by a financial landlord vs a single-property landlord.
“Put in terms that are easier to understand, if a unit held by a Single Owner (owner of one property) was listed at our dataset’s average rent—$2,187, the expected rent of the same unit would be $2,510 if it were owned by a financial firm, a $323 difference,” explain Martine August and Cloé St-Hilaire, the study’s authors.
Targeting The Most Vulnerable For Profits
Rather than being restrained by the market size, financial landlords are leveraging their resources and concentration to exert a disproportionate influence. The study suggests a strategic dismantling in the City of Toronto’s designated Neighbourhood Improvement Areas (NIAs)—low income, racialized districts with historically affordable housing.
In these areas, financial firms charged 20% higher rents than other landlords—capturing what researchers call the “rent gap” in undervalued communities.
“While tenants face a crisis, the shareholders and senior executives in financial firms investing in rental housing gather diamonds.”
—August & St-Hilaire (2025)
It’s tempting to frame this as “just” gentrification but it also mirrors a more dangerous phenomenon: bubble contagion. In a bubble, prices detach from amenities, leveling across large swaths of the city—leaving some areas prime for a correction. It’s a phenomenon that’s only really been observed in home prices, not rent, so this may be worth a deep look on another day.
Algorithmic Rents, Antitrust Alarms, & Strategic Displacement
Financial landlords are deploying both classic and cutting-edge tools to squeeze out higher returns. One of the most controversial tools has been YieldStar, a software platform that sets rents algorithmically based on local conditions, and projected demand. It even sometimes suggests leaving a unit empty to create artificial scarcity and drive rents higher, according to the researchers.
The US Department of Justice (DoJ) is currently pursuing an antitrust case against YieldStar’s parent company, alleging the software facilitates collusion among large landlords by sharing non-public information that can be used to coordinate price hikes. The company denies this allegation.
Meanwhile, some financial landlords have explicitly described using value add and repositioning strategies to extract higher rents. This often involves renovating, displacing, and re-renting the unit for much more. Similar to the renovictions conducted by slumlords, but with more steps to make it fancier.
The researchers’ conclusion is crystal clear: financial landlords are driving higher prices & destroying affordability. The financialization trend first took root in the early 90s, but rapidly scaled up during the era of low rates. In Toronto, the study found these landlords scooped up nearly all rental suites in the past few years. As concentration grows, so does the problem.
Policymakers to the rescue?
You might expect this trend to spark action, and you’re right. That’s why policymakers have adopted plans to throttle the growth of these firms, and redirect capital towards more productive use to fuel the country’s economic growth. Just kidding.
Rather than reigning in these firms, policymakers are using public resources to fuel their growth, even providing funds for well-capitalized firms. In fact, the financialization of rentals is the “solution” that policymakers are pitching to restore housing affordability.
Is anyone else starting to feel like shelter instability is a feature—not a bug?
English (US) · 