Canada’s increasingly tight rental market is leading to a rise in rental scams, which could leave newcomers, international students and others vulnerable to losing thousands of dollars and scrambling to find affordable housing.
According to the Canadian Anti-Fraud Centre, in 2021, Canadians lost $12.3 million in merchandise fraud, which includes rental scams.
The fraudulent schemes vary, but generally follow a similar pattern of sounding too good to be true.
One of the challenges in a city like Toronto is we’re not building enough rental housing.
Scam to note
Earlier this year, a notice posted on Facebook Marketplace advertised a modern-looking two-bedroom unit for $750 in Montreal. When people reached out to the person behind the listing, they were told the $750 was in order to book a visit to look at the unit, not the monthly rent.
There have also been reports of supposed landlords that require potential tenants to wire transfer first and last month’s rent, as they can’t meet them in person, in turn bilking them out of thousands of dollars.
Last year, a man in Trenton, Ont. who was selling his house was surprised when people started showing up at his door, wondering about the rental. It turns out, scammers had used photos of his house and advertised it on a real estate site. He told CTV News that one person who showed up told him that she’s already sent $1,000 to rent it.
The Canadian Anti-Fraud Centre says this common scamming tactic has been around for a while, but spiked during the pandemic. By June 2022, there were 610 reports of such a scam.
Last year, Toronto police issued a warning about a brazen scam where a unit was being rented out as a short-term rental, but then being posted as a long-term rental on Kijiji. When potential tenants showed up to view the suite, they were asked for first and last month’s rent, and given the keys. When they moved in, a cleaner would arrive the next day and the new tenants were told they had to leave for the unit to be cleaned. That's when the tenants would realize they got caught up in a scam.
What to watch out for
There are several red flags to watch out for when looking for rental accommodations, which Competition Bureau of Canada has broken down:
The price is too good to be true, or well below the average rental market;
The landlord is asking for cash only, a cash security deposit, or money to be wired, especially without a formal rental agreement;
The person claiming to be the owner is out of town but is still asking for a deposit;
A real listing will have a variety of high resolution photos of the inside and outside of the property. If the photos of the property in the listing lack details or only show the outside of the property, be wary.
What potential renters can do to avoid getting scammed
People looking for a place to live can be proactive when it comes to protecting themselves from scams. On the advice of the Competition Bureau of Canada:
If possible, visit the property in person. If that's not an option, do an image search online.
Schedule a showing and insist the landlord is present.
If the property is a new development, contact the builder to confirm ownership.
Ask for a lease or formal contract and review it thoroughly.
Know your rights as a renter. Get in touch with your local provincial or territorial department or ministry of housing.
Canada’s rental market is increasing
There are many factors at play when it comes to the bleak rental market in most cities, which is leading to an uptick of scams.
According to the latest census data, the rate of growth of renters is twice as much as homeowners. That means more people are becoming renters, than the number of people who are becoming homeowners.
Cherise Burda, executive director of the City Building Institute at the Toronto Metropolitan University, says the record level of immigration is also adding to the already tough rental market, along with the increase in AirBnB suites, which often make more money than if the property was used as a rental.
Finding rental properties is one thing, but finding affordable rentals is another obstacle. While home prices have taken a dip as interest rates go up, rents have gone up steadily.
“Rents are going up because landlords are having to charge more for rent because they’re paying higher interest rates and their costs are going up,” she tells Yahoo News Canada.
This can vary depending on the province. Ontario, for example, ended rent control in 2018, meaning all buildings built after that year no longer have to limit the amount that they charge to rent it.
“One of the challenges in a city like Toronto is we’re not building enough rental housing,” she says. “The majority of new rental units are all secondary rentals, meaning they’re condos bought by investors and rented. There’s no security, it’s really precarious, and the rents can go up.”