Estimated reading time: 4 minutes
Originally published February 8, 2024. This article reflects the study-permit policy announcement and rental-market expectations at that time.
In January 2024, the federal government announced a temporary cap on new international student study permits as Canada faced growing pressure around housing availability, affordability, and the rapid expansion of the international student population.
The announcement raised an immediate question for rental-property owners: if fewer international students entered Canada, could rental demand change in markets such as Toronto?
At the time, the answer was far from straightforward.
Why the Study Permit Cap Was Introduced
Canada had experienced rapid growth in the number of international students attending colleges and universities.
Many of those students needed rental housing, often in already expensive urban markets where vacancy was limited.
The federal government presented the temporary cap partly as a response to concerns that student population growth had outpaced housing and other services in some communities.
For students themselves, high housing costs were also becoming a significant concern, particularly in cities such as Toronto where rent represented a substantial portion of monthly living expenses.
Would Fewer International Students Reduce Rental Demand?
The study-permit cap had the potential to reduce one source of new rental demand.
But international students represent only one part of Toronto's renter population.
Rental demand is also influenced by:
- Permanent immigration.
- Domestic migration.
- Employment growth.
- Household formation.
- Homeownership affordability.
- Interest rates.
- New rental and condominium supply.
For that reason, it would have been difficult in early 2024 to assume that a reduction in study permits alone would substantially change Toronto's rental market.
Immigration Remained an Important Source of Housing Demand
At the time the article was originally published, Canada's broader immigration targets remained high.
International students were not the only newcomers requiring housing, and Ontario continued to receive a significant share of Canada's population growth.
That meant property investors needed to look at total housing demand rather than treating international student numbers as a stand-alone indicator.
Toronto's housing challenge remained fundamentally connected to the relationship between population growth and the amount of housing being added to the market.
What Could the Policy Mean for Property Investors?
The most likely effect would vary by property and neighbourhood.
Rental properties located close to colleges and universities and marketed primarily to international students could experience a different impact from family-oriented housing in another part of the GTA.
Investors therefore needed to consider the actual demand profile for their property rather than relying on national headlines.
This is also why rental-property analysis should consider location, tenant demand, operating expenses, vacancy, and achievable rent together.
Our article on determining rental value in Toronto examines some of the property-level factors that influence rent.
The Supply Side of the Housing Equation
Reducing population growth can relieve some pressure on demand, but it does not by itself create additional housing.
Toronto's longer-term affordability challenge also depends on the pace at which new homes are added.
That includes purpose-built rental housing, condominiums, secondary suites, and missing-middle and multiplex housing .
In 2023, Toronto had already expanded permissions for up to four-unit multiplexes across residential neighbourhoods, creating another path for adding rental supply within the existing low-rise city.
The February 2024 Making Room for Multiplexes feature looked at how builders were beginning to respond to that opportunity.
Different Rental Segments Could Respond Differently
A change in international student numbers would not affect every rental equally.
Student-oriented rooms and smaller apartments near post-secondary campuses could respond differently from:
- Family-sized houses.
- Condominiums aimed at professionals.
- Townhouses.
- Multiplex units.
- Suburban rental properties.
Property investors therefore needed to understand the renter profile associated with a particular location and property type.
Our guide to rental income properties explains how different residential property types can fit into an investment strategy.
What the 2024 Study Permit Cap Signalled
The study-permit cap highlighted a broader issue that had become increasingly difficult for governments to ignore: population growth, housing supply, and infrastructure need to be considered together.
For rental-property investors, the announcement was another reminder that demand can be influenced by immigration policy, economic conditions, interest rates, housing construction, and demographic change.
No single policy change determines the future of the rental market.
Investors evaluating Toronto real estate should therefore focus on the specific property, local supply and demand, realistic rental income, operating costs, and the long-term suitability of the investment.
Owners evaluating rental-property acquisitions can learn more about LandLord's real estate services for property investors .
Need help with your property?
Tell us what you are considering and our team will help determine the right next step.
Thank you.
Your enquiry has been sent. A member of our team will be in touch shortly.
