What the 2026 rental market outlook means for landlords
Landlords across Canada are entering 2026 with more competition for tenants than they have seen in years. The national purpose-built vacancy rate reached 3.1% in 2025, according to CMHC’s December 2025 rental market report, up from 2.2% in 2024 and a record low of 1.5% in 2023. RBC Economics expects the rate to climb further this year, which means pricing, tenant retention, and leasing strategy deserve fresh attention.
From a landlord’s market to a balanced market
The jump from 1.5% vacancy in 2023 to 3.1% in 2025 is one of the fastest swings CMHC has recorded, and it signals a shift from a landlord-favoured market toward a more balanced one.
Asking rent versus average rent
Two figures matter here. Asking rent is what a landlord advertises for a vacant unit, and it fell nationally in 2025. Average rent, what tenants are actually paying, still rose 5.1% for a two-bedroom unit, largely because units are repriced higher at turnover. liv.rent’s monthly rent reports track asking rent city by city, adding a more current read between CMHC’s annual surveys.
A third straight year of rising vacancy
RBC Economics projects that 2026 will be the third consecutive year of rising vacancy nationally, with two-bedroom apartment vacancy expected to top 3%, the threshold RBC treats as marking a balanced market, for the first time in about a decade.
What is driving vacancy higher in 2026?
Record rental construction
Housing starts rose nationally in 2025, driven largely by purpose-built rental construction, according to RBC Economics. CMHC’s June 2026 Mid-Year update adds that vacancy is highest in buildings completed after 2020 and in units near post-secondary institutions.
A slower population, a softer demand side
RBC Economics reports that a sharp drop in temporary resident inflows through 2025 pulled national population growth down to roughly 0.9%, with further slowing expected in 2026. Ontario and B.C. landlords are the most exposed, since both provinces have historically absorbed the majority of temporary resident arrivals.
Condo investors entering the rental pool
CMHC’s 2026 Mid-Year Rental Market Update flags investor-owned condo rentals as a source of competition that is currently higher than usual for purpose-built landlords in larger markets, though CMHC expects this pressure to ease as condo completions decline in coming years. For general guidance on leasing and screening, liv.rent’s landlord resources hub covers these topics in depth.
City by city: where vacancy stands for landlords
National figures only tell part of the story. Here is how the largest rental markets compared in CMHC’s 2025 survey.
| City or market | 2025 vacancy rate | Notable change |
| Toronto | 3.0% | first time at this level since before the pandemic |
| Vancouver | 3.7% | up from 1.6% a year earlier, highest since 1988 |
| Calgary | 5.0% | held stable as strong migration kept pace with record new supply |
| Edmonton | 3.8% | driven by strong completions and slower household formation |
| Ottawa | 3.0% | newly built units alone reached 6.7% vacancy, more than double the city average |
These figures, along with Montreal and Halifax data, are detailed in CMHC’s December 2025 rental market release. Vacancy in Greater Toronto and Hamilton Area buildings completed since 2000 climbed further still, reaching a five-year high of 5.4% in the first quarter of 2026, according to Urbanation.
What rising vacancy means for landlord strategy
The real cost of turnover
Industry guides put a realistic Toronto turnover, covering four to six weeks of vacancy, cleaning, painting, and a locator fee, at $5,000 to $10,000 or more before lost rent is added in. This figure comes from a landlord education resource rather than CMHC or RBC, so treat it as an illustrative range rather than an official government number.
Screening matters more, not less
A wider applicant pool means more variation in tenant quality. Careful tenant screening protects landlords from non-payment risk even as competition for renters increases.
Pricing: hold, negotiate, or offer incentives
Ontario’s 2026 rent increase guideline is 2.1%, down from 2.5% in 2025, and it applies to units first occupied before November 15, 2018, per Ontario.ca’s residential rent increase guidance. Units occupied on or after that date are exempt from the cap, though 90 days’ written notice is still required. In a softer market like the GTHA, where vacancy hit a five-year high through spring 2026, retaining a good tenant is often worth more than pushing rent to the top of the market.
Incentives and listings: standing out in 2026
What landlords are offering
Urbanation’s Q1 2026 data found 66% of purpose-built rental projects in the GTHA offered incentives, up from 62% a year earlier. Two months of free rent were offered by 47% of projects, up sharply from 32% the year before, while one month free fell to 42% of projects from 53%. Cash move-in bonuses grew to 17% of projects from 10%.
Incentives versus a lower headline rent
After accounting for these incentives, net effective rent in the GTHA averaged $3.52 per square foot in the first quarter of 2026, down 3.8% year over year and the lowest level in 16 quarters. Incentives reduced advertised rents by roughly 13%, or about $379 a month, from $2,904 down to $2,525. Offering a concession tends to protect long-term asking rent better than cutting the sticker price outright.
A listing that still gets noticed
A strong rental listing, with clear photos, accurate amenity details, and transparent pet and parking policies, matters more when renters have options.
Tools and data every landlord should track in 2026
Sources worth bookmarking
CMHC’s Rental Market Survey data tables, updated every October, remain the most authoritative annual snapshot available. Because CMHC surveys only once a year, liv.rent’s monthly rent reports help fill the gap between releases with more current asking rent data.
What the numbers are showing
CMHC’s June 2026 Mid-Year update notes that in Toronto and Vancouver, rents have stabilized at relatively lower vacancy levels, meaning even small vacancy increases can meaningfully ease rent pressure there, while Montreal, Ottawa, and Halifax have seen more gradual transitions. RBC Economics expects average rent increases to slow further, to roughly 3.6% in 2026.
Centralizing the work
A landlord dashboard that combines listings, applications, digital leases, and rent tracking in one place cuts down on the administrative load that turns a short vacancy into a longer, costlier one.
The outlook for the rest of 2026 and into 2027
Will vacancy keep climbing
IBISWorld projects the national vacancy rate will reach 3.7% in 2026, continuing the climb from 2023’s record low, as reduced rental demand meets a wave of new supply.
Where the pendulum could swing back
CMHC expects competition from investor-owned condo rentals to ease as condo completions slow in coming years, while household formation, especially among younger Canadians who are more likely to rent, should keep providing a demand floor through 2026.
The takeaway for landlords
Landlords who prioritize tenant retention, keep up with monthly rent data, and use digital tools for screening and leasing now will be better positioned whenever conditions tighten again. Whatever your market looks like this year, liv.rent’s landlord tools, from tenant screening to digital leases and dashboards, can help you adapt quickly and keep your units occupied.
What is Canada's rental vacancy rate in 2026?
The national purpose-built vacancy rate was 3.1% in 2025, according to CMHC, up from 1.5% in 2023. IBISWorld projects the rate will reach 3.7% in 2026 as new supply continues to outpace demand slowed by lower immigration.
Is 2026 a landlord's market or a tenant's market in Canada?
It is shifting toward a more balanced market. Tenants have more negotiating power in cities like Toronto and Vancouver, where vacancy hit multi-decade highs in 2025, while Calgary remains relatively tighter thanks to strong interprovincial migration.
What vacancy rate counts as balanced?
CMHC and RBC both treat roughly 3% as a common reference point, the level where inflation-adjusted rent growth is close to zero, though CMHC notes the exact threshold varies by city and time period.
Should landlords lower rent or offer incentives in 2026?
Industry data suggests offering concessions, such as free rent months, protects long-term asking rent better than cutting the advertised price. In the GTHA, 66% of new rental buildings offered incentives in the first quarter of 2026, according to Urbanation.
Which Canadian cities have the highest vacancy rates for landlords in 2026?
Vancouver reached 3.7% in 2025, the highest level since 1988. Edmonton reached 3.8%. Toronto and Ottawa both reached 3.0%, with Ottawa’s newly built units alone at 6.7% vacancy. Calgary held steadier at 5%, per CMHC’s 2025 rental market report.
Will vacancy keep rising through 2026 and into 2027?
Vacancy is expected to stay elevated through the rest of 2026. Longer term, CMHC expects competition from investor-owned condo rentals to ease as fewer condos are completed, while ongoing demand from younger renters should support the market.
What is Ontario's rent increase guideline for 2026?
Ontario’s 2026 guideline is 2.1%, down from 2.5% in 2025. It applies to units first occupied before November 15, 2018. Units occupied on or after that date are exempt from the cap, though landlords must still give 90 days’ written notice.
How can landlords reduce vacancy in a softer market?
Prioritizing tenant retention over maximum rent increases, offering competitive incentives on new leases, screening applicants carefully, and using digital leasing and rent tracking tools can all help reduce vacancy periods and their cost.
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