Star Metro - Canada's Purpose-Built Rental Crisis: Why the Private Sector Must Lead the Way

TORONTO, ON / ACCESS Newswire / February 26, 2026 / Canada is in the middle of a rental housing emergency, and no one is coming to save it. That is the frank assessment of Ladan Hosseinzadeh Sadeghi, President & CEO of Sky Property Group Inc., who has spent more than a decade building residential and mixed-use communities across Ontario.

"We have been talking about the rental housing shortage in this country for years," said Hosseinzadeh Sadeghi. "And the conversation keeps happening while the vacancy rates stay near zero and rents keep climbing. At some point, the private sector has to stop waiting for policy to catch up and start building."

The numbers make a compelling case for urgency. Canada's national residential vacancy rate hovered near 1.5 percent in major urban centres as of late 2025, according to Canada Mortgage and Housing Corporation (CMHC) data - well below the 3 percent generally considered a balanced rental market. In Toronto, Vancouver, and Calgary, the picture is even more dire. Newcomers, students, and young professionals are competing for a dangerously thin supply of purpose-built rental units that simply does not exist at the scale needed.

What Is Purpose-Built Rental - and Why Does It Matter?

Purpose-built rental housing refers to residential buildings constructed with the explicit intention of renting units long-term, rather than selling them as condominiums. Unlike condos, where individual investors may rent out units informally, purpose-built rentals offer more stability, longer tenancies, and often better amenities for residents who prefer or need to rent.

But for years, developers in Canada overwhelmingly favoured condo construction over purpose-built rental because the financial model made more sense: pre-sales generated construction financing and delivered faster returns. The result was a lopsided housing ecosystem - thousands of new condo units entering the market, while dedicated rental stock stagnated.

"The incentives were misaligned for a long time," Hosseinzadeh Sadeghi explained. "Building rental meant carrying long-term operational costs and waiting years for a return. But those economics are changing. Interest rates have moderated, government incentive programs have improved, and frankly, the demand is undeniable. The rental market in this country is enormous - and underserved."

Federal and Provincial Programs Are Moving the Needle

Recent years have seen meaningful policy shifts at both federal and provincial levels. The federal government's Apartment Construction Loan Program (ACLP) - formerly the Rental Construction Financing Initiative - has expanded its envelope significantly, offering low-cost, long-term financing to developers who build purpose-built rental units. In Ontario, the province has moved to remove development charges on certain rental projects, reducing the upfront cost burden that has historically deterred builders.

Hosseinzadeh Sadeghi is cautiously optimistic about these changes, though she believes execution - not announcement - is what will define success.

"Policy moves in the right direction, and then implementation lags by two or three years," she said. "In real estate, time is money and time is people. Every year we delay is another year that families are paying too much for housing that doesn't meet their needs. We need approval timelines to shrink, we need clarity on density permissions, and we need municipalities and provinces to align their signals."

Sky Property Group has been positioning itself at the intersection of market-rate and attainable rental development, identifying sites in Ontario communities where population growth is outpacing supply. The company's approach emphasizes mixed-income rental buildings that serve a wide range of tenants - from young professionals entering the housing market to seniors looking to downsize without leaving their communities.

The Immigration Factor

Canada's population grew by more than one million people in 2024, driven largely by international migration targets that successive federal governments have pursued as an economic growth strategy. While immigration has been an engine of economic vitality, it has also placed enormous pressure on rental markets in cities that were already stretched.

"When you bring in hundreds of thousands of people who need a place to live - and most of them will rent before they buy - you need the housing to be there," Hosseinzadeh Sadeghi said. "We didn't build it fast enough, and now we're paying the price in rents, in competition, and in social tension that didn't have to happen."

She is careful not to frame immigration as the problem - rather, the failure to plan ahead for it. "Every one of those newcomers is a future homeowner, a future business owner, a future contributor. The question is whether we give them a dignified place to land. Right now, we're not doing that well enough."

Financing Innovation and Institutional Appetite

One encouraging trend Hosseinzadeh Sadeghi highlights is the growing appetite among institutional investors - pension funds, insurance companies, and REITs - for purpose-built rental assets. Unlike condo speculation, purpose-built rental offers stable, long-term cash flows that align well with institutional investment horizons.

"We're seeing pension money take a serious look at Canadian rental housing in a way they didn't ten years ago," she said. "That's good for the industry. It brings patient capital and professional asset management to a sector that needs it."

Sky Property Group has been exploring joint-venture structures that pair private development expertise with institutional capital, a model Hosseinzadeh Sadeghi believes can unlock projects that would otherwise be unviable under traditional financing.

What Needs to Happen Next

When asked what she would tell Canada's housing ministers if given thirty minutes, Hosseinzadeh Sadeghi doesn't hesitate.

"Speed up approvals, protect rental tenure, and stop changing the rules mid-project," she said. "Developers can absorb risk. What we can't absorb is uncertainty. When the goalposts move after we've already committed capital, projects die. And when projects die, units don't get built."

She also advocates for greater use of modular and mass timber construction as tools to reduce build times and costs - technologies she believes remain underutilized in Canada relative to their potential.

"We have the land. We have the capital markets starting to come along. We have government programs that are better than they were five years ago," she said. "What we need now is alignment and urgency. Canada can fix this - but not by talking about it."

About Sky Property Group Inc.

Sky Property Group Inc. is a Toronto-based real estate development and investment company led by President & CEO Ladan Hosseinzadeh Sadeghi. The company specializes in residential and mixed-use development across Ontario, with a focus on sustainable, community-centred projects that meet the evolving needs of Canadian renters and homeowners.

Contact:

Ladan Hosseinzadeh Sadeghi
[email protected]

SOURCE: Sky Property Group Inc.

View the original press release on ACCESS Newswire

A.Landry--SMC