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Personal Finance

Written by: Koray Can Oztekin

As the cost of living continues to rise, it’s important for households to have a budget in place to manage their expenses. One area where a lot of households are feeling the pinch is in their rent payments which increased by 12% nationwide in 2022.

According to the 2021 Census, almost 5 million households rented the home they lived in last year—up from 4.1 million a decade earlier, approximately 36% of the population in big cities are renting. Rent is a significant portion of most household budgets, often taking up a large chunk of monthly income. 1/3 of the renters are spending more than 30% of their income on rent and they are considered to be in core housing need.

How can households manage this rent burden and still stay within their budget? Since we are already 3.5M units short in the housing supply and renters are not moving anywhere it’s unlikely that moving to a more affordable home is an option. Luckily it is still possible to optimize for the rent payments while staying in the same residence and here are three tips:

  1. Create a budget and stick to it by aligning the timing of your bills including rent payments with the paycheck days whenever possible. Take advantage of split rent payments if offered by your landlord like Avenue Living Communities or Mainstreet.
  2. Reduce the cost of household loans by refinancing high interest rates loans. Rent reporting with credit bureaus can help with credit building thus and find better terms for refinancing.
  3. Preserve cash buffer to be resilient for changes in other expenses and avoid overdrafts and late fees. A low interest line of credit or splitting rent payments could create that buffer if saving more is not an option.

In addition to the increasing ratio of renters, Canada is also expecting 500K newcomers in 2023 who will most likely rent which will likely increase rent prices further since only about 260K new units are built per year. This means that we will continue to need tips like above to optimize for rent payments and stay on top of household finances.

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