Coliving in Canada: A Softening Rental Market and a City-by-City Rulebook

CMHC's 2026 mid-year update shows apartment vacancy rising across every major census metropolitan area in 2025: Montréal 2.9%, Toronto 3.0%, Ottawa 3.0%, Vancouver 3.7%, Edmonton 3.8%, Calgary 5.0%, Halifax 2.7%. Vancouver's rate more than doubled year on year.

The cause is on both sides of the equation at once. Demand softened as immigration targets were reduced and the labour market cooled; supply rose as purpose-built rental completions landed alongside investor condo units returning to the rental pool. Two forces moving in opposite directions produce exactly this.

Rents followed. CMHC's asking-rent index for two-bedroom apartments in Toronto fell to 93.7 by the fourth quarter of 2025, from a base of 100.0 in the first quarter of 2024 — a decline of roughly six percent in nominal asking rents over seven quarters, in the country's largest rental market.

Canada has no national equivalent of the UK's HMO regime. Shared-living regulation sits with municipalities, which means the rulebook changes at the city line and an operator running buildings in two cities is running two compliance regimes.

Toronto is where most operators meet the framework first, and it is the most developed. Since 31 March 2024, every multi-tenant house operator in Toronto requires a licence. The city defines a multi-tenant house as premises where four or more rooms are rented to separate people who may share a kitchen or washroom but do not live as a single housekeeping unit — a definition that captures a large share of what the sector calls coliving.

The framework came with teeth. Multi-tenant houses are now permitted across the whole city rather than in selected former municipalities, which was a genuine liberalisation. In exchange there is a dedicated enforcement team, annual inspections, a licensing tribunal, standards including at least one bathroom per four dwelling rooms, and fines of up to $100,000 for non-compliance.

Our reading, and it is ours rather than the city's: the trade was supply for oversight, and it favours operators who were going to run properly anyway. If your model depends on being below the enforcement threshold, Toronto is now the wrong market.

A rising vacancy rate does not affect all operators equally. It compresses the gap between a well-run building and a poorly-run one from the tenant's side of the table: when there are alternatives, service quality and response speed convert directly into retention, and retention is where coliving economics live.

The tactical consequence, in our own experience of operating through softening markets, is that the first lever to pull is renewals rather than acquisition. Holding an existing resident for another term costs a fraction of replacing them, and it is the only occupancy point that gets cheaper rather than more expensive when the market loosens.

The second is turnover speed. In a tight market a slow turnaround costs you a few days; in a loose one it costs you the enquiry that has already moved on to another building. Compressing the gap between move-out and move-in is worth more in Canada in 2026 than it was in 2023.