Canada’s post-secondary education system is globally recognized, attracting students from around the world. However, a severe shortage of student housing threatens this success, posing a broader socioeconomic challenge that demands urgent action.
The Canadian housing market faces a significant supply and demand imbalance, with over four million homes needed over the next six years to restore affordability.* Other policymakers, such as the Canadian Human Rights Commission, believe this number could be even higher. Rising government charges and insufficient construction capacity have exacerbated this crisis.
Without positive government intervention and policy adjustments — such as the recently introduced HST exemptions on rental housing — amid the currently challenged financial environment, the lack of housing starts witnessed in the past two years will persist, particularly in university cities and towns where demand for all housing is exceptionally high.
The magnitude of the student housing shortfall
Canada is experiencing an unprecedented shortfall in student housing, with a deficit of over 400,000 beds nationwide.** This shortage is particularly acute in the country’s 20 largest university markets, which host approximately 1.5 million post-secondary students but offer only around 170,000 beds.*** The result? An overwhelming majority of students are forced to compete for already limited and expensive rental housing, exacerbating the housing crisis in local communities.
In university towns like Guelph, Ontario, the housing shortage is particularly severe, reflecting a broader trend across many such communities. The strain on local rental markets, driven by insufficient student housing, has led to rising rents and forced many, including students, into substandard or overcrowded accommodations. Compounding this issue, the provincial tuition freeze mandate for domestic students has compelled universities to increase international student intake to cover rising costs, further straining the housing supply.
The role of purpose-built student accommodations
Purpose-built student accommodations (PBSAs) offer a viable solution to this crisis. Unlike traditional rental units, PBSAs are specifically designed to meet the unique needs of students, providing them with safe, affordable and community-oriented living spaces.
Countries like the United Kingdom and the United States have successfully implemented PBSAs at scale, significantly alleviating housing pressures on students and local communities alike. Off-campus PBSA accounts for 60 per cent in the U.S., 58 per cent in the U.K. and 69 per cent in Australia, but only 29 per cent in Canada.**** The PBSA market in Canada remains underdeveloped.
To close the gap, we must incentivize the development of PBSAs through policy changes, financial support and streamlined regulatory processes. The recent introduction of PBSA in the Government of Canada’s Affordable Housing Fund, which aims to provide low-interest loans for new affordable housing projects, is a step in the right direction, though details have yet to be released. Still, more needs to be done given PBSAs are essential to drive affordable housing and economic growth, by alleviating existing housing stock that can be made available to the general non-student population.
Student housing in Ontario amid ongoing municipal approval challenges
Bill 185 in Ontario is a significant development for expediting approvals in the student housing sector. This legislation has enabled Forum Asset Management to unlock approximately 1,100 units across projects in Guelph and Toronto, providing University of Guelph and York University students with high-quality, community-focused housing.
However, despite the progress made by Bill 185, developers continue to face headwinds, from continually escalating development charges (which in Toronto, according to data from Scotiabank, have increased by 2,000 per cent over 20 years) to higher construction and financing costs.
The way forward: Collaborative efforts and policy reform
The Canadian student housing crisis cannot be solved by developers alone. It requires a combined effort from all stakeholders, including government agencies, educational institutions and the private sector. Key policy changes, such as the inclusion of PBSA in the definition of affordable housing (which would create development charge exemptions) and the adoption of policies similar to Bill 185 across other provinces, are essential to unlocking the potential of this sector.
Additionally, property tax exemptions for student housing catering to specific university student bases, both on and off-campus, should be created. These exemptions could play a pivotal role in supporting universities’ broader educational and community missions, regardless of whether the housing is university-owned or operated by the private sector.
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