Low Vacancy Rates

Definition

A low vacancy rate is when only a small number of existing housing units are unoccupied leading to significant challenges if there are more people needing housing units than there are units available. i.e. the supply of housing is not meeting demand.

 

Why are we talking about this for Calgary?

Low vacancies in Calgary are one of the leading factors in the high rental prices we see today. In 2023, Calgary saw high population growth; a 6% jump in just one year, which was the largest year over year increase since at least 2001.[1] During this time, the construction industry was facing many challenges- high construction costs and interest rates, regulatory challenges, and labour shortages – all of which contributed to the lower supply of rental housing. These factors, compounded with the high mortgage rates and high home prices that disincentivized home ownership and made rentals more attractive, overflowed the rental market with prospective buyers, leading to the high rental prices we see today.[2]

When housing is in short supply, rental prices are usually high across the board. Low vacancy rates give landlords the power in the market; when it comes to housing, people pay what they have to based on the large number of prospective other buyers, not what might make sense for the quality of unit or the amenities provided. Landlords have more power than renters and buyers because renters/buyers are reliant on perceived value based on the market not on actual value based on the cost of the materials, provisions, amenities and infrastructure.

In a market with high vacancy rates, you will see landlords offering incentives to attract potential renters- free rent periods, complimentary utilities/services, and flexible lease terms are common incentives offered.[3] When the market shifts, and housing options are reduced, basic items or amenities start to be seen as luxuries as opposed to standard inclusions.

What piece of the housing puzzle does landlord power control?

We need a more sustainable path forward since just asking landlords to keep prices low won’t work. We believe that means increasing the supply of housing, stabilizing funding for non-market housing, and increasing regulations around rental prices short-term.

Vacancy rates hit a low of 1.4%, and after heavy investment into increasing housing supply, the rates climbed back up to 4.6% in 2024.[4] This is obviously an improvement, but landlords still have so much power that they haven’t had to adjust. This is because there are still so many renters and buyers in need of housing in the city.

Addressing the supply of housing takes time, and many individuals affected by rental price increases over the past few years need short-term solutions to keep financially stable while the supply of housing increases. Rent caps or rent stabilization are commonly used measures to protect tenants from excessive rent increases. In Alberta, for example, the implementation of temporary rent control policy when rental prices first started skyrocketing would have protected existing renters from a 40% rent increase.

Rent Control Policy

Definition

Rent control is a regulation that limits the amount a landlord can increase rent on a property. These regulations protect tenants from predatory rent prices and are an important piece of keeping housing affordable. In Canada, rent control policy is regulated provincially.

Why are we talking about this for Calgary?

In Calgary, there are no limits on how much a landlord can increase rent. The regulations currently in place state that landlords can only increase rent after 12 months has passed since a tenant moved in, cannot increase rent for fixed-term tenancies, and must provide notice in advance if raising the rent for periodic tenancies (12 weeks for weekly tenancies, and 3 months for monthly tenancies).[5] Rental increases can be disputed if they are “unreasonable” based on similar listings in the area, which protects residents from being pushed out by a single landlord, but this does not protect anyone from rental price increases across the board, which, as we’ve discussed, is a specific part of the problem.

Since 2020, we have seen dramatic increases in Calgary’s rental prices, with a 40% increase in just 3 years, pricing many current tenants out of their homes.[6] For people with low income, particularly those with fixed incomes or those on income supports, a 40% increase in rent could mean having to choose between groceries or a car payment and covering the month’s rent.

Rental price increases not only affect market housing, but affordable housing as well— which is classified as affordable only if the price is approximately 10% below market value. Given the current housing market in the city, even 10% below market rates mean “affordable housing” is out of reach for many Calgarians- even those who work full-time, or do not have dependents, or other housing or health needs.

Another important factor in the implementation of rent control is vacancy control. In Ontario, for example, rent control policies have long been in place for existing tenants, but there is currently nothing stopping landlords from raising rents as much as the market will bear once a unit is vacant. This means that moving from your home for any reason, like a landlord-initiated renovation, will result in a hefty increase to your monthly rental price. This is called renoviction – an increasingly common practice used to capitalize on the market and exploit housing shortages.

In a normal market, where there is enough supply to meet demand, housing and rental prices sort themselves out, but in a market this tight, more interventions are needed to protect housing as a basic need. Rent caps are under provincial jurisdiction.

What piece of the housing puzzle does rent control address?

Rent control keeps housing affordable and protects residents from landlords setting excessively high rental rates that do not match the objective value of the product. We believe in solutions that balance the urgent need for housing today with long-term sustainability; rent control does not fix housing by itself, but it can provide protections for current tenants while the government works on long-term solutions.

Incentivizing Housing Supply

Why are we talking about this?

On top of temporary rent protections for current tenants, we need more housing supply to properly address the housing crisis, and that’s where developers and builders come in. Developers acquire land to build on, manage the planning and design process, and then sell the completed units. Essentially, developers create real estate for profit, while landlords own real estate for profit.

Historically, developers don’t build affordable housing out of the goodness of their hearts – because profit is the primary objective of development companies it is antithetical to their business model to build cheaper units when a more lucrative option is available. Incentives, therefore, are needed to entice them, and are often used as an avenue for the government to work with, and guide, developers in order to reach a larger societal goal (i.e. more housing).

Incentives can be grants, subsidies, low-interest loans, tax incentives, public land programs, zoning changes, and streamlined approval processes.

Zoning Changes

The citywide rezoning that passed in Calgary last year streamlined the approval process for development projects, and allowed for a more diverse number of building options, offering a significant incentive for developers to create more housing. According to the city’s data, a 289% increase in applications was seen after citywide rezoning was implemented on August 6th, 2024.[7]

Tax Incentives

Tax incentives are another way to address housing need. A recent example is the government of Canada providing a tax rebate on purpose-built rental housing (PBRH rebate) to incentivize the construction of more rental housing to increase supply.[8]

  • A minimum number of units that must be built ensuring that a certain number of housing units are created
  • A regulated timeframe for project completions to ensure the housing units will be on the market in a reasonable time
  • A condition that 90% of units must be reserved for long-term residential renting to disincentivize short-term rentals and ensure that these housing units are reserved for people who need long-term housing

Government Programs & Grants

There have been many new grants and programs that have come out to increase housing supply, some of which are open to anyone, and others only available for non-profit providers that are more focused on affordable/non-market options.

With corporate firms generally having much more financial power compared to non-profits, we believe the private sector is an integral part of increasing housing supply as their financial power give them the ability to introduce large amounts of housing into the market in a short time.

A great example that offers incentives for both non-profit and corporate firms is the City of Calgary’s Downtown Incentive Program. This program looks to revitalize the downtown area and provides a slew of incentives to make this happen:

  • The Downtown Calgary Development Incentive Program
  • Downtown Non-Market Office Conversion Grant
  • Downtown Density Bonusing Offset Program
  • Plus 15 Fund Offset Program
  • Downtown Office Demolition Incentive Program
  • Downtown Post-Secondary Institution Incentive Program

All of the above incentives aim towards removing/redeveloping vacant office space, and creating more housing in different ways. For example, the non-market office conversion grant is geared toward non-profit housing providers and addresses the need for more affordable housing, while the density bonusing offset program encourages the addition of more units to existing property alongside increased community investment. You can read more about the program and the different incentives offered here.

What piece of the housing puzzle do incentives for housing supply address?

Developers and builders are a core part of creating more housing, and we need high quality incentives, ranging from financial incentives and collaborative projects to regulatory changes, to encourage the creation of diverse types of housing that meet the needs of the population.

Regulating Housing

Definition

Alongside providing incentives and increasing housing supply, there must be regulations in place to ensure developers and builders are held accountable for their role in diversifying housing options, maintaining affordability, and protecting tenants.

Why are we talking about this for Calgary?

The Canadian Human Rights Commission’s report on the financialization of housing in Canada has several recommendations for the government to limit the impact of financialization on the housing sector.[9] Here are a few of the recommendations in the report to show different ways the government can influence the trajectory of the housing market:

  1. Limit the financial ownership of housing
    1. Limit/cap firms that treat rental housing as an investment to prevent monopolies and encourage competition
    2. Disallow ownership and purchase of social housing and mobile homes by financial firms
  2. Increase long-term care housing supply
    1. Award long-term care licenses to public and non-profit operators and explore how beds can be reallocated to those operators from financialized/for-profit operators.
    2. Support public and non-profit providers in taking over for-profit/financialized homes when contracts expire
  3. Strengthen Tenant Protections & Rent Control
    1. Implement vacancy control to control the increase of rent between tenancies
    2. Limit annual rent increases to the cost of living
    3. Prevent evictions and prohibit eviction into homelessness
    4. Stronger guidelines to protect tenants from renovictions
    5. Eliminate above guideline increases to rent
  4. Increased regulations for landlords
    1. Develop landlord licensing to track bad practices, like renovictions, identify bad actors, implement.
    2. Acquire and designate existing affordable housing stock at risk of acquisition by financial firms to operate as social, co-op, or non-profit housing.

What piece of the housing puzzle does regulation address?

Increasing supply and affordability is complex and requires a multi-pronged approach. The above recommendations all address housing from different angles- regulations for landlords, support for non-profit providers, tenant protections, and increasing long-term care housing supply.

The government’s role in tackling the housing crisis, and ability to influence housing supply cannot be understated. Through education on the issues and advocacy, the public has immense potential to enact meaningful change through their voices and votes. We encourage everyone to stay informed and ask the right questions this upcoming election and, most importantly, to go out and vote!

Visit this webpage for more information on voting times and locations and check out the rest of the content on our Vote Housing page (https://alphahousecalgary.com/votehousing ), where we have a lot of great information and commentary about housing in Calgary

 

[1] https://www.cbc.ca/news/canada/calgary/calgary-edmonton-cmas-july-2023-population-estimates-2024-data-release-1.7210191

[2] https://www.cmhc-schl.gc.ca/media-newsroom/news-releases/2024/canadas-vacancy-rate-reaches-new-low-demand-outpaces-supply

[3] https://ontariohousingmarket.com/2025/04/07/landlords-offering-free-rent-and-other-incentives-to-attract-tenants-in-canadas-evolving-rental-market/

[4] https://www.calgary.ca/communities/housing-in-calgary/housing-research/housing-trends.html

[5] https://liv.rent/blog/rental-laws/what-is-the-alberta-rent-increase-limit/

[6] https://www.tamarackcommunity.ca/articles/calgarys-housing-success-reversing-rental-cost-increases

[7] https://livewirecalgary.com/2025/02/26/calgary-blanket-rezoning-permit-results/

[8] https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-rebates/purpose-built-rental-housing.html

[9] https://publications.gc.ca/collections/collection_2023/ccdp-chrc/HR34-7-2022-eng.pdf