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Canada's study permit cap is loosening campus rents
More rental units are sitting empty near Canadian university and college campuses, and the main driver is a simple one: fewer international students. CMHC’s Fall 2025 Rental Market Report found vacancy rising fastest in neighbourhoods built around post-secondary institutions, from Waterloo to Toronto’s Downsview district. It’s a direct effect of Ottawa’s study permit caps, now in their third year. Students weighing where to live in 2026 will find more choice on paper, but rent itself has barely moved.
What changed
CMHC’s national rental survey, run every October and published as the Fall 2025 Rental Market Report, ties this year’s rising vacancy directly to falling study and work permit numbers among 15 to 34 year olds, the age group that drives most new rental household formation. British Columbia and Ontario, the two provinces that host the largest shares of international students, were hit hardest.
The pattern is clearest at the neighbourhood level. In the Kitchener-Cambridge-Waterloo area, the purpose-built vacancy rate held at 4.1%, a multi-decade high, and CMHC pointed specifically to Zone 4, the area around the University of Waterloo and Wilfrid Laurier University, as the sub-market where the study permit cap eased demand the most. In Toronto, the Downsview neighbourhood near York University’s Keele campus saw its vacancy rate jump from 0.7% in 2023 to 3.1% in 2025. Post-secondary pockets of Mississauga and Brampton climbed above 4% too.
None of this has made rent cheaper. Average two-bedroom rent in Kitchener-Cambridge-Waterloo rose 3.3% to $1,832 over the same period, and CMHC found vacancy for the least expensive units in the region still sitting under 1%. New supply has skewed toward higher-end buildings, so students on tight budgets aren’t the ones benefiting from the extra vacancies. It’s a reminder that a headline vacancy rate and what you’ll actually pay for a room can be two different stories, something worth checking against our Canada cost-of-living guide before you budget.
Who it affects
- Students weighing a first year in Waterloo, where campus-adjacent vacancy has risen fastest of any Ontario market CMHC tracks.
- Students looking at housing near York University, or in Mississauga and Brampton, where post-secondary neighbourhoods now have noticeably more vacant units than two years ago.
- Anyone assuming “more vacancies” automatically means “lower rent” for shared, entry-level, or basement units.
What you should do
- Use the extra vacancy to negotiate rather than assume prices have dropped. Landlords in softening markets are often more open to shorter leases, a free month, or holding rent flat at renewal.
- Check a building’s age before signing. CMHC’s data shows the new vacancy is concentrated in newer, larger purpose-built buildings, not in older stock or the cheapest units.
- Compare individual neighbourhoods, not whole cities. A university town’s overall vacancy rate can mask big differences between the zone right by campus and the rest of town.
- Read our Canada accommodation guide before signing a lease sight unseen, particularly if you’re comparing options in Waterloo or the GTA from overseas.
What hasn’t changed
The federal study permit cap itself isn’t new. It has been in place since 2024 and tightened further through 2025 and 2026. What’s new is seeing its effect show up so clearly in rental data, neighbourhood by neighbourhood, rather than just in national permit statistics.