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Is the 35% Cut on International Students in Canada going to Crash the Toronto Rental Market?

Last week, we talked about the potential 10.5% increase in property tax in the City of Toronto.

This week, it’s the Federal government’s turn to make a new move.


The government is putting a 2-year cap on international student permits in response to our housing crunch in Canada.

In 2024, we are going to see a 35% reduction from 2023 on undergraduate study permits. 

I’m going to give you the most comprehensive picture of the situation.

How many student permit holders do we have by year, by citizenship, by province, by education levels?

You are going to have it all at the end of this video.

And we are going to discuss the impact of this new policy on universities, restaurants, banks and of course the rental market.

#1 The Numbers

In order to understand what a 35% reduction really means, we need to break the numbers down and put things into perspective.

Let’s start by looking at the number of new study permit holders we have per year from 2015 to 2023.

The number of new study permit holders in Canada from 2015 to 2023

In 2015, Canada had just over 200,000 new study permit holders added in the year.

By 2019, that number has almost doubled to just over 400,000.

Then we saw a significant drop in 2020 because of Covid.

After that, the number increased to almost 550,000 in 2022.

And we almost hit 580,000 in 2023.

This is open data from the Government of Canada and it is only up to November 2023.

So the actual number for 2023 should be a little bit higher, but you get the idea.

Also, keep in mind that this is the number of new study permits issued each year.

If we include existing permit holders as well, then Canada is actually housing around 1 million international students in 2023.

Which country do you think we get most of our international students from?

Take a guess.

The answer is based on the new study permits issued in 2023.

The distribution of study permit holders in Canada by Citizenship in 2023


More than one-third of our new international students are from India, 36.8%.

Coming in second place, China, 9.4%, significantly less than India.

Nigeria, 5.5%.

Philippines, 4.9%.

France, 2.6%.

Hong Kong, only 1.3%.

The remaining 39.5% come from 152 different countries around the world.

Fun fact, there are 195 countries in the world.

Now, let’s zoom in a little and see how the international students are distributed among the 10 provinces in Canada.

The most popular province gets more than half of the students.

Can you guess?

Distribution of study permit holders in Canada by province in 2023

That’s right, Ontario, 52.7%.

In second place, British Columbia, 19%.

Quebec, 12.1%.

Alberta, 6.1%.

The government is going to take this distribution into account when they implement the cut on the number of international students.

For 2024, the government is going to limit the number of approved study permits to approximately 360,000.

Overall, it is around a 35% cut from 2023.

But for Ontario, because we get more than 50% of the students, we are going to see roughly a 50% cut on the number of new study permits being issued.

Renewals of existing study permits will not be affected.

There are also some exemptions based on study levels.

Secondary school and under do not count towards the cap.

Students studying a master’s or doctoral degree also do not count towards the cap.

In 2023, there were just over 300,000 new study permits issued.

Around 42,000 of those, so 14% were for secondary school and under.

We can still see a similar number in 2024 because that’s exempted from the cap.

There were 240,000 permits issued for post secondary education in 2023.

We don’t have the official data on the distribution between undergraduate and graduate students.

If we just use the University of Toronto as a reference, the ratio between undergrad and grad students are typically 70:30.

As a rough estimate, we had around 168,000 undergrad international students in Ontario in 2023.

Cut that in half, we could possibly get 84,000 less international students in Ontario this year.

#2 The Impact

The ones who are going to feel the most direct impact are obviously the educational institutions.

Now that there is a cap on study permits, the provincial government is responsible for the allocation of permits to each institution.

The government did say that the new policy is meant to target some small private colleges taking advantage of international students.

They charge the students high tuition fees and yet put them at under-resourced campuses.

So would the small private colleges get very few or no quota at all while the majority of the quota goes to well-known universities?

There is no official answer, but I think it would be a sensible guess.

Let’s take a closer look at Ontario universities.

In 2019, the Ford government cut tuition fees for domestic students by 10% and the fees have been frozen since then.

As of 2023, 10 out of 23 Ontario universities are running deficits totalling $175 million dollars, and that is expected to rise to $273 million in 2024.

International students have been an important source of funding for universities as they pay much higher tuition fees, but now the government is cutting that too.

Ontario universities get the least amount of funding from the provincial government, only 57% of what other provinces are paying per student.

They are not allowed to raise the tuition fees for domestic students.

And now they have to face a 50% cut on the number of international students as well.

I’m not sure how the government wants the universities to operate.

Eventually, the government would likely have to unfrozen the tuition fees, so the universities can raise the fees for domestic students to get funding.

You see, domestic students may end up paying more because of the international student cut.

Besides the universities, restaurants are going to see an impact as well because international students made up 4.6% of 1.1 million workers in the food service industry in 2023.

Banks will see an impact because each international student is required to have a GIC of more than $20,000 to cover living expenses.

#3 The Rental Market

Toronto has 6 universities and 4 colleges.

International students are an important tenant source for our rental market.

With the cap on international students, we will definitely see less competition on the rental market, but whether it will get to a point where we start seeing a rent reduction, that’s the key question.

We have the top university in Canada right in the heart of downtown Toronto.  

It is also the biggest, with over 70,000 full-time students.

In 2023, international students made up almost 30% of the University of Toronto’s student population.

I don’t know if the government would want to disrupt the operation of the top university in the country.

But of course, Toronto also ranks #3 as the city with the most expensive rents, after Vancouver and Burnaby.

So it will be interesting to see how the government is going to balance out between university funding and a competitive rental market.

We will have to wait and see how things play out in the rental market.

After all, international students are only part of the very strong rental market in Toronto, so I don’t think we would see rent reduction in 2024, but we would see a much slower increase compared to 2023.

I will definitely be watching the market very closely.

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