The Rent Cap Can Decide Whether The Project Works
Many homeowners focus on the $45,000 loan first. But the rent cap is just as important. If the project relies on the affordable detached ARU forgivable loan, rent is capped at 100% of CMHC Average Market Rent during the affordability period. That creates a planning ceiling for income.
The question is not just “Can I get the loan?” It is “Does the project still make sense at the capped rent after vacancy, maintenance, financing, insurance, taxes, and hidden site costs?”
Estimate Capped ARU Income
Choose a 1-bedroom or 2-bedroom ARU, then adjust vacancy and expense assumptions to see a more conservative planning number.
What The Current Planning Values Mean
Using the current planning values on this site, a 1-bedroom ARU at $1,371/month produces $16,452/year before vacancy and expenses. A 2-bedroom ARU at $1,645/month produces $19,740/year before vacancy and expenses.
That is gross rent, not profit. Homeowners still need to account for vacancy, repairs, utilities, insurance, property tax reassessment, loan payments, and long-term maintenance.
How This Connects To The $45,000 ARU Loan
The affordable detached ARU forgivable loan can improve the project economics, but it comes with program rules. The unit must follow the affordability requirements, including the CMHC rent cap, for the required period. If the project only works at unrestricted market rent, the affordable stream may not be the right assumption. Read the London ARU grant guide before you assume the funding and rent math line up.
Read the loan guide before you assume the rent math works on its own.
Read The London ARU Grant GuideUse Conservative Rent Assumptions
Capped rent is only one part of the rental math. A unit may sit vacant between tenants, need repairs, require insurance changes, or trigger property tax reassessment. The more conservative the assumptions, the less likely the homeowner is to be surprised after construction.
- Allow for vacancy between tenants
- Budget for repairs and maintenance
- Confirm whether utilities are included or separately metered
- Ask about insurance changes
- Consider property tax reassessment
- Compare capped rent against financing costs
1-Bedroom Vs 2-Bedroom ARU Math
A 2-bedroom ARU may create more capped rent than a 1-bedroom ARU, but it can also require more space, higher construction cost, and more careful zoning review. London’s interim ARU rules also limit each ARU to a maximum of 2 bedrooms, so bedroom count should be reviewed before choosing a design.
Do not choose a larger plan only because the rent cap is higher. The right unit size depends on lot coverage, setbacks, servicing, design cost, construction cost, tenant demand, and loan rules.
Verify CMHC Values Before You Apply
CMHC Average Market Rent values can change. The numbers on this calculator are planning values based on the research file and should be refreshed before a homeowner applies for the City program or signs project commitments.
When in doubt, confirm the current CMHC Average Market Rent for London and the applicable bedroom type.
Planning values
Current Rent Planning Values
$16,452/year before vacancy and expenses
$19,740/year before vacancy and expenses
Plan around capped rent, not unrestricted market rent
Subject to City program rules and approval
FAQ
CMHC Rent Cap FAQs For London ARUs
What is CMHC Average Market Rent?
CMHC Average Market Rent is a rental market benchmark reported by CMHC. For the affordable detached ARU forgivable loan, the rent cap is tied to 100% of CMHC Average Market Rent for the applicable unit type.
What rent values are used on this calculator?
This calculator uses the current planning values from the research file: $1,371/month for a 1-bedroom ARU and $1,645/month for a 2-bedroom ARU. These values should be verified before applying or making project decisions.
Can I charge more than the CMHC rent cap?
Not under the affordable detached ARU forgivable loan stream. If using that stream, rent must follow the program’s CMHC rent-cap rules during the affordability period.
Does the rent cap last forever?
The research file notes a 10-year affordability period for the affordable detached ARU forgivable loan. Homeowners should confirm the current program terms before applying.
Is the rent cap the same as guaranteed income?
No. The rent cap is a maximum planning amount under the affordable stream. It does not guarantee tenant demand, occupancy, rent collection, or profit.
Should I build a 2-bedroom ARU because the rent cap is higher?
Not necessarily. A 2-bedroom ARU may allow more capped rent, but it can also cost more, require more space, and create more zoning or design constraints. The right choice depends on the property and project economics.
Does the $45,000 loan make the project cash flow?
Not automatically. The loan can help reduce the funding gap, but homeowners still need to model vacancy, maintenance, financing, insurance, property taxes, servicing, and construction costs.
Where should I check the current rent values?
Use CMHC’s Housing Market Information Portal or confirm the current program guidance before applying. The calculator values should be treated as planning inputs only.
Check The Rent Before You Commit To The Build
Use the rent cap calculator alongside the Backyard Audit to check whether the property, loan rules, and capped income point toward a realistic next step.
Use The Rent Calculator Read The ARU Loan Guide