City benchmark · July 2026 · free calculator
London multi-family cap rate · Class A
4.00–4.75%
Class B / value-add: 4.25–5.00%
source: CBRE Q1 2026
What a 4.00–4.75% cap rate means for your financing
Put this cap rate next to your mortgage rate — that single comparison is the most useful thing on this page. If the cap rate is below your mortgage rate, you have negative leverage: the property earns less unlevered than the debt costs, so every borrowed dollar drags your return down and the property most likely runs cash-flow negative from day one. If it is above, borrowing amplifies your return instead.
Across much of Canada, negative leverage is simply the market condition — the national high-rise Class A multifamily cap rate was 4.51% in Q1 2026, among the lowest in North America. Investors accept the monthly deficit because they are buying appreciation and mortgage paydown rather than income. That is a legitimate thesis. It is only dangerous when it is unexamined.
Two Canadian specifics worth remembering: investment (non-owner-occupied) property requires a minimum 20% down payment with no CMHC insurance available, and the federal stress test still applies. If you are looking at 5+ units, the CMHC MLI Select program changes the maths considerably. Check your financed position with cash-on-cash return and whether a lender will fund it with DSCR.
London vs other Canadian markets
| Market | Cap rate |
|---|---|
| London (this page) | 4.00–4.75% |
| Vancouver | 3.50–4.00% |
| Toronto | 3.85–4.75% |
| Montreal | 4.25–4.50% |
| Quebec City | 4.25–5.00% |
| Kitchener-Waterloo | 4.50–4.75% |
| Ottawa | 4.50–5.00% |
| Calgary | 4.50–5.00% |
| Edmonton | 4.50–5.00% |
| Halifax | 4.50–5.25% |
| Winnipeg | 4.50–5.00% |
| Victoria | 4.50–5.00% |
| Saskatoon | 5.25–5.75% |
| Canada national — high rise Class A | 4.51% |
Source: CBRE Q1 2026 — CBRE multifamily, Class A, Q1 2026. Class B trades higher in most markets. CBRE reports multifamily yields rose across every segment in Q1 2026. Benchmarks are directional and move quarterly. See all markets in the cap rate by city guide.
London's purpose-built rental vacancy rate jumped to 4.0% in October 2025 from 2.9% a year earlier — the largest single-year vacancy increase of any Ontario city in this set — while the average rent still rose to C$1,534 across all bedroom types. London is subject to Ontario's 2026 rent increase guideline of 2.1% on most sitting tenancies, the same as Ottawa and Kitchener-Waterloo.
A 1.1-point vacancy jump, with rent still climbing
CMHC's Rental Market Survey data tables for London show the purpose-built private apartment vacancy rate rising from 2.9% in October 2024 to 4.0% in October 2025 — a 1.1-percentage-point jump, the steepest one-year vacancy move among the Ontario cities in this batch. Despite that, average rent across all bedroom types still climbed from C$1,446 to C$1,534, a 6.1% year-over-year increase. Rising vacancy with rent still growing this fast suggests London absorbed a wave of new purpose-built supply that has not yet fully leased up, rather than a market where demand is actually softening.
London's asking-to-paid rent gap
Statistics Canada's experimental asking-and-paid-rent series (table 46-10-0092-01) recorded London's 2-bedroom apartment average asking rent at C$1,920 for the 2026 Q2 reference period, against an average paid rent of C$1,560 — a gap of C$360, or 18.75%. That is close to Kitchener-Cambridge-Waterloo's 18.9% gap, suggesting the two Southwestern Ontario markets share a similar pattern of in-place rent lagging what current listings ask, even though London's absolute rent levels sit below K-W's on both measures.
| Measure | Amount |
|---|---|
| Average asking rent | C$1,920 |
| Average paid rent | C$1,560 |
| Paid vs. asking | −C$360 (−18.75%) |
Statistics Canada, table 46-10-0092-01, experimental estimates, reference period 2026-04 (Q2 2026). Different vintage from CMHC's October 2025 survey above.
Ontario's guideline applies here too — with the same 2018 cutoff
Ontario's 2026 guideline caps most sitting tenants' rent increases at 2.1% without Landlord and Tenant Board approval. Against London's measured 6.1% average rent increase, the gap between the guideline and market-level rent growth is wider here than in K-W — meaning a larger share of London's rent growth has to be coming from turnover and from post-2018 buildings exempt from rent control, since renewals on older stock are capped at 2.1% regardless of how fast the surrounding market is moving.
As in every Ontario CMA, any London unit first occupied for residential purposes after November 15, 2018 falls outside the guideline entirely — a distinction that matters more here than in an Ontario market with slower rent growth, since it accounts for a proportionally larger share of the 6.1% headline number.
Ontario land transfer tax on a London purchase
London, like Kitchener-Waterloo, levies no municipal land transfer tax — only Ontario's provincial LTT applies. Per the province's bracket schedule (0.5% to C$55,000; 1.0% from C$55,000 to C$250,000; 1.5% from C$250,000 to C$400,000; 2.0% above C$400,000), a C$450,000 London purchase — closer to London's lower average price point than the C$650,000 example used for K-W — works out to: C$55,000 × 0.5% = C$275, plus (C$250,000 − C$55,000) × 1.0% = C$1,950, plus (C$400,000 − C$250,000) × 1.5% = C$2,250, plus (C$450,000 − C$400,000) × 2.0% = C$1,000. Total Ontario LTT = C$5,475.
A qualifying first-time buyer can apply Ontario's land transfer tax refund — up to C$4,000, for purchasers at least 18, who have never owned an eligible home anywhere in the world, will occupy within 9 months, and (since January 1, 2017) are a Canadian citizen or permanent resident. Applied here, a first-time buyer's C$5,475 LTT bill on this example London purchase drops to C$1,475 net.
Methodology
Vacancy and rent figures are CMHC's October 2025 Rental Market Survey data tables for the London CMA, purpose-built private apartment universe, all bedroom types combined. The asking-vs-paid rent comparison is Statistics Canada's experimental table 46-10-0092-01 for 2-bedroom apartments, reference period 2026 Q2. The Ontario land transfer tax and refund worked examples apply the province's own published bracket schedule and refund maximum to an example purchase price scaled to London's lower average rent/price profile relative to Kitchener-Cambridge-Waterloo; no municipal LTT is added, since London does not levy one.
Sources
- CMHC — Rental Market Survey Data Tables, London, 2025 — accessed 2026-09-21
- Statistics Canada — Table 46-10-0092-01, asking and paid rent — accessed 2026-09-21
- Government of Ontario — Rent increase guideline — accessed 2026-09-21
- Government of Ontario — Calculating land transfer tax — accessed 2026-09-21
- Government of Ontario — Land transfer tax refunds for first-time homebuyers — accessed 2026-09-21
Frequently asked questions
What is the average cap rate in London?
London multifamily Class A cap rates run approximately 4.00–4.75% (CBRE Q1 2026, CBRE multifamily, Class A, Q1 2026). Class B product in the same market trades at roughly 4.25–5.00%. Southwestern Ontario market pricing closer to Toronto than its size might suggest. For context, the Canadian national high-rise Class A multifamily cap rate was 4.51% in Q1 2026. Cap rate is net operating income divided by purchase price, and it deliberately excludes your mortgage — so it describes the property rather than your financed position.
Is London a good market for rental investment?
At 4.00–4.75%, the honest question is what you want the property to do. If the cap rate sits below your mortgage rate you have negative leverage — the property earns less unlevered than the debt costs, so borrowing reduces your return and the property likely runs cash-flow negative. That can still be a sound long-term position if you are buying appreciation and mortgage paydown, but it should be a deliberate decision rather than a surprise at closing.
Why are cap rates in London at this level?
Canadian cap rates broadly reflect prices rising faster than rents over many years — yield is income over price, so when the denominator outruns the numerator the ratio compresses. The spread across Canada is narrow: Vancouver sits lowest at 3.50–4.00% Class A, most markets cluster around 4.25–5.00%, and Saskatoon tops the survey at 5.25–5.75%. CBRE also reports that multifamily yields rose across every segment in Q1 2026, led by Kitchener-Waterloo, Montreal and Vancouver.
What's the difference between Class A and Class B cap rates in London?
Class A is newer, well-located, professionally managed product; Class B is older stock with room for improvement. Class B generally trades at a higher cap rate as compensation for the work and risk — about 4.25–5.00% in London, against 4.00–4.75% for Class A. The gap varies a lot by market: in Vancouver, CBRE records Class B at the same range as Class A, while Ottawa's Class B spread is much wider. If you are comparing your own deal against a published benchmark, make sure you are comparing like with like.
Does this cap rate include my mortgage?
No — and that is intentional. Cap rate is net operating income divided by price, describing the property as if you paid all cash. That is what makes it comparable across buyers with different loans. To see what your specific financed position earns, use cash-on-cash return; to check whether a lender will fund it, use DSCR.