Criteria for setting rent 2021

Montreal, January 20, 2021 - According to a large survey conducted by CORPIQ, the vacancy rate on the island of Montreal jumped to 6% in December, up from 1% in May 2020. Such a high rate indicates a more difficult rental period for landlords, but one that offers more choice for Montreal tenants.

However, this is not reflected in neighbouring regions where the vacancy rate is also rising, but at a slower rate. It stands at 1.4% in Monteregie and Laval, and 1.2% in Lanaudiere^(1).

CORPIQ's Director of Public Affairs, Hans Brouillette, explains: "The pandemic and the economic crisis that it is causing are particularly affecting rental housing in Montreal. People working in the retail, restaurant, tourism and cultural sectors are experiencing more job uncertainty; furthermore, students and immigrants also represent a sharply declining rental demand. In addition to these factors, there are also the rental units that are no longer offered to tourists that are increasing the supply in the residential market".

This rising vacancy rate is also having an effect on rents. According to the statistics used by the Tribunal administratif du logement in its method of setting rents, the average annual growth for rents in Quebec was 1.9% in 2019, but it has fallen back to 1.2% in 2020, the average annual level for the last 15 years.

"30% of Montreal landlords expect a more difficult rental season this year, compared to 14% who believe it will be easier," says Mr. Brouillette. "Optimism is significantly lower in Montreal than in Quebec as a whole".

Record rent setting criterion for 2021

Furthermore, CORPIQ denounces the record rate of adjustment that the Tribunal administratif du logement published on January 20^th as a rent setting criterion for renovation work, in accordance with the regulation adopted by the Quebec government.

In fact, landlords will only be entitled to a $1.92 rent increase this year, for every $1,000 of work carried out in 2020. Therefore, it will theoretically take 43 years to recover this expense, which is much longer than the longevity of the renovated property.

"For decades, the Quebec government has watched the rental housing stock deteriorate due to underinvestment caused by an overly restrictive rent setting method. The fault does not lie with the Tribunal administratif du logement. Its successive leaders over the decades have all tried to convince the government to modernize the setting criteria, but no political party in power has corrected this well-known problem. The CAQ government’s actions remain to be seen. The state of the rental stock is only getting worse. We need to act more quickly," concludes Hans Brouillette.

In conclusion, it should be noted that the tax freeze in most municipalities, thanks to the assistance fund provided by the Quebec government, will help moderate rent increases in 2021. On the other hand, increases in property management and labour costs related to the pandemic in general, as well as the explosion in insurance premiums in recent years, will have the opposite effect.

Vacancy rate in December 2020

Montreal	6,0%
Chaudière-Appalaches region	3,3%
Abitibi-Témis.	3,1%
Saguenay-Lac-St-Jean	2,0%
Quebec	1,6%
Montérégie	1,4%
Laval	1,4%
Lanaudière region	1,2%
Outaouais	0,9%
Laurentians	0,9%
Lower St. Lawrence	0,9%
Centre-du-Québec	0,8%
Eastern Townships	0,8%
Mauricie	0,5%

 ⁽¹⁾ Source: CORPIQ. Survey conducted from December 14 to 22, 2020 to which 2372 landlords or managers responded, representing nearly 70,000 dwellings in Quebec. Margin of error of 2%, 19 times out of 20.

CORPIQ has provided online its own rent adjustment calculation grid that compares the result of what it proposes with that of the official grid of the Tribunal administratif du logement.