Increase in available housing: CORPIQ expects low rent indexation in 2021

Montreal, January 28, 2021 - The significant increase in vacancy rates in 2020 reflects what CORPIQ discovered in its survey released last week. With more vacant dwellings and stagnant tax bills, rent increases are expected to slow down this year.

The vacancy rate in October of 2.5% in Quebec, which doubled to 3.2% on the Island of Montréal, as observed by CMHC for buildings with three or more dwellings, is a clear increase from 2019. It is explained by the pandemic and the economic crisis it is causing. Employment is affecting young people, who are mostly renters, and those who are teleworking are no longer required to have a dwelling downtown. The student clientele and immigrants also represent a sharply declining rental demand, for obvious reasons. In addition to these factors, housing that used to be rented to returning tourists is increasing supply in the residential market.

According to CORPIQ, which conducted its own survey in December that included buildings of all types, the vacancy rate on the island of Montreal is currently even higher – approximately 6%.

Slowdown in rents to be expected

The rent increases reported by CMHC of 4.2% in Montreal in 2020 and 3.8% in Quebec reflect what happened a year ago. The situation will be completely different this year. CORPIQ's Director of Public Affairs, Hans Brouillette, explains:

"October 2020 rents were included in leases already signed or renewed before the pandemic took effect in the spring and everything came to a standstill. There was a scarcity of housing available at that time. Rents also increased due to other factors. It is during the coming  season that the pandemic and its effects on the market will really be felt for the first time on rents. It will be reflected in the October 2021 survey. "

It should be noted that 30% of Montreal landlords expect a more difficult rental season, according to the CORPIQ survey, while 14% expect it to be easier.

CORPIQ suggests that housing committees use their figures

CORPIQ is surprised that the RCLALQ, a pro-tenant advocacy group, reports an average 6% increase in rents in one year. It is a methodological error to compare rents by including the tens of thousands of new dwellings that have been added to the market. They obviously have much more expensive rents and are not subject to control for five years. Following the RCLALQ's reasoning, it is as if one were opening a seniors' residence and seeing the statistics on the average age of the neighbourhood rise and then say  that people have aged an average of 10 years in the last year…

However, CORPIQ makes this proposal to the RCLALQ: Would the RCLALQ accept that, from now on, the Tribunal administratif du logement use its figures in its rent setting method instead of those of Statistics Canada?

In fact, CORPIQ would like to remind you that under the Regulation respecting the criteria for determining the rent, the rent adjustment for the "Management fees" and "Net income" portions is based on the variation of rents in the market. However, the court is using a low rate of 1.2% for 2021, which is detrimental to the real estate market," says CORPIQ's spokesperson.