25% of landlords dealing with lease assignments

The number of lease assignments is becoming highly problematic and is causing serious damage to the rental market. There are Facebook groups where leases are being bought and sold because the current rent is far below the market. This prompted CORPIQ to conduct a survey on lease assignments in Quebec, 1399 responses were compiled.

Among the respondents, 351 landlords told us that they have had to deal with one or more lease assignments, which represents 25%, a figure that is completely disconcerting. The situation is very serious and causes a lot of harm to landlords, but also to tenants. More than 10% of these lease transfers were done without the landlord consent. The landlord has the right to verify the information of his or her future tenants such as credit reports. Not notifying the landlord is tantamount to taking away the landlord's basic property rights.

 

Bad faith lease assignments to harm landlords and the market

 Of the cases where the tenant informed the landlord of their intentions to assign the lease, nearly 75% of the assignments, the landlords offered to release the tenant from their obligations in case of the lease assignment so that they could relet. This request was refused in almost 20% of the cases. The landlord has then no recourse and must wait for the tenant to assign the lease. This can have important consequences for the dwelling. CORPIQ has tried to find out more about these consequences. In cases where the assignment of the lease is done in such a way that the landlord cannot handle the re-rental himself, we asked landlords to tell us if they would have made renovations if their hands were not tied by an assignment, and if so, by how much. Nearly 20% of landlords tell us that they would have made renovations. If you look at the numbers, there are some minor renovations, but also some major renovations of dwellings that did not take place because of lease assignments. This has a very serious impact not only on profitability, but also on the maintenance and renovation of the rental stock.

Also, 62% of lease assignments are made on dwellings that landlords consider to be offered below market prices, with nearly 40% of these units having a 10% or greater gap from the market price. Several landlords indicate to us that the tenants expressly wanted to block the price of the rent by the transfer of lease; this is confirmed by Facebook groups where leases are sold (sometimes at high prices) and by the encouragement of some people to engage in this practice following the same objective, such as tenants organizations and sometimes even elected officials, which is completely unacceptable.