Aviseo report on rental housing

Montreal, May 9, 2023 - The Corporation des propriétaires immobiliers du Québec (CORPIQ) and Aviseo Conseil, a firm specializing in economics and strategy, today unveiled a comprehensive report on rental housing entitled "Proposal for a quality, diversified housing supply throughout Quebec". The objectives of this study are to 1) present a scientific and objective factual basis to illustrate a portrait of supply and demand, 2) identify the main challenges facing rental housing, and 3) propose possible solutions to resolve the housing crisis and prevent it from recurring.

Portrait of renters: Quebec stands out from the rest of Canada

The study paints an up-to-date portrait of Quebec renters. It reveals that 52% of renter households consist of a single person, an increase of 6 percentage points in 20 years.  This increase, combined with demographic growth, has changed the face of the rental sector, causing availability to drop.  The Aviseo study also confirms that housing in Quebec is less expensive than in the rest of Canada and the difference is significant. Quebec tenant households allocate an average of 18.1% of their gross income to housing, compared to 22.9% in the rest of Canada.  This situation has improved in Quebec since the last census. "The data from the last Canadian census shows a favourable situation for Quebec renters compared to the nine Canadian provinces. In addition to the accessibility, Quebec distinguishes itself from the rest of Canada by a level of satisfaction of the tenants on their housing which reaches even a record threshold of 81%.  This data confirms that tenants who occupy housing are generally in a favourable situation, but that those who are looking for housing are faced with a lack of choice, which makes accessibility more difficult," said Jean-Pierre Lessard, economist, and partner at Aviseo Conseil.

A growing rental stock, but under pressure

In Quebec, the rental housing stock numbered nearly 1.6 million units in 2021. Between 2012 and 2021, the growth of the primary rental housing stock reached 30%, which is noteworthy. The Montreal CMA has seen the most growth over the past 10 years, up 35%. Despite this, vacancy rates are falling at a worrying level, because supply is not keeping up with demand, even more so outside the metropolis. 

Aviseo estimates that there is a shortfall of 16,300 rental units in order to achieve an equilibrium vacancy rate of 3% in the Quebec market by 2021. "The rental housing market is under pressure and the current supply does not correspond to the demand on the field. All of this in a difficult economic situation with a lack of manpower and high interest rates. We are going to experience even tighter times if we are not able to meet the demand in the real estate market and take care of the existing housing," explained Jean-Pierre Lessard. The Aviseo study estimates that an additional 130,000 units will be needed during the 2021-2031 decade.

The challenges of rental housing: modernizing regulations and easing obstacles to the construction of rental housing

In order to ensure that Quebec has a diversified, quality housing stock that is present throughout its territory, the study points out that the negotiation mechanism for renewing a rental lease must be reviewed, and that the current method does not encourage the renovation and maintenance of the stock, which leads to situations where everyone loses out: the tenant, the landlord, but also the municipality in terms of its property revenues. "The formula put forward by the TAL is difficult to reconcile with the objective of renovating the existing stock and holding the units for the long term," said Lessard.

Municipal regulations are an issue that has a major impact on construction. The study highlights significant regulatory costs: rental apartment buildings face costs five times higher than single-family homes.  In addition, Aviseo considers that the zoning of certain Quebec municipalities restricts the implementation and development of rental housing.  It also points out that several municipal policies, including parking requirements, affect tenants' wallets with costs that represent up to 13% of the rent. Finally, the report calls for a rethink of municipal taxation to avoid penalizing the rental sector and density targets. "The municipal sector is a partner of choice for rental owners and builders. Unfortunately, regulations and taxation can sometimes be a significant disincentive to rental construction," the study's authors say.

24 solutions to solve the housing supply crisis in Quebec

The diagnosis and rigorous analyses in this report have made it possible to identify a series of priority issues affecting the proper functioning of housing rental markets. These issues have been translated into three axes to get out of the crisis and avoid its repetition: 1) deal with the existing situation, 2) aim for multiple solutions and 3) focus on efficiency. "To make investments attractive, nine proposals are on the table to encourage owners to manage their buildings in a way that maintains and improves their quality. In addition, in order to build a minimum of 130,000 housing units over the current decade, a large proportion of which will be built outside of metropolitan areas, 11 recommendations will ensure that new housing supply is facilitated through multiple flexibilities, notably in the construction industry and municipal regulations. Finally, 4 measures aim to leave no one behind and invite governments to specifically support the most vulnerable clienteles," explains economist Jean-Pierre Lessard, "If some households are vulnerable, the overall situation of Quebec tenants is advantageous, and the vast majority of tenants are in good shape. However, this situation is threatened by an imbalance against the supply, hence the importance of a convergence of solutions to tackle the current tensions" concludes Mr. Lessard. 

For CORPIQ, the recommendations are a starting point for reflection and will set the table for a dialogue between all housing partners. "The current situation is a call to action and our association takes note of the recommendations to ensure a follow-up with the decision-makers. This document is now a reference," concluded Mr. Marc-André Plante, CORPIQ spokesperson.

Read the report in French here

 

About CORPIQ

A non-profit organization bringing together 30,000 owners and managers who provide rental units and condos to more than 600,000 tenant households, CORPIQ is the largest association offering services to housing owners. It serves all regions from four offices with a total of 60 employees. Quebec landlords house 1.5 million tenant households and own, in seven cases out of ten, a duplex or triplex.

 

Information and interview requests:

Marc-André Plante

Director, Public Affairs and Government Relations - Corporation des propriétaires immobiliers du Québec

Cell: 514-249-1691

E-mail: maplante@corpiq.com