Revitalizing the rental sector is the key to solving the housing crisis

Quebec City, September 14, 2023 - Invited to participate in the Special Consultations and Public Hearings on Bill 31, an Act to amend various legislative provisions concerning housing, the Corporation des propriétaires immobiliers du Québec (CORPIQ) draws the government's attention to the fact that the rental sector is reaching breaking point due to outdated regulations. The brief presented at the event paints a disturbing picture of the situation and proposes concrete solutions to rapidly increase supply and improve the health of the current rental stock, which is grappling with unsustainable problems.

"CORPIQ shares the government's desire to revitalize the rental sector, as it is one of the keys to overcoming the housing crisis. While, overall, we welcome the adoption of Bill 31, which resolves a number of issues, including the assignment of leases, some provisions deserve improvement, such as Section G of the lease and security deposits," explains CORPIQ Chairman Éric Sansoucy.

 

23% of rents below $750 per month

As reported by the Canadian Mortgage and Housing Corporation (CMHC) last June, 23% of dwellings in the Montreal metropolitan area (CMA) are below $750 per month. In concrete terms, this represents 145,000 private dwellings. The Léger survey conducted for Vivre en ville last spring confirms this: 60% of tenants in the Montreal CMA pay less than $1,000 a month; 64% in the Quebec City CMA and 79% in the rest of Quebec. While these statistics demonstrate the abundance of affordable housing in the private sector, they conceal a harsh reality: the state of this stock is reaching breaking point.

 

Giving landlords back the means to take care of their units and tenants

The punitive approach to landlords that underlies current regulations and legislation needs to give way to measures that encourage landlords to keep housing in its current form for the long term.

"Traditional rental stock is not receiving the investment required for its preservation. Current legislation is blocking maintenance and renovation, and pushing the players in the field towards the exit. Small landlords in particular are at their wits' end, and no longer hesitate to take units off the market and sell their buildings, since the conditions of ownership for plexes no longer make sense. We have to recognize that if a building is in deficit, it will eventually be converted to a different use. It's urgent that corrective action be taken upstream to encourage maintenance of the rental stock, while re-establishing the trust and integrity that should be at the heart of housing leases," confides Mr. Sansoucy.

There are major problems derailing some fundamental principles of the rental sector, but they can be corrected quickly.  Bill 31 corrects some of them, such as the assignment of leases, but other elements also deserve attention, such as Section G of the lease and the security deposit. 

 

Restoring confidence: lease transfers

Until five years ago, lease assignments were rare: less than 5% of landlords experienced them. Assignments went rather smoothly: the tenant informed the landlord of the reasons for his or her move, and a discussion led to an appropriate choice of relocation process. Landlords were sympathetic to the tenant's needs, and the lease transfer was widely accepted.  The whole process was harmonious and transparent.

What used to be harmonious and transparent is no longer so.

Today, lease transfers have been transformed into a parallel market where the commoditization of leases is commonplace, often without the landlord's consent and most often through alarming misinformation. CORPIQ studies show that more and more landlords have experienced a lease transfer over the years (10% in 2021, 15% in 2022 and 25% in early 2023).  This progression goes hand in hand with the discourse of certain groups actively proposing that tenants assign their leases.  However, assignment has taken so many forms that it has become distorted.  It is no longer uncommon for a tenant to derail the rent renewal process by pretending to accept the renewal of his or her lease, but a few days later advertising the unit themselves - all without the landlord's knowledge. 

Bill 31 thus corrects a drift contrary to the spirit and intent of the legislator. It should be remembered that the adoption of Bill 31 will still allow the transfer of leases, but under more balanced conditions between landlord and tenant. The same kind of adjustments would be needed for subletting and section G of the lease, as their use undermines the trust and integrity of the landlord-tenant relationship.

 

Stemming evictions and compensating for lack of maintenance

CORPIQ has never and will never defend owner-investors who practice illegal evictions. The only way to put an end to these practices is through concerted action and a willingness to understand the causes and find solutions. 

"CORPIQ has always denounced illegal evictions and repossessions, and now welcomes the tightening of legislation surrounding illegal evictions proposed by Bill 31," emphasizes Mr. Sansoucy.

CORPIQ also insists that there should be fewer evictions and repossessions. Improving the formulas that enable landlords to maintain their buildings on a regular basis and with a long-term perspective is fundamental to preserving the rental housing stock, particularly the most affordable rents.