2016 rent adjustments : misleading rates published by the Régie du logement

The Régie du logement is providing misleading rent adjustment rates, which, according to CORPIQ, are more conducive in creating conflicts between landlords and tenants than serving the public interest.

Four fundamental reasons to believe that the disclosure of the Régie’s rates misleads landlords and tenants and creates confusion in the rental market:

1. Omission to include municipal taxes in its calculation scenarios
2. Inclusion of erroneous figures on insurance premium variations
3. Use of a growth indicator non representative of rental figures
4. Use of a statistical basis not representative of all buildings.

According to Hans Brouillette, CORPIQ’s public affairs director, ‘the rates that the Régie disclosed to the public should be at least three times higher if the calculations were based on the right sources of information. By releasing scenarios far from reality, the organism makes the lease renewal period more difficult for both owners and tenants’.

Taxes omitted and errors in insurance premiums

According to the Régie du logement, rent that does not include heating, should increase on average 0.4%, before the adjustment of property taxes (the lowest rate in history). In the example of an $800 rent, the increase would be no more than 3$. However, the 2016 municipal and school taxes alone can bring on a raise of $3 to $6 on an apartment’s rent. A minimum amount should therefore be included in the scenarios.

CORPIQ also denounces the fact that the Régie does not take into account the sharp increases of insurance premiums in its scenarios, which have been observed for some years in the segment of multi-housing buildings. (See tables below)

Mr. Brouillette went further and explained that ‘in its estimates, the Régie du logement assumes that the insurance premiums of residential buildings decreased 3% in 2015. It is not the right figure. The majority of the buildings that make up its statistics are single family residences whose premiums are entirely different than those of the rental market. Over the past three years, the multi-housing buildings suffered strong consecutive increases. Instead of an annual decrease of 3%, average increases of 10% to 15% are observed for 2016. By relying on the Régie’s suggestions, we are losing $4 to $5 on rent.’

Moreover, the buildings being all different, it is impossible for the Régie du logement to propose average rates without harming building owners whose income and expenditures deviate from these averages. Therefore, each year, they experience difficulty trying to get their tenants approval for the rent adjustments.

Renovations destroying value!

A sad record has been reached in 2016: landlords can retrieve in the form of rent increase 2.5% of the value of work performed. For example, for $2,000 worth of housing renovations, monthly rent may be increased by a meager $4,17,  compared to $21,66 for the same work if it was completed in the 80s. Never has the rate decreed by the Quebec government been so weak. Value is being destroyed, since, theoretically, it would take 40 years to recover such expenditure, consequently exceeding the useful life span of what is renovated.

Make your own calculations with CORPIQ’s rent adjustment form

 

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