A Forecast of the 2017 Rent Adjustment Rate

CORPIQ evaluated the trend of the 2017 rent adjustment rates which landlords could possibly receive for any major renovations occurring this summer, should a fixing of rent occur. While the 2016 rate was 2.5% (a record low), that of 2017 might stand at a meager 2.4%... If the current trend is maintained.

Indeed, the 5 year guaranteed investment rate, used as reference, is situated at an average of 1.4% for the period running from January to May. To this, the Quebec government grants a percentage point as an incentive, as foreseen in the regulation. If the 2.4% rate is maintained until the end of the year, this will yield a renovation cost recovery that will only be achieved in… 41 years!

The rent adjustment rates for « maintenance costs » for their part should be slightly more elevated. Based on the consumption price index growth from Statistics Canada from January to April, the rate which property owners may be eligible to receive in 2017 on their 2016 maintenance bills is at 3.8% compared to this year’s rate of 2.5%. These figures remain preliminary and caution should be exercised.

In 2015, CORPIQ submitted requests to the advisory committee on regulatory relief to obtain more flexible criteria for the fixing of rent in order to boost renovations and investments. We will know if the Quebec government intends to follow up on this issue when its new 2016-2018 agenda will be released in the upcoming months.