Developers and landlords in Quebec can continue to count on uncontested rent for the first five years newly constructed rental housing is occupied, at least while the provincial government studies the matter further. An amendment to Quebec’s Civil Code that would have allowed for rent adjustments after three years was withdrawn from recently adopted omnibus legislation, following warnings that it could stifle new rental housing supply.
Under the current rules, which date back to 1980, there is no right to appeal annual rent increases to the Administrative Housing Tribunal for a five-year period after a unit first comes onto the market. However, landlords are required to explicitly state that in the lease.
Earlier this spring, Benoit Ste-Marie, executive director of Quebec’s largest rental housing industry association, CORPIQ (Corporation des propriétaires immobiliers du Québec), defended the policy to a committee of Quebec’s National Assembly — arguing that developers need the flexibility to offer competitive rents during the lease-up phase, and then scale them up to reflect operating costs and obtain a more realistic return on investment. He defined it as a stabilization period that is weighted in tenants’ favour at the front end.
“The purpose of this clause is to promote the arrival of new tenants so that the profitability of the building is possible in the medium and long term,” states an associated English-language summary from CORPIQ. “It is a risky business model because the revenues are to be expected in the years to come, unlike the sale of condos where the sums are collected before the occupant even takes possession. In a condo building, it is the occupants who manage the maintenance of the building over the years and assume the corresponding costs. It is the owner of an apartment building who must assume this risk.”
Other elements of the legislation, known as Bill 37, An Act to amend various legislative provisions mainly with respect to housing, have now been adopted. That includes a requirement for Ministerial authorization before a non-profit or cooperative housing corporation can sell a building, and establishment of rules for repayment from tenants who no longer comply with income requirements for residency in subsidized housing.
