Publication of the TAL on the 2023 annual rent increase grids
The Corporation des propriétaires immobiliers du Québec (CORPIQ) considers the rent increases in the TAL scenarios for 2023 to be low in the event of a dispute between a landlord and his tenant. This calculation method is used in the event of a disagreement in court. Let's remember that the renovation and maintenance sector has seen a cost growth of 22% in 2021, and, in parallel, 7% inflation in 2022. Rental landlords will therefore have to absorb, once again, a significant portion of inflation in a fragile property management context. More than ever, Quebec must open the discussion on the formula for calculating rent adjustments, particularly to promote the maintenance and renovation of the aging rental stock.
TAL's Rent Adjustment Calculation Grid: An Outdated Formula!
Over the past two decades, there have been many calls to reform the method of calculating the annual rent adjustment in Quebec. For the second year in a row, the TAL rent adjustment calculation grid is well below inflation. The explosion of renovation and maintenance costs over the past three years is also hurting rental owners who are being hit by a 400-point increase in the Bank of Canada's key interest rate, while more than 50% of them have a variable rate mortgage and, in 60% of cases, the value of the mortgage is more than half of the original loan. According to CMHC, the cost of rent is 51% higher in the rest of Canada than in Quebec. "Although the rent adjustment recommended by the TAL is the highest in 10 years, it will be about 50% of inflation once municipal taxes and insurance premiums are factored in. This situation discourages the maintenance of rental stock and real estate investment. Clearly, the rules must be modernized to protect the rental stock. Thus, CORPIQ hopes for a quick response from the government to review this issue in particular," indicated Mr. Marc-André Plante, Director, Public Affairs and Government Relations of CORPIQ.
Solutions to protect rental housing and improve the environment for tenants
"The very unique context that affects the rental housing sector requires solutions from everyone. According to the APCHQ, there is a shortage of 100,000 housing units in the Quebec real estate market. In September 2022, CORPIQ unveiled its vision with 32 solutions to solve the housing crisis in Quebec. We are eager to contribute to the search for solutions. As an indication, nearly 60% of housing was built before 1980. There is an obvious deficit in the maintenance of the rental stock in Quebec. For 2023, an economic study by the APCHQ estimates a 15% decrease in renovation expenditures, which represents a gap of 3 billion dollars. A decrease that the housing sector can absolutely not afford considering the current imbalance in the rental market. For CORPIQ, there is an urgent need to modernize the system, including the calculation of capital depreciation on rents and the addition of direct government support to stimulate renovation, notably by decarbonizing the rental stock. Finally, we need a plan to stimulate the supply of housing throughout Quebec, for which housing starts are slowing down, and extended measures to help the most vulnerable tenants," concluded the spokesperson for the Corporation des propriétaires immobiliers du Québec.
