This text is part of the special Real Estate section
The Corporation of Quebec Real Estate Owners (CORPIQ) predicts a 1er July “very difficult” as the lack of accommodation is glaring this year. It offers solutions to resolve the current crisis, solutions to which the Regroupement des committees logement et associations de tenants du Québec (RCLALQ) reacts.
“I’m not an alarmist, I don’t want to exaggerate the situation, but we really anticipate great difficulties,” said Marc-André Plante, director of public affairs and government relations for the association representing 30,000 owners and managers in an interview. of dwellings.
According to CORPIQ’s observations with major landlords, approximately 94% of tenants would choose to sign their lease again during this renewal period, which will certainly complicate the lives of households looking for a new home. “People are not moving, there are no free houses,” adds the spokesperson. Last year, these same owners observed a renewal rate of around 86%.
Supply and demand
The Association of Construction and Housing Professionals of Quebec (APCHQ) says there is a shortage of 100,000 housing units in the province to rebalance supply and demand. The Canada Mortgage and Housing Corporation (CMHC) indicates that 620,000 should be built by 2030 to regain affordability.
To achieve this, CORPIQ proposes, among other things, that cities in Quebec set targets for the creation of housing, and that the three levels of government authorize, facilitate and encourage, through financial and tax incentives, soft densification, such as the development of an apartment in the basement or a tiny house in the courtyard. These secondary suites would necessarily be more affordable. It also calls for regulatory processes to be revised to speed up the approval of construction projects.
However, CORPIQ sees an obstacle to the proliferation of cranes and excavators throughout the province: the situation of the Quebec real estate market, which is less and less attractive for investors. “Housing starts fell 16% in 2022 and will contract 19% in 2023 due to rising financing costs,” it said in an internal document. To make it more attractive at a time when high interest rates, the lack of labor and the staggering price of materials create a “difficult” context for owners, the legislation should be modernized.
Review the setting of rents?
The Régie du logement, now called the Administrative Housing Tribunal (TAL), was created in 1980. “There is a series of rules that no longer hold water, which were designed more than 40 years ago “, denounces Marc-André Plante. The formula for calculating rents would be the first element to dust off, according to him. When an owner carries out renovations or major work, to establish the amount that the occupants will pay monthly, he must use the method imposed by the TAL. However, the latter would be disadvantageous, according to CORPIQ.
“It can take 20, 30, 40 years to make a return on spending on major works, it’s nonsense,” explains Marc-André Plante. So much so that the owners would be forced to renovate again, wear and tear of time obliges, even before the initial expense is reimbursed.
For CORPIQ, the calculation formula discourages the hammer, and would cause a large number of evictions. “We have a park that is deteriorating so much that at some point, the only viable option is to rebuild almost the entire habitat… And there, it’s difficult to do it in the presence of the tenants”, notes the spokesperson, who however claims higher penalties in the event of “renovictions” for owners who do not respect the reasons justifying the takeover.
CORPIQ makes no secret of it: renewing the calculation formula amounts to raising rents. She says, however, that housing would improve in quality. Better renovated, they would become more energy efficient, which would have a positive impact on the environment and on the electricity bills of the occupants.
Still with a view to creating a space conducive to investment, CORPIQ also wants Quebec law to be amended so that it is possible to advertise accommodation at current rates when it becomes available after several years. Having an apartment at $700 and another at $1,300 in the same building would not be financially viable and would cause “intergenerational inequities”, because young people would find themselves forced to compensate for the low rents of their elders.
CORPIQ demands that section G of the lease, in which the landlord is required to indicate the lowest rent for the last 12 months, “stop being used as a threat by the tenant”. Marc-André Plante explains: currently, every citizen has 10 days after signing a lease to open a file with the TAL if he deems the increase too high, in the hope of seeing his rent reviewed at the decrease. The corporation is asking that 10 days be given to tenants instead to break the contract, without having to go through the TAL.
A reform is however not envisaged by the corporation: the abolition of clause F, which allows the rent to be increased in the first five years of the life of a dwelling. It would be useful to mortgage holders in the context of inflation and fluctuating interest rates.
“These are not solutions”
The Regrouping of Housing Committees and Tenant Associations of Quebec (RCLALQ) indicates that it disagrees with CORPIQ’s proposals. “These are not solutions to the housing crisis, it’s more solutions to their own interests and concerns as a lobby owner,” says Cédric Dussault.
The co-spokesperson for the organization that defends and promotes the rights of tenants in the province stresses that a change in the method of calculating rents would not stimulate renovation. “In 2020, 0.46% of private owners owned nearly 32% of the rental stock in Montreal”, he highlights, scientific study in support. More and more large groups would appropriate buildings that they would use as a “financial tool”, a short-term investment aiming for quick returns. However, work does not generate immediate profits.
For the RCLALQ, it is inaccurate to assert that owners take too long to recoup their money when they make changes to their building: a study by the Institute for Socio-economic Research and Information (IRIS) argued in 2020 that “the renovations offer a reasonable return” and allow a better selling price to be obtained when the time comes.
Betting on construction to solve the housing issue would also be a false good idea: there would certainly be more options for tenants, but new constructions are expensive and without the possibility of a ceiling for five years due to the clause F, which is otherwise opposed by the group.
According to Cédric Dussault, the crisis we are currently going through is based on a lack of housing, but above all on a shortage, even on “a complete absence” of affordable housing. The RCLALQ is campaigning for the Government of Quebec to establish a rent register limiting the increase in rents, and for it to acquire or revitalize more buildings to create social housing.
To lend a hand to low-income households, Quebec would mainly rely on housing assistance programs, such as the Rent Supplement; in other words, on subsidies, explains Cédric Dussault. “The buildings do not belong to the state. This public money goes directly into the pockets of private owners. »
On the subject, CORPIQ asks that the eligibility criteria for housing assistance be broadened to support more vulnerable people and also encourages a revival of the construction and revitalization of social housing.
This special content was produced by the Special Publications team of the Duty, pertaining to marketing. The drafting of Duty did not take part.