In a context of housing crisis, while the recourse to the assignment of lease as well as its judicialization has increased like never before in recent years, the government of Quebec will shortly give owners the freedom to accept or not the transfer of such a rental contract from one tenant to another, without having to justify it. What potential impacts will this legislative change have on landlords, tenants and the rental market? The duty make the point.
The debates were long and acrimonious during the parliamentary commission which led to the adoption of article 7 of Bill 31. This ensures that an owner will soon no longer have to provide a “serious reason » — such as the financial insolvency of an individual — to oppose a request for transfer of lease. “This is where discrimination can occur and it will be completely unilateral” on the part of the owner, who will be able to refuse a transfer of lease and terminate it without having to justify himself, notes Daniel Crespo Villarreal, lawyer specializing in property law. housing and lecturer at the University of Quebec in Montreal (UQAM).
“It allows owners to do what they want without being objective. They can say: I don’t like her, I don’t accept her,” laments Mathieu Morin, a tenant who recently won his case before the Administrative Housing Tribunal (TAL) against an owner who had refused his request. transfer of lease.
The “instrumentalized” lease transfer
Created in 1973 by the government of Quebec to allow tenants to leave before the scheduled expiry of their lease and to prevent owners from finding themselves for several months without occupants in their homes, the assignment of lease has gained popularity in the last years.
In this regard, the parliamentary commission was unable to document the precise weight that lease transfers have on the several hundred thousand tenants who change apartments annually in Quebec. Data obtained by The duty however, report a marked increase, since 2017, in the cases opened each year before the TAL in connection with the transfer of lease. These appeals generally take place when an owner refuses an assignment of lease. Some tenants then submit a request to the TAL so that it can rule on the validity of the transfer of their lease to another tenant.
This is the case of Tate Lejeune. In recent weeks, the tenant has managed to transfer the lease of his old apartment in the Petite-Patrie district of Montreal, after obtaining a favorable judgment from the TAL at the end of October. The latter then concluded that the owner had cited “unfounded” reasons for rejecting the lease, which allowed the new occupant of the premises to pay $545 per month for a one-bedroom apartment. This is a rent significantly below market value in the Rosemont–La Petite-Patrie borough, where the average monthly cost for an apartment of this size was $840 last year, according to data from the Canada Mortgage and Housing Corporation (CMHC).
“My apartment is in La Petite-Patrie, an area that has been gentrifying for years, and I was lucky enough to have affordable rent,” notes Tate Lejeune in an interview. There are a lot of people in La Petite-Patrie who are forced to leave due to the lack of affordable housing, so I wanted to make sure that someone could benefit from this low rent. »
Tenants’ associations are also noticing that there are more and more calls from tenants who wish to transfer their lease when they have to move, rather than proposing to their landlord to transfer it. The Corporation of Real Estate Owners of Quebec (CORPIQ) has for its part carried out various internal surveys which show a marked growth in their members who have experienced a lease transfer in recent years.
“We are in the process of exploiting the transfer of leases,” notes Daniel Crespo Villarreal, who notes that tenants pass rental leases among themselves to maintain certain affordable housing. “But if we do it, it is because the rent control mechanism is deficient,” continues the lawyer.
In this regard, several data show that when a lease is terminated, the rent increase imposed on the next tenant is significantly greater than that recommended annually by the TAL. A CMHC report mentioned last January that the average rent for a two-bedroom apartment increased by 5.4% between 2021 and 2022 in Montreal. However, “it was 14.5% for housing that welcomed new tenants and 3.5% for those where the tenants remained the same,” indicates the document.
Towards an increase in rents?
In this context, Mr. Villareal fears that after the entry into force of Bill 31, the use of lease assignments will fall in Quebec, which will have the effect of contributing to an increase in the rents of many housing units whose lease will be terminated upon the departure of their tenants. An analysis shared by Louis Gaudreau, professor at the UQAM School of Social Work and specialist in housing.
“The transfer of lease has become, over time, in a context that has evolved, a bulwark against exaggerated rent increases which especially take place at the time of the change of tenant,” notes the expert.
CORPIQ affirms for its part that this article of Bill 31 will have the effect of improving the state of the rental stock by giving owners the opportunity to renovate housing between two tenants, after having refused a request for transfer of property. lease from a tenant. Currently, “the tenant suffers from the deterioration of housing on the private market”, argues the general director of the organization, Benoit Ste-Marie. At the same time, he pleads for massive government investments in social and affordable housing, to house the least well-off tenants.