A growing number of municipalities in the greater Montreal area are imposing higher property taxes on residential buildings with six or more units, compared to smaller buildings. And some cities will claim next year a fee of several thousand dollars for the construction of each new dwelling on their territory. Measures that could harm tenants, in addition to discouraging the development of dense buildings, warn associations of owners and builders.
Municipalities can impose a higher tax rate on residential buildings with six or more dwellings on their territory, as they see fit, all under a section of the Municipal Taxation Act. And at a time when cities are facing significant financial challenges, more and more of them are turning to it.
A document produced by the firm Aviseo on behalf of the Corporation of Real Estate Owners of Quebec (CORPIQ) listed 136 Quebec municipalities imposing, in 2020, higher property taxes on large rental buildings. Since then, others have been added to the list. This will be the case in particular next year for Terrebonne and Saint-Jean-sur-Richelieu, noted The duty.
In Terrebonne, for example, the increase in property taxes will be 11.38% for owners of residential buildings with six or more units (compared to an average rate of 5.94% for smaller buildings). “There are certain groups of owners of large dwellings who are able to make an additional contribution” in order to help the City “pay for municipal infrastructure”, argued Mayor Mathieu Traversy in an interview on Thursday.
The City of Laval, for its part, applies in its latest budget a tax rate approximately 14% higher for large residential buildings, a percentage which is 12.5% in Mascouche and nearly 29% in Chambly.
A burden for tenants?
This situation is of concern to both CORPIQ and the Association of Quebec Landlords (APQ), who point out that it is the tenants of these dense buildings who will suffer from the higher tax increases that their owners will receive next year. These increases can effectively turn into rent increases under the criteria of the Administrative Housing Tribunal.
“We should give a short course 101 for our mayors and mayoress to show them the method of setting rents so that they stop saying that by setting up a tax, they are targeting the very wealthy landlords”, leaves thus fall the president of the APQ, Martin Messier.
Some cities, including Chambly and Mascouche, have argued To have to that the increase in the property value of large residential buildings has been lower than that of smaller buildings in their last role – which they believe justifies imposing higher taxes on these buildings, for the sake of fairness.
The City of Montreal applies the same tax rate to all types of residential housing. However, discussions are underway behind the scenes with the Government of Quebec so that the latter allows the metropolis to go in the opposite direction of other cities – and lower the tax rate for buildings with six or more dwellings – , learned The duty.
The president of the executive committee, Dominique Ollivier, also hopes that a bill will be presented by Quebec to this effect next year. The metropolis thus hopes to reduce the burden on its resident tenants, who are mostly found in these larger buildings, explains Ms.me Oliver.
Tax construction
Cities also plan to impose next year, for the first time, a levy on builders for each new dwelling built on their territory, noted The duty. This will reach $5,000 per door in Terrebonne next year. In Repentigny, it will vary from $1,000 per unit (for buildings with 4 to 11 units) to $2,500 per unit (for larger buildings).
In Terrebonne, this measure is intended to finance the maintenance of municipal infrastructures put to the test by rapid real estate development.
The City of Repentigny, for its part, intends to use the money from these royalties to develop social housing on its territory; the maximum a developer will have to pay in royalties for a project will be $250,000. “We want to build social housing and, as we know, we have to find the money,” raises the mayor of Repentigny, Nicolas Dufour. “And those who are best placed to contribute to the cause are the owners who gain a lot from it. »
We should give a short course 101 for our mayors and mayoress to show them the method of setting rents so that they stop saying that by setting up a tax, they are targeting the wealthy landlords
The City of Mascouche also intends to set up a similar fee, the height of which has not yet been determined. “It’s coming,” says Mayor Guillaume Tremblay.
On the other hand, the last Mascouchois budget provides for the imposition on all residential owners of a special property tax of $0.01 per $100 of the value entered on the assessment roll in force. The money thus collected — more than $700,000 a year — will go into a fund dedicated to the acquisition of land intended to accommodate social and family housing projects.
However, the APQ and CORPIQ warn that these royalties will be passed on to buyers in the cities concerned. This measure could therefore affect access to property, argue the two groups of owners.
The Association of Construction and Housing Professionals of Quebec (APCHQ) fears that these measures will slow down construction starts in cities that are already sorely lacking in rental housing. “Obviously that doesn’t help the affordability of new housing, and the timing does not seem good to us either, because we should accelerate the construction of residential housing, and there, we have just added delays for developers, ”laments the director of the economic department of the group, Paul Cardinal.