Press review of late January
Our second press review of 2023 discusses the latest CORPIQ survey, the results of which were reported by various media outlets. It also discusses the challenges faced by rental unit owners.
By Corinne Laberge
CORPIQ survey on tenant perceptions and reactions to the TAL's proposed 2023 rent increase
Right off the bat, the title of this Noovo info article, "Landlords Make 87% of Renters Happy", is telling to say the least. "While the housing shortage and rising costs of housing are hot topics, a survey by L’Observateur highlights the good relationship between rental landlords and their tenants. The survey, conducted on behalf of CORPIQ, shows that 87% of tenants surveyed feel they have a good relationship with their landlord," it reports. Specifying that "47% of respondents consider that they have a very good relationship with the owner of their dwelling while 40% qualify this relationship as "rather good ?".
The Journal de Montréal, for its part, headlined "Rent increase in line with majority of tenants' expectations." According to CORPIQ survey data regarding the 2022 rent increase, "86% of the tenants surveyed consider the annual adjustment of their rent to be "respectable ?, while 44% mention an increase that is "in line ? with their expectations," it stated. Another 16% said their housing prices did not increase last year.
CORPIQ Public Affairs Director Marc-André Plante notes in the article that "As the Tribunal administratif du logement (TAL) recommendations loom, it is important to note that rental landlords have once again shown flexibility in determining, in collaboration with tenants, annual rent adjustments."
Also speaking in this TVA Nouvelles article following the announcement of the 2.3% increase proposed by the TAL this year (this percentage excludes the increase in property taxes and insurance premiums), Mr. Plante believes that this is a "reasonable increase". Recalling that housing costs almost 51% more across the country than in Quebec, he points out that "homeowners will (also) certainly have to absorb some of the inflation that is relatively difficult in the renovation-construction sector. So, "for every $1,000 of improvement (...) it has an impact of about the equivalent of $3.10 - $3.20" on the price of rent, he explains.
Knowing that a landlord will not see a return on his investment in major work until 26 years later, the rules should be reviewed in his opinion. Particularly in the context of an aging building stock.
Challenges faced by rental landlords in Quebec
On January 20th, Le Nouvelliste reported the case of a Saint-Édouard-de-Maskinongé landlord who, exasperated by the situations he says he has had to deal with - including "$30,000 in damages due to the carelessness of his tenants” - intends to sell his last property. While situations involving insalubrity and major damages to property "fortunately remain the exception," CORPIQ's director of public affairs says in the article, they are highly irritating for the landlords involved. "These are very costly procedures and in 80% of cases, the tenant is not financially solvent. The proceedings before the Tribunal can take up to two years and it is the landlord who has the burden of proof," says Marc-André Plante.
Bad payers are also difficult to deal with and the TAL process can take longer than expected. "For a non-payment, it takes at least two to three months. But someone who knows how it works can stretch that to seven to nine months, easily. I have one (tenant) for whom it took ten months. But now she's contesting the judge's decision, so we're going to lose another three or four months," the cited landlord laments.
"According to CORPIQ, together the 250 000 owners of rental dwellings in Quebec lose 250 million $ annually this way", it reads. Smaller landlords with less than twenty doors are more affected. "When they lose one or more months of rent during the year, it affects their finances, because they do not spread this loss over a large number of units," notes Mr. Plante. While small landlords are still the majority in Quebec, many are aging and some are choosing to sell to large companies.
On the other hand, the lack of housing remains an issue. As reported by Métro, "Ottawa is being called upon by the Association des professionnels de la construction et de l'habitation du Québec (APCHQ), which is asking it to intervene quickly to improve the supply of housing in Quebec and thus increase affordability for the population. The organization "estimates that there is currently a shortage of 100,000 housing units in Quebec in order to simply re-establish market balance," it says.
Finally, the repeated increases in the Bank of Canada's key rate are undoubtedly the challenge of the hour. This article published by Énergie 94.5 before the official announcement was setting the stage, stating that "most commercial banks are expecting a quarter-percentage point increase." On Jan. 25th, the news broke: the central bank adjusted its key rate from 4.25% to 4.50%, its eighth increase in less than a year.
Rising interest rates are particularly affecting rental owners, who unfortunately do not have the opportunity to increase their income accordingly to soften the blow. Small and first-time plex buyers are in a fragile and difficult position. This will have an impact on the intensity of housing renovations in 2023, considering the limited leeway of rental owners. CORPIQ will multiply its representations to this effect over the next few weeks.