Provincial rent increase reform appeases big landlords

Last week, Quebec's Housing Minister France-Élaine Duranceau announced that she would simplify the method of calculating rent increases. This reform was condemned by tenants' associations, as it is remarkably similar to the plan proposed in January by the province's largest landlords' association. 

The CAQ's proposal bears a striking resemblance to one made in January by one of Quebec's largest landlord lobbies, The Corporation des Propriétaires Immobiliers du Québec (CORPIQ). It would do away with the long and convoluted calculation formula, instead, averaging the inflation of 3 years prior to determine the applicable increase. 

The CORPIQ and the government both claim that this is a long-needed change that would bring rents in line with the “actual evolution of real costs” and ultimately allow landlords to renovate their aging housing supply. They also claim this would reduce the strain on the province's currently overburdened housing tribunal (TAL). 

Why a reform, why now?

While the old rent increase formula had been criticized for some time by housing activists, it came under heavy fire in January by landlords and tenants alike after the Housing Tribunal announced a minimum increase this year of 5.9%—a record-breaking rent hike.

Currently, the TAL sets rent increases on a case-by-case basis. Usually, landlords file for a decision when a tenant exercises their right to refuse an increase. The TAL determines the increase by applying Statistics Canada’s consumer price indexes (CPI) to the landlord's expenses and revenues. 

Tenants' rights activists say that this system keeps tenants in the dark as to what their landlord could fairly and legally be entitled to. Housing organizer Lyn O'Donnell of the Citizen Action Committee of Verdun (CACV) told The North Star that the real driver of the housing crisis isn’t confusion, but “fear, coercion and systemic inequalities.”

The CORPIQ stated that the minimum increase suggested by the TAL this year is high because “they reflect the delay accumulated by a calculation method that didn’t follow the evolution of real costs.” The CORPIQ pleaded for a reform that would be more “balanced and fair.” It proposed that increases be calculated based on the average overall CPI of the three years prior to the reference period and that tenants should pay for major renovations over a 15-year amortization.

Hearing the landlord's pleas, the CAQ announced their reforms two months later. The only real difference between the CAQ's and CORPIQ’s plans is that the amortization period for major renovations will be 20 years instead of 15.

Tenants' rights activists like Charles-Olivier P. Carrier of the Comité Logement d’aide de Québec Ouest (CLAQO) say that this new method “replaces one problem by creating another.” He says that his “worst fears were realized” after seeing that the government’s plan was a one-to-one ripoff of the lobby’s. “Our first thought when we saw the draft modification to the rules was: ‘these are exactly the demands of the CORPIQ,” he told The North Star.

Carrier explained that the old system disadvantaged tenants, and it already covers landlords' costs and assures them a minimal profit by pinning their authorized increases to their expenses and revenues. In other words, landlords got what they paid for, and then some.

When the price of eggs goes up, so does your rent

Minister Duranceau claimed in an April 16 interview on Radio-Canada’s Midi Info that her proposed reform wouldn’t incur any major gains or losses to either renters or landlords. Echoing this, the CORPIQ’s spokesperson, Éric Sansoucy, told Le Devoir that the new method would only disadvantage a minority of tenants, for whom “an additional $50 a month would be $50 too much,” and said that they would need to be subsidized by the government.

In an effort to evaluate these claims, the CLAQO used the proposed method to recalculate the last 10 years' increases. They found that by pinning the increase to overall inflation, the new method will likely cause rents to increase faster while also removing any requirements for maintenance.

The CAQ and CORPIQ originally stated that their goal was to “bring rents in line with actual costs” (i.e., raising rents significantly). Since facing public backlash, they now deny that the reforms would have any negative effects on tenants. Duranceau denied the CLAQO's calculations, insinuating to Le Devoir on Thursday that tenants that don’t go to the TAL must have agreed with their increase:

"It is impossible to determine a precise percentage of the rents set over the years for all the one and a half million units in Quebec. The ones for which we have the exact data are the rents that were set before the TAL, so those who found themselves in a situation of disagreement." 

Carrier disagrees with her assessment, calling it dismissive and insulting. In his experience, tenants don’t avoid the TAL because they’re pleased with their rent, but rather because they’re scared. “Tenants are entirely dependent on landlords to meet their basic need: housing,” he said. He explains that tenants often prefer to keep a low profile and avoid problems.

Lyn O'Donnell agrees that the risks incurred by tenants who wish to refuse are dissuasive. At the minimum, refusing an increase risks “deteriorating a ‘relationship’ already tainted by unequal power dynamics,” she says. “Harassment, negligence and eviction; That is the climate in which tenants must try to survive.”

According to Carrier, the new system does nothing to change the basic fact that responsibility of controlling rents falls entirely on tenants that are brave enough to refuse a rent increase. Not only will the new reforms not lower rents, but they also still leave ample room for landlords to confuse and coerce tenants.

In fact, a non-negligible portion of the increase (stemming from taxes and insurance) will remain variable, weighted, and hidden from tenants unless they contest. Carrier expects landlords will “systematically” use this confusion to their advantage, and continue pressuring tenants into accepting above guideline increases.

Neither Carrier nor O'Donnell are surprised that the CAQ would try to introduce reforms that only benefit landlords. O'Donnell says this reform is completely in line with every other action taken by the CAQ to deregulate and to serve the interests of the private sector.

“This is not the first time that the minister sabotages tenants’ rights,” Carrier observed. In 2023, Duranceau marched in lockstep with the landlord lobbies to abolish tenants’ right to cede their lease, as well as exempting retirement homes from certain rent controls. It’s evident to Carrier that a “real estate agent that paid cash for her first plex” would be on the side of developers and speculators. Indeed, many in the CAQ government are either landlords themselves, or are heavily invested in the real estate market.

Faced with a government that opposes their interests, housing activists are preparing for the struggles ahead. Although the situation looks bleak, Carrier knows that social movements and radical change take time to build, and is keen to point out that every discussion, every pamphlet and every demonstration makes a difference.

O'Donnell also believes that a major change is needed: housing must be removed from the private sector and become a public and collective good. Both agree that it's time to build a movement. “We need to talk to our neighbors,” declares Carrier. ”We need to get organized and get out on the streets, turn up the pressure!”