What you need to know about rent increases
The housing crisis continues to worsen in Montreal.
The month of March rhymes with the arrival of rent increase notices in the mail. Barring exceptions, the deadline for receiving such a notice is March 31, 2023, indicates the Administrative Housing Tribunal (TAL), and tenants have the right to refuse said increase, as the case may be. Here's what you need to know in case of an increase.
The average rent increase was around 3% last year, according to the Regroupement des Comités de Logement et les Associations de Tenants du Québec (RAPLIQ). According to the latter, “tenants who have increases that respect the indices [issued by the TAL] are rare”. Especially this year.
When can a rent go up?
A landlord can change the rental price of a dwelling only once every 12 months, regardless of the duration of the lease. A landlord wishing to increase the rent of a dwelling must send the written request to his tenants and the increase begins at the beginning of the next lease.
For a lease of 12 months or more ending on June 30 (thus starting on July 1), a landlord has until March 31 to notify his tenants. However, if the lease is signed for less than 12 months, or for an indefinite period, the landlord has between one and two months before the lease ends to notify them of a rent increase.
A rent cannot be increased during the lease, even if major work has been carried out. The rent must be increased for the next lease.
When is a rent hike legal (or illegal)?
The court offers a calculation tool for the rent increase, in order to “facilitate negotiations” between tenants and landlords. The RCLALQ instead suggests turning to the housing committees to do the calculation.
Each year, the TAL submits a calculation grid showing the reasonable percentages by which a rent can increase. These increases do not include homes affected by clause F.
Applicable percentage of TAL for 2023
If the accommodation is heated with electricity by the tenants: 2.3%
If the dwelling is heated with electricity by the owners: 2.8%
If the dwelling is heated with gas by the owners: 4.5%
If the dwelling is heated with oil by the owners: 7 .3%
According to the Corporation of Quebec Real Estate Owners (CORPIQ), these percentages would not be high enough, considering the increase in property taxes for 2023. On the RAPLIQ side, we consider that these “do not represent huge costs when they are spread over all the dwellings”.
The list issued by the court would not take into account major works, said RCLALQ spokesperson Cédrick Dussault. On the CORPIQ side, this would make the calculation method “obsolete”. Mr. Dussault, he is sorry that the less well-off tenants are “the most affected by these increases”.
CORPIQ spokesperson Marc-André Laplante considers that a reasonable rent increase in Montreal is between 3% and 4% for a dwelling heated with electricity. For apartments that have undergone major work or have been heated by gas or oil, “which is rarer”, the corporation speaks of an increase that can range from 7 to 9%
How to contest an increase in rent?
Faced with a rent increase, a tenant has three choices. He can accept the increase, move or refuse the increase and stay in his accommodation. A written response should be sent to the owner. If no response is issued, the rent increase is automatically accepted.
Mr. Dussault, of the RCLALQ advises tenants not to accept anything out of hand and to ask the owner to justify a high increase without supporting documents. He recalls that if a notice of increase does not offer the option of refusing it without moving, it remains a legal option. Housing committees can provide response models for contesting an increase.
Before going to the TAL, landlord and tenant have 30 days to negotiate and reach a decision. It’s up to the landlord to make a request to the TAL for rent fixing. “When the owner is in good faith, the judge will render a decision based on the calculation grid,” assures the CORPIQ spokesperson.
If the increase is approved by the TAL?
“The rent will look like what is offered as an index by the TAL”, indicates the RCLALQ. Last year, we were around 3% in the rents set by the court.
In the event of a loss in court, a tenant who disputes an increase without it being abusive or unjustified could be obliged to pay the administrative costs. “And the rent increase could be retroactive,” warns Mr. Laplante.
In summary: For a lease ending June 30, the owner has until March 31 to send a notice of increase. The tenant then has 30 days to send a written notice of refusal to the landlord. Together, they have thirty days to negotiate and agree on a fair increase. If no agreement is reached, the court will decide.
The RCLALQ reminds that the increase of an insurance policy, normal maintenance costs as well as an increase in interest rates affecting the mortgage are not justifications taken into account by the TAL and justify a dispute.