‘Impossible’ for Quebec to come up with proper rent hike formula, says Montreal lawyer

Real estate signage showing an apartment for rent is seen on Monday, May 15, 2023 in Montreal. (Christinne Muschi / The Canadian Press)

A Montreal lawyer is criticizing Quebec’s housing minister and the rental board, saying the new formula to determine rent increases is still flawed.

After Quebec’s housing tribunal (TAL) predicted an average 5.9 per cent increase this year – the highest in three decades – both landlords and tenants called for the system to be adjusted. Quebec announced its new calculation method last week, saying that under the new formula, the average increase would have been 4.5 per cent instead.

Housing Minister France-Élaine Duranceau said the new method would “be simpler to understand, for both tenants and landlords,” but lawyer Lisa Hollinger accused the government of oversimplifying calculations that should be on a case-by-case basis to get a desired result.

The new formula, which will only go into effect in 2026, bases rent hikes on the consumer price index for the three previous years, municipal and school taxes and insurance costs.

Duranceau told journalists at the National Assembly that the new calculation would be more “fair,” “balanced,” and would have “less big jumps” year after year.

The rates set by the government are for TAL judges to use when adjudicating cases but are not universal. The TAL’s website says “each calculation is specific to the building or dwelling concerned. Moreover, the simplified calculation tools make no allowance for certain particular situations that could be the subject of a hearing before the TAL.”

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Hollinger said this amounts to an admission that “the TAL purports to set rent increases based solely on historical matters that went before the Tribunal, which in and of themselves, were in fact ‘particular situations’ and lumps these ‘particular situations’ together to ‘set’ a future rent increase.”

She argues averages advertised and recommended by the TAL based on its decisions don’t reflect average rent increases agreed upon between landlords and tenants, making the statistics inaccurate.

Hollinger said she often takes on cases from tenants, all of which have been settled outside the TAL and none of which fell into the recommended percentage.

In fact, she said that most rent increases are negotiated between a tenant and their landlord and never make it into the statistics presented by the TAL. Tenants can refuse a rent increase they find unreasonable and make a counteroffer, which are typically accepted – even if it takes a few rounds of negotiation.

“The TAL’s decisions represent less than 0.5 per cent of all tenant households. It is inconceivable that the TAL thinks the numbers are justified on such basis,” Hollinger wrote in a letter addressed to the head of the tribunal.

Hollinger said the formula does not consider crucial information like the number of leased units within a building, location, previous increases, current monthly rent, and more. She also said there is little correlation between rent increases and inflation when landlords can calculate based on their expenses, so the formula benefits some landlords while hindering others.

A spokesperson for the TAL, Denis Miron, said the tribunal simply applies government regulation and cannot comment on the amendments in progress.

Miron stressed that the tribunal does not issue any “recommendations” for rent increases but rather “publishes fictitious calculation scenarios to help citizens understand the calculation method.”

Hollinger believes it’s impossible to come up with a proper calculation method and that the government should instead focus on a rent cap for reasonable rent increases, which housing advocates have been demanding for years.

Félix Marois of housing group BAIL said he is mainly concerned by the lack of enforcement mechanisms to ensure the TAL’s rates are respected.

“Without effective rent control, landlords are free to demand any amount they choose, leaving it up to tenants to challenge unreasonable rent hikes themselves,” he said. “We believe that the TAL must play a much more active role in determining how much rents can be increased.”

In the meantime, Hollinger says tenants should be aware of their rights and not be afraid to negotiate with their landlord.