Quebec is changing how rent increases will be calculated after hikes hit historic high

Quebec is planning to change how rent hikes will be calculated as tenants across the province are preparing for their highest increase yet.

After Quebec’s housing tribunal (TAL) recommended 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.

Housing Minister France-Élaine Duranceau laid out her proposed rules on Wednesday, which will go into effect in 2026.

The current calculation method has been highly criticized for counting the owner’s “net income,” or the profit made from speculation, pushing up rents. Under the revised approach, net income will no longer be considered.

The amendment will also remove “operating expenses” and “service” from calculations.

Instead, increases will be based on:

• An applicable base percentage for rent
• The consumer price index for the three previous years
• Variation in municipal and school taxes
• Variation in insurance costs
• A percentage of capital expenditures

• READ MORE: Montreal’s vacancy rate is going up, but so is rent

In the previous calculation, owners had to include the income from their building, the building’s operating expenses, its net income, the building’s rent adjustment percentage, major repairs and improvements specific to the dwelling and the dwelling’s rent adjustment.

“The new calculation method proposed by Minister Duranceau will give tenants greater predictability and avoid shocking rates. It will be simpler to understand, for both tenants and landlords, which will reduce the number of applications to the TAL,” said a spokesperson for the minister’s cabinet in a statement.

A spokesperson for landlord association CORPIQ said the changes meet the demands landlords have been making – the calculations are simpler and easier to understand.

“It will help avoid going to the TAL because the tenants don’t understand the increase,” said Eric Sansoucy.

• READ MORE: Rent increase cases more than tripled at Quebec’s housing tribunal in last 5 years

According to Duranceau’s office, this year’s increase would have been 4.5 per cent with the new calculation method.

But housing advocate with BAIL Felix Marois said this year would have been an exception, and the new method is less transparent.

He told CTV News he tried calculating average rent increases from the 20 years with the new guidelines and in all cases the increase was higher than what was recommended by the TAL.

“In every other year since 2005, the old method resulted in lower rent increases,” he said. “In the long-term this will impoverish tenants.”

Housing advocates are instead pushing for better rent control measures and for the government to cap rent hikes.

• READ MORE: Montreal warns tenants to think twice before moving this year

Duranceau is also changing how renovations will be incorporated into rent hikes, based on a constant 20-year amortization rate of 5 per cent instead of allowing it to vary depending on the economy. This could mean a higher increase for tenants.

However, Marois pointed out that tenants typically don’t know how much their landlord spent on renovations and accept in good faith. He said landlords should have to share those details with tenants.

Overall, said Marois, the new rules are a missed opportunity to make the system better for tenants.

“Housing is a right before an investment,” he said.