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Calculation of the 2020 rent increase

Part of category Lodging

Wednesday, 22 January, 2020

Montréal, January 22, 2020 – The Régie du logement has established the applicable percentages.

These percentages are used to calculate the 2020 rent increases, in accordance with the Regulation respecting the criteria for the fixing of rent. The percentages enable the amounts attributed to each component of the calculation to be determined based on the actual expenses incurred for the building or dwelling in question.

The Régie must wait for Statistics Canada to release the Consumer Price Index for December before it can calculate the percentages that apply. In fact, the methodology used takes the 12 months of the preceding year into account. Statistics Canada has released the data for December 2019 today.

Table 1: Applicable percentages for calculating rent increases

RIGHT OF REFUSAL

In Québec, lessors and lessees are free to agree on a rent increase that both consider acceptable. If the two parties cannot agree on the rent increase (or on any other modification to the lease), an application to modify the lease can be filed by the lessor with the Régie du logement no later than one month after the date of receipt of the lessee’s negative reply. It is important to note that, for dwellings in buildings constructed not more than five years earlier, a lessee who refuses a rent increase must leave the dwelling at the end of the lease if section F of the lease refers to this restriction (box checked).

The lessee also has the right to refuse a rent increase proposed by the lessor. To facilitate agreements on rent increases, the Régie now provides a calculation tool on its website. The website provides both an electronic version of this form, entitled Calculation 2020 Tool (in French only), and a printable PDF version of it.

These simplified calculation tools make it possible to establish the rent increase, by taking into account the variation in municipal and school taxes, insurance, major improvements and all operating costs of the building. The paper version of the form will be available at the Régie’s 25 offices and service locations as of the second week of February.

It should be noted that the simplified calculation tools make no allowance for certain particular situations that could be the subject of a hearing before the Régie du logement, such as the provision of a new service that results in additional management costs, or an expenditure that does not benefit all the occupants of the building.

APPLICATION OF PERCENTAGES

For example, the Régie provides a hypothetical calculation scenario to better illustrate the application of the Regulation respecting the criteria for the fixing of rent. NOTE that this example does not take into account the specific features of each building and dwelling. The income and operating expenses of a given building may justify a variation in rent that differs from this calculation example, particularly if the building has undergone major work.

Consequently, it is important to point out that the online calculation tool must be used to obtain a more precise estimate of the increase.

Table 2: Hypothetical calculation scenario

The estimated average basic increases in the second column were obtained by using, for each category of expense, the new percentages that apply for 2020, based on the cases submitted to the Régie du logement in 2018 and 2019.

CASES BROUGHT BEFORE THE RÉGIE

From 2013 to 2019, the Régie du logement granted an average rent increase of 2.9% for the cases that were brought before it, taking into account the capital expenditures that were submitted to it.

Table 3: Average rent increases granted by the Régie from 2013 to 2019

The years correspond to the reference period for calculating rent increases, not to the year in which the calculation was performed. The percentages granted take into account all the rent components, including taxes (municipal and school) and insurance. However, the results without capital expenditures do not take into account the major expenses attributed to the building or dwelling in question. The number of decisions corresponds to the number of calculations used in determining the average rent increases granted for each reference year.

FOR MORE INFORMATION

The specific rules that apply to rent increases for rental units (for example: time periods allowed for serving notices, particular circumstances for members of a cooperative or someone living in low-rental housing) are explained on the Régie’s website, which also provides model rent increase notices and a model reply to such a notice.

For more information, please refer to section Calculation for the Fixing of Rent.

You can also reach the Régie by phone:

Montréal, Laval and Longueuil

514 873-BAIL (2245)

Other regions

1 800 683-BAIL (2245)