The rental housing market in Quebec, the second most populated province in Canada and once known to be one of the most affordable provinces to live in, has an affordability problem.
According to the Tribunal administratif du logement, Quebec’s housing tribunal, its 2023 recommendations forecasted a 2.3 % increase in rental prices, not including heating.
Housing crises happen when there’s a scarcity of affordable residences, a common case of low supply and high demand. And with the new rules on Airbnb rentals, speculative investment, the rise of debt, plus inflation, affordable housing is scarcer than ever.
Studies by the Canada Mortgage Housing Corporation (CMHC) indicate that the housing crisis is nowhere near its end. From government programs to personal loans, regardless of your credit – you’ve got options to afford to rent in Quebec.
Why Is There A Housing Crisis In Quebec?
In Quebec, two factors create and sustain the housing crisis within the market. A housing shortage and high-interest rates. These two factors ultimately result in a disproportionate increase in the cost of housing. Though minimum wage rates are increasing, these components make it difficult to keep up with the basic cost of living.
Starting in 2022, the Quebec government allocated $77 million toward low-income housing. Included, was a plan to provide rental subsidies for 2,200 households. However, with the whole province affected, additional aid is needed.
How Do High Interest Rates Influence A Housing Crisis?
The Bank of Canada’s latest benchmark increase brought the current prime rate for borrowing to 6.7%. This prime rate is the starting point for other types of borrowing, including mortgages.
At the time of writing, a variable rate mortgage is sitting around 5.95%. High interest rates deter many potential homeowners from investing in a property. As a result, people are driven to rely on the rental market.
High-interest rates aren’t just affecting individuals, but businesses too. The high cost of borrowing coupled with inflation means that renovating existing properties or constructing new housing is more costly. Owners and landlords, in turn, charge higher rent to recover from their investment.
The Quebec Law That Favours Rent Increases
A new Quebec law will now permit the construction of new apartment buildings to 5 years of rent increases, outside the normal Regie du logement guidelines. Meaning, for-profit developers can charge higher rents without regulation.
Do Any Federal Or Provincial Laws Make The Housing Crisis Worse?
Citizens, developers and landlords are all looking to the provincial and federal governments for help. But, are federal and provincial laws and regulations possibly making things worse?
How Does A Housing Crisis Result From A Housing Shortage?
The Association des professionnels de la construction et de l’habitation du Québec (APCHQ) has recently determined that Quebec is facing a shortage of housing. Approximately 100,000 vacant housing units are necessary to meet current demand.
The severity of the housing crisis is determined by the difference between supply and demand. This is measured by a rate called the ‘vacancy rate’. In Quebec, the healthy medium is considered to be 3%.
And according to the CMHC, the rental vacancy rate in 2023 sat at 1.9 %. Down from 2.5% in 2022. Whereas some cities like Gaspé saw no rental housing available at all. Big cities like Montreal and Quebec City saw a rate of 1.5% to 2%.
In its January 2023 Rental Market Report, the CMHC estimated a two-bedroom (4 ½) in Montreal is now at an average cost of 1,258 $. And a condo at 1,930 $ with a 1.6 % vacancy rate.
Cancellation Of The Low-Income Housing Program
And as far as affordability goes, the government-funded low-income housing program ‘Acces Logis’ has now been cancelled after 24 years of operation. This leaves Quebec with no new low-income housing developments and an increasingly long waitlist for existing dwellings.
Ban On Foreign Home Buyers
As of January 1st, 2023, the CMHC implemented the new ‘The Prohibition on the Purchase of Residential Property by Non-Canadians Act’. The act prevents non-Canadians from buying residential property in Canada until 2025.
Some exceptions are granted for individuals who have filed their taxes in Canada for three consecutive years. An exception might be granted for those who are:
Yet, the ban on foreign investments means newcomers will be reliant on a sector of housing (rental) that is already struggling to meet the demand.
According to housing policy experts like the Research Chair in Urban Governance at McGill University, foreign investor market share is already incredibly low. Posing the question of whether the ban is even effective in managing housing affordability and shortages.
How Is The Government Responding To The Housing Crisis?
The Federal government and the provincial government of Quebec offer several forms of rent relief. Some of the main solutions available are tax rebates, allowances and subsidized housing.
Though these options are temporary solutions to otherwise possibly permanent problems.
Housing Aid By The Federal Government: Renting and Owning
The following is a list of existing, and new government programs aimed at reducing the financial burden caused by the housing crisis for renters, homeowners and prospective homeowners.
Canada Housing Benefit
The Canada Housing Benefit is a program aimed at aiding low-income, Indigenous and newcomer families in Canada. The program is funded by both the Federal and Provincial governments and pays monthly.
It is available to families who earn $35,000 and below. Or singles who earn $20,000 and below.
Right now, the federal government is offering an additional one-time top-up on the existing Canada Housing Benefit. The one-time top-up will deliver an additional $500 directly into the accounts of 1.8 million low-income earners. This benefit will be tax-free.
Those interested must apply before the deadline on March 31st, 2023 at 11:59 PM. And can do so either by phone at 1-800-282-8079 or online on the My CRA website.
Tax-Free First Home Savings Account
As of 2021, Statistics Canada reported that the number of renters has outgrown the number of home buyers. And as we mentioned, the large rental market is in part due to the difficulty of purchasing properties.
To get people out of the rental market, the program is available for prospective first-time homebuyers. It allows them to save up to $40,000. The benefit is tax-deductible and available for withdrawal upon the purchase of a home. Accounts can be opened in mid-2023.
Additionally, those who apply for the first-time home buyers’ tax credit (HBTC) can also qualify for up to $1,500 to help with closing costs.
Multi-Generational Home Renovation Tax Credit
Rent affordability hits seniors particularly hard. What if you housed a senior citizen? According to Statistics Canada, 7% of Canadians are living with extended family members. The Multi-Generational Home Renovation Tax Credit helps with the cost of renovating and or building additional living space for those living with seniors or persons with disabilities. The benefit will provide $50,000 in qualifying renovation and construction costs.
Additional Federal Aid
The federal government offers a variety of other tax incentives. These incentives are offered for a specific form of dwelling or individual.
- Funding for Indigenous housing by the CMHC
- Home Buyers’ Plan (HBP)
- GST/HST New Housing Rebate
- Home Buyers’ Amount
- Canada Greener Homes Initiative
For more information on these programs, consult the Government of Canada’s website on housing benefits.
Housing Aid By The Government Of Quebec
The government of Quebec has three main programs and benefits to help residents of the province. These programs are exclusive to Quebec residents and have filed taxes in Quebec.
The programs mentioned below are related to housing specifically. With an expansive social aid program, keep in mind more social and financial programs are available to help subsidize the cost of living.
Shelter Allowance Program
This program helps subsidize a portion of your rent, mortgage or boarding costs. Available from October 1st, 2022 to September 30, 2023 – the program provides residents with $100- $170 a month. Individuals can apply by filling out a Shelter Allowance application available on the Revenu Québec website.
If you are renting a room, you will need to fill out a Statement of Rent form in addition to the Shelter Allowance application. You will need to fill out the Statement of Rent form if any of the following applies to you:
- Rent a room, apartment or house.
- Living in a mobile home on rented land.
Once you’ve gathered the necessary documents, send your application to the following address:
PO Box 6800. Place-Desjardins
Montreal Quebec H5B 1J5
Quebec Rent Supplement Program
The rental supplement program is available to low-income Quebec residents living in housing cooperatives or private-sector dwellings. The supplement is aimed to allow individuals to live outside government social housing.
Those who are approved for the program will have their new rent under the program, equal to 25% of their income.
You must first qualify for the program. In specific circumstances, the waiting process may be waived for those who are domestic violence victims and or those whose homes have been accidentally destroyed. To learn more, visit Revenu Quebec.
Low-rent housing or subsidized housing is available to eligible individuals struggling with financial and housing stability. Similar to the Rental Supplement Program, low-rent housing helps cover individuals’ and families’ rent, up to 25% of their income.
This program is available exclusively to low-rent dwellings. Though no new units are being built, you can still apply.
A wait time may be placed on your application. In some cases, priority is given to individuals who are victims of domestic violence and those whose homes have been destroyed accidentally.
Other Forms Of Financial Assistance
Government loans don’t have to be the only form of assistance if you don’t qualify. Here are a few different ways you keep up with the cost.
- Personal Rent Loans – A personal loan is customizable to your own needs, and that includes rent. With a personal loan, you can qualify for anywhere between $300 to several thousand. The term of your loan will depend on the agreement you’ve made with your lender.
- Charities and Grants – Another great option is reaching out to charities or applying for grants from charity and private foundations. Depending on your needs and background, you may be able to qualify for financial assistance. To find out where to apply, your local social welfare office or YMCA may be a good place to start.
Is The Quebec Rental Housing Ever Going To Cool Off?
The current state of Quebec’s rental housing market can be frustrating to navigate, but you have options. The government is trying to help but it’s best to explore all the various options available to you, from specified housing or general government aid programs to personal loans.
Getting people out of the rental market might increase supply and lower rent prices. However, as we see with Airbnb, some landlords might just decide to turn their units into temporary rentals.
Making use of all your options can provide you with the support needed to afford your rent and balance your finances.