What will Quebec rent increases be in 2024?

Are the record rent increases in Quebec over the past two years likely to have a further impact on those who will have to renew their leases in 2024? 

The Rise in Rent in 2024 in Numbers 

In January 2023, we saw the Housing Administrative Tribunal recommend an average base increase of 2.3% for an unheated dwelling and 2.8% for an electrically heated dwelling.

In 2024, the average increase for a heated or unheated dwelling is 4.6%, taking into account the increase in municipal taxes.

For example, in Montreal, the property tax will rise to 4.9%, which represents an increase of 0.8% compared to the increase in 2023.

It should be noted that there are other criteria that influence the increase in rent, such as:

• Fluctuations in insurance premiums;
• If renovations or major works are carried out in the previous year, the increase will be 6.6%.

Table 1: Percentages for calculating rent increases

*These applicable percentages are not average increase estimates. Source: Housing Administrative Tribunal

Each year, the housing administrative tribunal makes available a rent increase calculator tool. This tool is simple and effective and helps facilitate negotiations between tenants and landlords. 

Although it does not take into account some specific situations, such as the introduction of new services which could entail new expenses, it does include a number of factors: 

• Vacant units in the building; 
• Taxes and insurance; 
• Operating expenses for services already in place; 
• Other major expenses such as building renovations and repairs. 

This tool used to calculate rent increases for 2024 and the applicable percentages issued by the housing administrative tribunal have been online since January 16, 2024. The TAL presents a fictional scenario to better understand the application of the rent setting regulation according to the different criteria, here it is:

Table 2: Hypothetical calculation scenario

When should the notice of rent increase be sent?

In fact, notice of a rent increase must be sent 3 to 6 months before the end of the lease for a 12-month lease. Thus, for a lease ending June 30, which is more or less standard, the notice must be sent by March 31st at the latest. 

Once the lease renewal request has been received, the tenant has 30 days to send a reply to the landlord. Although it is possible to conclude an amicable agreement, the TAL will sometimes set the rent to resolve a situation where an agreement cannot be reached.

Buildings constructed less than 5 years ago, however, are not governed by this regulation, and the tenant will have to leave the property at the end of his lease if an agreement has not been reached by then. Read our article on Clause F to find out more.

Some recent statistics on housing prices 

In 2023, the annual rise in rents was 10.9% for an average monthly rent of $1977. 

The increase in rentals was greatest in Montreal and Quebec City, proportionally speaking. 

A one-bedroom apartment in Montreal averaged $1805, representing a 13.9% increase over 2022. For a 4 1⁄2 (2BR), the average monthly rent was $2278, an increase of 5.6%. We had already noticed this trend earlier in the year. Data published to the end of November 2023 corroborates our earlier forecasts. 

In Quebec City, rents rose by 14.5% for a one-bedroom apartment, climbing to $1319 a month. A 4 ½ (2BR) cost at least $1743, or 10.9% more than in 2022. 

In short, the monthly price of housing is experiencing significant repetitive increases that have caught the attention of all the experts. 

Housing shortage 

The Canadian government is in the process of setting up a national housing policy, the Quebec government is pursuing its own actions with, among others, its Allocation-logement program and, more and more, cities are encouraging the construction of rental housing on their territory. Nevertheless, it is clear that there will be a housing shortage for some years to come. 

In fact, the impact of government programs will not be felt until 2025, when we will experience some stabilization in rent increases in Quebec.

While this situation seems to favour current homeowners, since 2021 they have had to cope with various increases (property tax, mortgage rate, heating costs, etc.), requiring them to impose their own rent hikes. 

Prime rate and average prices in 2024 

First of all, the prime interest rate is expected to stabilize and even decrease later in 2024. The inflation rate is already stabilizing, and results are expected to improve somewhere in the second or third quarter. 

The first six months of 2024 may appear to be relatively difficult, but we can count on the economy to slowly improve thereafter. 

That said, rent prices are not going to drop, and are likely to rise by an average of somewhere between 7% and 10% in 2024. We believe this range is realistic, given the indicators observed in Quebec. 

Using the above data, the scenarios for Montreal and Quebec City would be as follows: 

These forecasts are based on an analysis of the past few years, combined with the current economic situation, economic experts’ projections for the coming year, the housing shortage, and the deferred impact of current government programs. 

As far as the lack of rental housing in Montreal is concerned, it will continue in 2024. While the vacancy rate was 3% in 2021, it is forecast to be 1.4% in 2024. This will add upward pressure on rental prices for the coming year. 

Beyond 2024? 

If comparisons are anything to go by, we can expect rental price increases to slow in 2025. 

In Vancouver and Toronto, where rents are considerably higher than in Quebec, we’re seeing a slight increase in Vancouver and a decrease of over 2% in the Queen City. 

Even so, the average price of an apartment in both cities remains high, at $3171/month in Vancouver and $2913/month in Toronto. 

We can therefore expect rental prices in Quebec to stabilize from 2025 onwards, which would be a great relief to tenants who, for the time being, are setting up mitigation strategies, such as apartment sharing, to alleviate the costs of monthly rent.

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