Inflation, a new impact on rent increases?

In 2023, inflation is having a significant effect on the rent increase rates issued by the Administrative Housing Tribunal. Indeed, all rates have undergone an increase in the percentage announced.

The rate related to major work has even increased and reversed the harmful trend of the previous three years with 3.8%, a record as we saw a decrease since 2020:
This rate has been falling steadily since 2020:
2022: 2.0%
2021: 2.3%
2020: 3.1%
However, we should not rejoice too much because it will still take 26 years for a return on investment (ROI), or $3.17 for every $1000.00 of work done.

Inflation is still weighing heavily on the Canadian economy, but the first signs of a decline came in May when the Consumer Price Index (CPI) fell from 4.4% in April to 3.4% in May, its lowest level in 2 years.

Since the methodology for calculating rent increases in Québec dates back to its implementation in the 1980s, the rates determined each year are based on the CPI.
So, if the Consumer Price Index (CPI) continues to fall, it will have a catastrophic impact on rates issued in 2024.

Over the first five months of the year, we can already see that negative, yes, indeed, negative rates appear!
The reform of the calculation of rent-setting is not included in Bill 31, An Act to amend various legislative provisions as regards housing, and unfortunately for the maintenance of Québec’s rental stock some dark clouds may appear.

Only interest rates seem to continue to rise, so that the index which is taken into account for determining the rates of major works would for the first 6 months give a rate of 4.3% instead of 3.8%.

According to the first figures, here are the estimated rates over 5 months of 2023:
Electricity: 1.8%
Gas: -3.5%
Fuel oil: -8.2%
Maintenance: 5.0%
Services: 3.5%
Management: 3.1%
Annual net income: 1.6%
Repairs and major work on the entire building: 4.3% (6 months)

The Government therefore has 6 months left to decide on the future of Québec’s rental stock and to take the necessary actions to reform the rent-setting system.