The vacancy rate for the whole of Quebec is on the rise according to the CMHC and has reached 2,5% according to its study published on June 15, 2010.
However, the rate isn't constant and varies according to the type of building and its geographical location.
This situation re-launches the debate concerning the rent-free months offered by certain owners to help in renting their apartments that remain vacant.
Others prefer to give free home electronics, a raffle ticket for a free vacation, or to renovate the apartment.
Firstly, we can all agree that it is important to take the time to evaluate each building in relation to its target tenant market, to the neighbourhood, and how our rental offer compares to others in the market. Naturally, if this evaluation shows that changes are necessary to improve the position of our building in the market, the need to be made to improve your market position.
However, in different situations and for different reasons, the best way to attract your target tenant is to offer rent-free months, or to give the tenant some other added benefit.
You should be aware that offering rent-free months brings with it a few risks. Firstly, at the legal level, you must be careful to make clear that you are offering “rent-free months”, in order to prevent the Québec Rental Board from ruling it to be a permanent reduction of rent. If the rent-free month isn't clearly specified in the lease (ex: “The rent of November 2010 will be free. This exemption from payment is not renewable. “), the Rental Board may consider that the exemption from payment applies to the renewals. There is also a risk that if you renew the exemption from payment a second time, the Rental Board could decide that the amount of rent has changed by distributing the amount of the exemption over twelve months, thus decreasing the monthly rent.
Additionally, you should be aware that in certain cases the tenants whom we attract with an offer of rent-free months will want to have the same benefit the following year.
No solution is perfect, but it is certain that this type of decision should not be made lightly.
We're always happy to answer your questions and to assist you in the drafting clauses for your leases so that everything is as clear as possible in order to avoid conflicts.