Many renters risk the leap when extending their lease. Due to inflation, the rent of some units will increase by 10-15%.
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“There are few this year who won’t have monthly rent increases of at least $35 or $40. We understand there are some who will scrape and we are preparing for that. We expect many challenges,” said Steve Forget, founder of Sherpa Immobilier and owner of rental properties in Joliette and Montreal.
Municipal taxes, heating, insurance, renovation costs, snow removal costs… Inflation also hits the landlords, who have no choice but to pass these cost increases on to their rents.
“One of our triplexes just increased our municipal tax bill by $2,500. One of the tenants has to pay about $80 more on their monthly rent just for the tax portion. In addition, the building is heated with natural gas, which is also more expensive this year. Add to that the increase in insurance and maintenance, and his rent increase will be about 15%. It’s big, it’s almost $150 a month,” explains Steve Forget, who emphasizes that this is an extreme case and not the norm.
“A welfare recipient who gets a $40 monthly raise spread out over a year is almost a welfare check going toward a rent increase,” he says.
Save where you can
In addition to municipal tax increases, which vary from place to place, insurance, heating and maintenance, including snow removal costs, increase for homeowners.
Around one in four tenants has signed a rental agreement in which the heating is paid for by the landlord. However, many households are still heated with heating oil or natural gas, the prices of which have risen sharply in the past year. According to Steve Forget, insurance costs for most buildings are increasing at 20% a year. Inflation in the construction costs means that in the event of a fire, for example, the reconstruction values are corrected upwards by the insurers.
“To save money, we are increasing our deductible on our insurance contracts. We’ve gone from $2,500 to now $5,000 and soon it will be $10,000. In order to absorb the insurance increase, we take on an additional risk. You know, I could just set lower deductibles and pass the increase on to my tenants, but I know their ability to pay is limited,” says Steve Forget.
Difficult for everyone
Marc-André Plante, Managing Director of CORPIQ
Right now is a difficult time for tenants, but also for landlords.
“Most increases have nothing to do with a decision by the owner. They have to pass the costs they incur on to the tenants,” says Marc-André Plante, director of public affairs at the Corporation of Property Owners of Quebec (COPRIQ).
The latter adds that 60% of its members have variable interest rates on their mortgages and that many are now wondering if it’s still worth the cost of all that effort…
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