Landlords could pass the bill of rising interest rates on to tenants already hit hard by Quebec’s housing crisis.
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“It is certain that the increase in mortgage costs will be passed on to owners by an increase in rents,” points out Pierre-Antoine Harvey, economist and associated researcher at IRIS.
Same story on the Corporation of Real Estate Owners of Quebec page.
Its CEO, Marc-André Plante, concedes that the fluctuations in rate hikes “are not part of the calculations recognized by the Administrative Housing Tribunal,” but he believes the rising cost of mortgage financing will add pressure to an already unbalanced market.
According to him, 60% of homeowners, including mortgage holders, would opt for variable interest rates and see a direct effect on their financing costs. The rise in interest rates coupled with inflation would therefore increase pressure on rents in a context where demand exceeds supply.
But renters are already struggling: difficulties in finding affordable housing are making headlines this year, and the Regroupement des Comités Logement et Associations de Tenants du Québec (RCLALQ) estimates that rents have already risen by 9% between 2021 and 2022 .
Cédric Dussault, spokesman for the organization, denounced the use of rising interest rates as another “pretext” for rent increases.
In his opinion, even if interest rates rise, the value of real estate is not lost. Owning an apartment or investment property remains a very profitable investment for which an investor should be willing to “take the risk”.
The spokesman adds that landlords are actually trying to “protect their profit margins,” to the detriment of tenants.
Pierre-Antoine Harvey recalls that rent is an important issue, especially for the less well off: “For a poor household, housing accounts for 30 to 50% of expenses, while the richer you are, the less important this part becomes. »