Law 31 real estate: Our comprehensive guide to everything you need to know
Law 31 real estate: Our comprehensive guide to everything you need to know
Key facts:
- Balancing rights and responsibilities: Bill 31 aims to balance the rights of tenants and landlords, strengthening protections against abusive practices while clarifying legal procedures.
- Protection against unfair eviction: The law significantly increases the compensation due to evicted tenants and introduces stricter rules to prevent “renovictions”.
- Changes in lease assignment: The amendments bring greater rigidity to lease assignments, limiting tenants’ ability to freely transfer their leases without landlord approval.
- Risks for property investment: The new rules could discourage investment in the rental market, potentially impacting the supply of available housing.
- The need for ongoing monitoring: It is essential to continually monitor the effects of Bill 31 to adjust measures if necessary and ensure that the objectives of protection and fairness are achieved without compromising the vitality of the real estate market.
In today’s volatile Quebec real estate market, with increasing pressure on tenants and landlords alike, the adoption of Bill 31 marks a significant turning point.
This legislative reform aims to rebalance rights and responsibilities in rental relationships, by introducing new rules and modifying existing processes.
Let’s delve into the details of this law to understand its essence and practical implications for all players in the real estate market.
Time needed: 10 minutes
- Bill 31 real estate : definition
- Bill 31 and the housing crisis
- Bill 31: Impact on the real estate market
- Bill 31: Impact on rental prices
- Bill 31: Coming into force and deadline
- Risks related to law 31 – real estate market
Bill 31 real estate : Definition
Bill 31, adopted to reform the Civil Code of Québec in the area of rental law, seeks to address several points of friction between tenants and landlords. It comes in a tight market, where housing shortages and rising rents are exacerbating tensions.
Bill 31 was therefore introduced to address and alleviate Quebec’s housing crisis. Its aim is to facilitate access to student housing, expand the supply of social and affordable housing, and provide municipalities with additional tools to accelerate the development of residential projects.
Its key provisions include the adjustment of co-ownership rules, the simplification of eviction procedures, and the introduction of measures to limit unjustified rent increases. Consult the official documentation of the bill via this press release.
“In the current context of housing crisis, the Minister responsible for Housing, Mme France-Élaine Duranceau, is proud of the National Assembly’s adoption of Bill 31. It puts forward provisions to help counter abusive evictions, restore the balance between landlords and tenants, and increase the supply of housing in Quebec.”
Let’s take a closer look at the characteristics and impact of these different measures.
Bill 31 – Objectives and impacts
According to the Quebec government’s official statement, this law complements other measures already adopted, and has several advantages:
- Better protect tenants and publicize their rights.
- Counter abusive rent increases with greater transparency.
- Make lease transfers more flexible.
- Optimize intervention by the Administrative Housing Tribunal (TAL) and improve access to justice.
- Improving access to student housing.
- Increase and preserve the supply of social and affordable housing through better management of the housing stock.
- Accelerate housing projects by giving special temporary powers to municipalities.
- Give the Société d’habitation du Québec (SHQ) new tools to finance housing;
- Modify certain rules concerning divided co-ownership.
This law reflects a desire to modernize and adapt the legislative framework to the contemporary realities of the Quebec real estate market.
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Bill 31 and the housing crisis
Quebec’s housing crisis, characterized by high occupancy rates and insufficient supply, creates a context conducive to abuse and instability for tenants.
By modifying the rules governing lease transfers and introducing new protections against eviction, Bill 31 is a legislative response to these issues. By allowing landlords to refuse the transfer of a lease without cause, while prohibiting subletting for profit, the law aims to deter abusive practices and guarantee greater residential stability.
However, these measures also raise questions about their effect on residential mobility and rental market flexibility.
Bill 31: Impact on the real estate market
We can already list the changes Bill 31 will bring to the real estate market:
One of Bill 31’s key reforms is the simplification of the lease transfer and sublease process.
By offering landlords the possibility of refusing an assignment without having to provide a serious reason, the law aims to reduce disputes and speed up rental transitions.
This measure, while favorable to landlords, could limit tenants’ flexibility in an already constrained market.
However, by explicitly prohibiting subletting for profit, the law seeks to prevent the exploitation of the rental market for profit, which could help stabilize rental prices in the long term.
Impact for the tenant: Reduces flexibility to change accommodation, but protects against arbitrary rent increases.
Impact for landlords: Simplifies lease management and reinforces control over properties, but imposes new responsibilities in terms of refusal of assignment.
Bill 31 also introduces important changes to protection against eviction, significantly increasing the compensation due to evicted tenants.
This measure reflects a desire to dissuade owners from resorting to eviction for speculative or superficial renovation reasons (“renoviction” phenomenon).
In theory, this increased protection should contribute to the stability of the rental stock and provide additional security for tenants. However, the real impact of these changes on the market remains to be seen, particularly in terms of housing availability and landlords’ willingness to invest in the rental sector.
Impact for the tenant: Provides better protection against unjustified eviction and guarantees higher compensation.
Landlord impact: Increases costs associated with legitimate evictions and encourages long-term tenant retention.
Bill 31 directly addresses the issue of “renovations”, a term referring to the eviction of tenants under the pretext of renovations, often used by landlords to raise rents.
The new regulations impose stricter conditions for this type of eviction, including the need for owners to provide substantial evidence that the renovations are necessary and cannot be carried out without vacating the dwelling.
In addition, the law requires landlords to offer a right of return to the tenant after renovations, at a rent that must not unreasonably exceed the previous rent, plus the costs of the improvements made.
Impact for the tenant: Protects against evictions disguised as renovations and ensures the right to return on reasonable terms.
Impact for the landlord: Restricts the ability to increase rents through renovations and imposes stricter requirements for work.
The changes made by Bill 31 to clauses F and G, which deal respectively with repossession of a dwelling by the owner for his or her own use (clause F) or for a relative (clause G), now include an enhanced justification requirement. These clauses can no longer be invoked arbitrarily. The owner must demonstrate a serious intention to use the dwelling according to the terms of the clause invoked, and is subject to controls and sanctions in the event of abuse.
Impact for the tenant: Increases security by limiting arbitrary repossession by the landlord.
Impact for the homeowner: Requires more rigorous planning and justification for repossession of the home for personal or family use.
For newly built dwellings or those recently converted to rental use, Law 31 introduces a five-year restriction period during which rents cannot be increased arbitrarily. This measure is designed to stabilize the new housing market and prevent sudden increases that could exclude less well-off tenants.
This allows for a more balanced integration of new construction into the overall rental market.
Tenant impact: Ensures stable housing costs in new developments, protecting tenants against sudden and often prohibitive rent increases.
Impact for the owner: Limits the flexibility to set rents at market rates in new projects during the first few years, which could affect the initial profitability of real estate investments.
Law 31 clarifies and strengthens the representation of tenants and landlords before the Housing Administrative Tribunal (TAL).
By facilitating access to justice for both parties, the law hopes to resolve rental disputes more effectively. This improvement in the legal process is a step towards fairer, faster dispute resolution, which will benefit the entire real estate sector.
Impact for tenants: Improves access to justice and understanding of legal procedures, strengthening tenants’ ability to defend their rights in the event of conflict.
Impact for the owner: Enables a more structured and potentially faster resolution of disputes, reducing the costs and time associated with these legal steps.
Bill 31 also clarifies the situations in which planning issues may affect the lease.
Landlords must now be more transparent about any planning restrictions that may affect the use of the property. This transparency is designed to protect tenants against rentals that may not comply with municipal or provincial regulations.
Tenant impact: Provides better protection against the rental of non-conforming properties, ensuring that units comply with planning standards.
Impact on the owner: Requires extra diligence to ensure that all information regarding planning restrictions is clearly communicated, thus avoiding conflicts and potential penalties.
Finally, Law 31 underlines the importance of the rental declaration, an essential document that must be completed and given to tenants to ensure complete transparency on rental conditions.
This reinforced formality ensures that tenants are fully informed of their rights and obligations from the outset of their lease, contributing to clearer and fairer rental relations.
Impact for tenants: Ensures a clear and complete understanding of lease terms and conditions, reinforcing tenants’ rights and enabling them to better protect themselves against unfair practices.
Impact for owner: Imposes an obligation of clarity and rigor in the documentation provided to tenants, thus fostering transparent rental relationships based on trust, while minimizing the risk of misunderstandings or disputes.
To find out more about the various impacts, visit the following websites: La Presse, Radio Canada, Bail-facile, Le Devoir, Corpiq and Xpertsource.
Loi 31 : Quel impact sur le prix des loyers
Bill 31 could have a significant impact on rental prices in Quebec.
In theory, restrictions on the assignment of leases and subletting for profit are designed to control rapid and unjustified rent increases. However, by limiting tenants’ ability to easily sublet their apartments, the law could also reduce the supply of housing available on the secondary market, which could, paradoxically, contribute to an increase in prices due to reduced supply.
In addition, landlords may be tempted to increase initial rents to compensate for the increased risks associated with stricter constraints on eviction and the higher indemnities they may have to pay.
Bill 31: Coming into force and deadline
Law 31 came into force on January 1, 2024, with certain provisions taking effect gradually to enable tenants and landlords to adapt to the new regulations.
This timeframe is crucial to ensure a smooth transition and to allow all players in the real estate market to familiarize themselves with the implications of these legislative changes.
It is also essential that landlords review their existing lease contracts and prepare the necessary amendments to comply with the new law, while informing their tenants of upcoming changes that could affect them.
Risks related to Bill 31
Although Bill 31 aims to bring fairness and protection to the rental sector, it is not without its risks.
Landlords could feel increased pressure from tighter restrictions on evictions and the potentially higher costs associated with compensating tenants. These factors could discourage investment in rental properties, reducing the supply of available rental housing.
Furthermore, changes to lease assignment rules could introduce a rigidity that would limit tenants’ residential mobility, impacting their ability to respond to changes in personal or professional circumstances.
The risks can be summarized as follows:
- Increased pressure on homeowners:
- Tighter restrictions on evictions.
- Potentially higher costs for compensation to evicted tenants.
- Impact on real estate investments :
- Possible reluctance to invest in rental properties due to increased costs and restrictions.
- Potential reduction in the supply of rental housing on the market.
- Rigidity in lease transfer :
- Limited flexibility for tenants to change accommodation.
- Impact on tenants’ ability to adapt to changes in personal or professional circumstances.
Conclusion
Bill 31 represents a significant step forward in the regulation of the Quebec rental market, aimed at balancing the rights and responsibilities of tenants and landlords while addressing the housing crisis.
It introduces essential measures to protect tenants against abusive practices, and offers new rules clarifying lease transfer and eviction procedures.
However, while these reforms are intended to improve the stability and fairness of the rental market, they do entail risks that could influence the dynamics of the real estate market.
Landlords may be deterred from investing in new rental properties by increased costs and restrictions, while tenants may find themselves less mobile in the face of changing circumstances.
As Law 31 is implemented, it will be crucial to monitor its impact on the market to ensure that it achieves its objectives without undesirable side effects.
If you’re looking to successfully complete a real estate project, put your trust in our team of Montreal real estate brokers.
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