20:52 on 2011/06/30 Reply  

• john 22:42 on 2011/06/30 Permalink

  The simple truth is that Montreal rents are extremely affordable when compared to other cities in Canada and the United States. Property prices have gone up through the roof, but rents have simply not followed suit because of the rental board.

  Interest rates will no doubt go up in the coming months and they will make purchasing an apartment building an increasingly risky venture. (There’s a reason why apartment buildings aren’t being built in this city.) No one wins if landlords have no money for repairs or if a great number of them get foreclosed.

  I think a reasonable increase in rents would benefit everyone in the end.

• Stefan 07:54 on 2011/07/01 Permalink

  that’s what the rental board is trying to do: reasonable increase in rents, which are related to economic realities and not speculative bubbles or out-of-control market forces.

  if you look i.e. at craigslist advertisements, you can see that market prices can easily be double of that of appartments which have been rent-controlled for some time. $1500 as opposed to $800 for a 5 1/2 as an example (granted that it may be renovated). i know of landlords who charge a very reasonable rent, but this shows that the majority of them are not reasonable.

  some landlords will not do repairs if they feel that they do not get enough ROI on their apartment. but if one has to make the choice between either living in an unrepaired apartment or not to eat… how exactly would that benefit them?

  there would be much more poverty in montreal without the rental board (montreal is also one of the poorest large cities, if not the poorest one, in north america).

• David Tighe 09:31 on 2011/07/01 Permalink

  A consequence of controlled rents is a shortage of apartments for rent. I lived this experience in London in the old days before controls were lifted. Rises in property values are not just speculative or caused by bubbles nor necessarily by unjust market pressures. They are also caused by rising wages, perhaps exacerbated by inequitable distribution of incomes, and increasing demand for attractive urban environments.

  Controls on abusive increases or dishonest landlords go without saying. But obliging them to, de facto, subsidise rents is not just either. In any case, often the beneficiaries do not need the subsidies anyway. Look at New York where apartments are passed from generation to generation (or used to be)

• Ian 10:09 on 2011/07/01 Permalink

  John’s assertion that the rental board keeps Montreal rents in check is simply untrue – a landlord can raise the rent as much as they want when a new tenant moves in. That part of the rental regulations was scrapped some years ago though many people are under the false belief it still exists. The only protection the tenant has in that regard is is the landlord raises their rent too much when the lease renews – and even then only if the tenant contests it.

  We’re now seeing well over a thousand dollars a month for a 4 and a half from ndg to homa… last time I moved, 5 years ago, a 5 and a half in the plateau was about 900 a month – now they’re all around 1400. For all that the landlords are complaining about the rents being too low, well, here’s the thing of it – Montreal has lower salaries than Toronto and Vancouver too, and nobody’s salary is going up even remotely as quickly as rents are. I suspect the real reason rents are rising so quickly isn’t the rising property values but all those zero down mortgages a few years back… new landlords jack the rents to meet their inflated monthly payments, and when word gets out, the other landlords want in on the action, too.

• Stefan 11:40 on 2011/07/01 Permalink

  ian: this is something i’ve noticed. lots of ‘success’ articles in the press about the buy-a-plex, profit and use the money to buy others. now it seems like everybody wants to join in this perceived ‘free money’. this decouples housing from its original purpose and leads to a speculative bubble. and as it has always happened when such an investment frenzy is at its top, the professional/instituitional investors get out and leave mr. and mrs. new-landlord with the deflated assets (possibly foreclosures in that case). that’s why it is called a bubble.

• ant6n 13:37 on 2011/07/01 Permalink

  So when’s the bubble gonna be over? ‘d be nice to get -a-plex.

• Stefan 14:06 on 2011/07/01 Permalink

  ant6n: looking at what is happening in the states may give some indication, even if regulations are different (there seems to be no walk-away possible in canada), variable interest mortgages are more popular, the SCHL props the market with taxpayer’s money instead of the banks taking on risks. housing markets are also quite different depending on the city. there seems to be some consensus though that the eventual raising of the interest rate of the bank of canada will have an impact.

  but raising of that rate also means that even with prices coming back off artificial to real demand (after all, central montreal areas are in a process of densification), monthly mortgage payments won’t really go down – so don’t get up your hopes, until you can pay cash.

  there’s this joke about how economy is not an exact science, unless the event has already happened :-)

• People person 19:50 on 2011/07/01 Permalink

  Rents are high not because of landlords but because of the previous landlords. The current landlord often had to pay a bundle to get the building. The beneficiary of that big cash bonanza was the first owner. The new owner is just trying to make payments on the big debt required to buy the place so he has no choice but to charge a lot. The villain is old owner who already sold out.

• Kate 10:46 on 2011/07/02 Permalink

  The only response to that, Pp, is that people should not buy buildings they can only just barely afford. There are other forms of investment that aren’t so stressful to manage.

  Thanks folks for the discussion here.

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