MONTREAL VACANCY RATE APPROACHES 5%

WHY IT'S HAPPENING
WHAT IT MEANS
WHAT TO DO ABOUT IT

Lucky for renters, but unlucky for property owners: rental apartment vacancy rates across Quebec have been rising steadily. On the island of Montreal CORPIQ (a property owner's association), estimates vacancy rates at 5%. A balanced market is around 3% vacancy.

This is a far cry from the conditions of the "crise du logement" Montreal tenants were experiencing 2 years ago, where prospective renters had to line up for visits.


WHAT'S CHANGED? 

CORPIQ offers two explanations for this trend.

First of all, Montreal's condo promoters have been throwing up new constructions at a furious rate. In addition to this, cheap credit and a hot real estate market have taken the "top" layer of tenants out of the rental market. More condo- and house-buyers equals less renters, especially on the top end of the rental market.

In addition, very recently there has been a slight economic downturn in the Canadian economy more generally, and a specific change of the political landscape in Quebec. In more uncertain times, people refrain from setting up new households. Students stay longer with Mum and Dad, families put off getting bigger places to accommodate additional kids, and couples may put off establishing themselves in their own places.


WHAT IT MEANS FOR PROPERTY OWNERS
During the "crise du logement" landlords had the luxury of being able to rent just about anything at just about any price and this with a wide range of tenants to choose from.

Today, that is no longer the reality. Over-priced apartments in questionable states of repair stay on the market. The standard of applicants has dropped overall.

This is a good state of affairs for prospective tenants - if you're a renter, you may want to consider seeing what's now available. You might get lucky.


WHAT TO DO 
So, as a property owner, what are your options if you can't seem to rent your place.

1) Drop the price.
Sometimes a very small drop in price (from 600$ to 570$ for a 3 1/2 for example), may be the difference between renting your vacant place or having it empty. Most tenants fix a budget and won't even look at places that are more expensive.
Of course, landlords don't like to drop their prices especially with the Regie's laws about rent control. But in actual fact, if you do the calculation, one month vacancy represents a loss of 600$. Over a one-year period, if you rent for 570$ instead, you lose only 360$! This means it'll take almost TWO YEARS to recover one lost month of rent.
Think about it - two lost months of rent will take you three years to recover! Sometimes a small price adjustment makes sense.

2) Spruce the place up.
It always surprises me how people respond to fresh paint and minor upgrades. Chuck out any old furniture or garbage. Get a cleaning service in (costs about 60$). Burn some incense. Paint the place white or varnish the floors.
Even if these minor upgrades are cosmetic, they make a huge difference to how attractive your place will be to prospective tenants.


3) Get creative.
What overall rental statistics don't tell you is that the rental market is uneven. For example, Montreal currently has a high rate of vacancy in smaller apartments, while larger apartments and furnished places are in shorter supply.
You may consider offering to rent your place with minimum furniture (appliances, beds and a couch). You can usually get more money by offering to furnish your place, while appealing to a wider clientele.

4) Whatever you do - don't lower your standards !
Bad tenants degrade your investment, cost time, headaches and frustration, and are very very hard to get rid of. Given the choice, rather lose a month of rent now than pick a questionable tenant out of desperation. Trust me !

Repair bills mount very fast. It is costly and time-consuming to expel tenants for non-payment. And - worst of all - the rental board makes it very, very, very hard to evict tenants for just about anything besides non-payment. In other words, you may be living for a very, very, very long with the screaming kids, the rabid pitbull they keep in the basement, the bedbugs they bring into your property, or their persistent neglect of your investment.


Last of all, remember that December is just about the worst time of year to have a vacancy. No one moves before the holidays. There should be a second wave of tenants on the market in January : foreign students are arriving, and many households face stress or take stock over Christmas resulting in movement. The early new year usually brings more potential applicants !

Happy renting !