The client
An investor bought a small multi-unit in Rivière-du-Loup advertised at a $1,150/mo asking rent, $62,000 (20%) down on a $310,000 purchase, $6,600/mo of their own income.
Purchase price
$310,000
Rivière-du-Loup, 20% down
Advertised (requested) rent
$1,150/mo
Contested, pending before the Tribunal
Actual current rent
$980/mo
Legally collectible until a ruling issues
Investor's own income
$6,600/month
Own qualifying income
The problem
The previous owner's rent-increase notice to $1,150 was contested by the tenant and sits undecided before the Tribunal administratif du logement. Under Quebec's residential tenancy rules, a requested rent increase does not take effect simply because it was requested -- the rent actually, legally collectible today remains the old $980, regardless of how the Tribunal eventually rules. The listing's own asking figure was never the current legal rent at all.
What a pending Tribunal application does, and doesn't, change
- ▸It does NOT put the requested, higher rent into effect -- the tenant's contestation keeps the old rent in force until a decision issues
- ▸It does NOT guarantee the increase will be granted, in full, in part, or at all, once the Tribunal does rule
- ▸A buyer qualifying on the advertised figure -- rather than an investment property mortgage's correctly documented rent roll -- would have been qualifying on a rent that, as of the purchase date, simply does not exist yet
This is a different Tribunal mechanism from a lease surviving a change of ownership -- here the dispute is about how much rent is actually owed, not about whether the lease itself carries forward.
The numbers
The gap between the naive and correct qualifying income is entirely the difference between the requested rent and the rent actually being collected today.
| The uninsured rental purchase, requested rent vs. actual | Amount |
|---|---|
| Purchase price | $310,000 |
| Down payment (20%) | $62,000 |
| Mortgage, uninsured | $248,000 |
| Qualifying income | Naive (requested $1,150) | Correct (current $980) |
|---|---|---|
| 50% add-back applied | $575/mo | $490/mo |
| Qualifying income (own income + add-back) | $7,175/mo | $7,090/mo |
| GDS | 28.0% | 28.3% |
At 6.85% (MQR on a 4.85% contract rate) the qualifying payment on the $248,000 mortgage is $1,714/mo. Correctly, TDS (payment + $205 tax + $90 heat + $225 car loan) ÷ $7,090 qualifying income = 31.5%. Both figures follow the same rental income add-back method; because this file is uninsured, neither GDS figure carries a CMHC ceiling -- but only the correct one reflects what the tenant is actually paying today.
The solution
A courtier hypothécaire obtained the tenant's actual lease directly from the outgoing owner rather than relying on the listing's stated rent.
First, requested the tenant's current lease and the notice of contestation, confirming both the old rent and the fact that the increase was still before the Tribunal.
Second, confirmed with the seller's notary that no Tribunal decision had yet issued, rather than assuming the listing's asking figure reflected the legal current rent.
Third, submitted the file qualifying on the current, actually-collectible $980 rent alone, treating the requested $1,150 as informational only -- something that might apply in the future, not something a lender should credit today.
The outcome
The file funded on the correct $7,090/mo qualifying income, GDS 28.3% and TDS 31.5%. Quebec's welcome tax on the $310,000 purchase came to $2,786, in a market where rental vacancy made the correct rent figure worth confirming rather than assuming.
The outcome of a pending Tribunal application is not knowable in advance; this file was qualified on today's actual rent regardless of how the increase is eventually decided.
What to take from this file
- 01A requested rent increase is not a rent increase until the Tribunal rules on it. Under Quebec's residential tenancy rules, the old rent stays in force through a contestation.
- 02Never qualify on a listing's asking rent without confirming the current lease. An advertised figure can reflect a request, not a legal reality.
- 03Ask specifically whether any rent-increase notice is under contestation. A pending Tribunal application is exactly the kind of detail a seller's listing has no reason to flag.
- 04This is a different TAL mechanism from a lease surviving a sale. That question is about whether the lease carries forward; this one is about how much rent is actually owed under it.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Gouvernement du Québec — Droits sur les mutations immobilières — Quebec's transfer duties ('welcome tax') — 2026 indexed brackets.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.85% contract rate — rates move daily; not a quote.
- ▸the 50% add-back percentage — each lender sets its own rental-income treatment; some offset rather than add back.
- ▸how the Tribunal administratif du logement will eventually rule on the contested increase — the outcome of a pending Tribunal application is not knowable in advance; the file was qualified on today's actual rent regardless of how it resolves.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.