Hundreds of properties, land or buildings in the territory of the city of Quebec could go to auction on November 22 if their owners do not pay their debts to the municipality on time.
The law allows municipalities to offer for sale any property for which taxes have not been paid, regardless of the amount outstanding, after a minimum period of six months.
At the end of September, the city threatened to auction 503 properties in Quebec. With the exception of 2022, which includes amounts due in 2020 and 2021, this is the largest number of buildings whose owners have defaulted in five years.
Properties are auctioned off due to unpaid taxes to Quebec City
| Year | Number of properties |
|---|---|
| 2018 | 339 |
| 2019 | 388 |
| 2021 | 142 |
| 2022* | 531 |
| 2023 | 503 |
* The year 2022 includes the amounts due for 2020 and 2021.
Source: Quebec City
However, according to Jean-Pascal Lavoie, spokesman for the city of Quebec, this number is “comparable” to previous years. Since the first notification to affected citizens, the number of buildings threatened with sale has fallen to 363. From year to year, the vast majority of properties are not sold because the owners pay off their debts on time. Since 2018, 88 properties have been sold through these auctions.
In the coming weeks, the city will communicate with the owners affected by the process to help them find a solution, Mr. Lavoie said by email.
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Since 2018, 88 delinquent properties have been auctioned by the City of Quebec.
Photo: Radio-Canada / Alexandre Vallée-Roy
Everything indicates that the number of buildings on the list will be reduced until the sale scheduled for November 22nd.
“It’s just a beginning”
These figures do not surprise Christian-Pierre Côté, research and data analysis specialist at Côté Mercier. This is just the beginning, he says. Since March 2022, the Bank of Canada’s key interest rate has increased from 0.25% to 5%. However, Mr Côté points out that several owners who have taken out mortgage contracts with a fixed rate have so far been spared from this increase and the Central Bank has not ruled out an increase in their interest rates.
Stéphane Leblond, bankruptcy and insolvency administrator, is also not surprised by the large number of insolvent owners.
According to him, inflation and the rise in real estate prices, which have nothing to do with the past, are damaging. People delay their tax payments, there are many who delay their mortgage payments, the banks accommodate them for a while, but at some point something is bound to go wrong somewhere.
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Stéphane Leblond is a licensed insolvency practitioner in Quebec.
Photo: Radio-Canada / Raphaël Beaumont-Drouin
Interest rates rise
Sébastien McMahon, chief strategist and senior economist at IA Industrial Alliance, is saddened by these figures, which he links to a rise in interest rates and the cost of living.
We see that this has side effects. There are households that are a little stuck, then we see these kinds of surpluses, so that’s quite worrying, he says.
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Sébastien McMahon is chief strategist and senior economist at IA Industrial Alliance. (archive photo)
Photo: Radio-Canada
A quick return to low interest rates is not expected in the short term, but the situation could stabilize, he said.
If we look at central banks, the message is pretty clear that we are reaching the end of the tightening cycle.
Stéphane Leblond believes that in certain cases heartbreaking decisions have to be made.
It is also difficult to make people understand that their desire to keep their house at all costs, while in some cases possible, is in some cases the cause of all their problems. 50, 60, 70% of their salary goes towards their accommodation.
He advocates for cities to review the way they tax property owners based on property appreciation.
In collaboration with Jérémie Camirand