Setting the Rent on a First Lease in Quebec: Section F and the New-Unit Exemption

ImmoMulti — a direct buyer of multi-unit properties on the North Shore — often guides owners through re-renting a unit or leasing a brand-new one. The recurring question: how do you set the rent on a first lease, and what belongs in the famous Section F? In Quebec, a residential lease includes a mandatory box where the landlord must state the lowest rent paid during the last 12 months. Filling it in correctly protects your rental income; omitting it — or claiming an exemption you can't support — opens the door to a rent fixed by the Tribunal. This guide explains when Section F applies, how to complete it, the 5-year exemption for new buildings, and what happens if you get it wrong.

Who sets the rent on a first lease in Quebec?

For a unit rented for the very first time, the landlord sets the rent freely based on the market: there is no prior reference rent. For a re-rental, the rent remains freely agreed between the parties, but the landlord must disclose the lowest rent of the previous year in Section F of the lease, which lets the new tenant challenge an increase.

Quebec has no "rent control" in the sense of a government-set ceiling. The rent on a lease is, in principle, freely agreed between landlord and tenant. The important nuance: for a unit that was already rented before, the tenant taking possession may, in certain cases, apply to the Administrative Housing Tribunal (TAL) to fix the rent if they believe the rent was raised unduly compared with the previous year. That is exactly the purpose of Section F.

So two situations must be distinguished. First, the very first lease of a unit that has never been rented (a new unit, or one that has never been put on the market): there is no reference rent, and the landlord sets the initial amount. Second, the re-rental of a previously occupied unit: the landlord sets the asking rent but must disclose the history through Section F. Note that this rent-setting logic is distinct from the TAL's method for calculating the annual increase, which governs raising the rent on a renewing lease, not the initial rent-setting.

What is Section F of the lease and the lowest rent of the last 12 months?

Section F of the mandatory TAL lease — "Lowest rent paid during the last twelve months" — requires the landlord to state the lowest monthly rent actually paid for the unit during the 12 months before the new lease began, or the rent fixed by the Tribunal. It is a transparency disclosure for the new tenant.

The Administrative Housing Tribunal's lease form is mandatory for renting a residential dwelling. It contains several rent-related sections, including Section F, titled "Lowest rent paid during the last twelve months." This box is not optional: it tells the prospective tenant the lowest amount that was paid for the unit in the year before their lease.

The legislator's goal is transparency. Without this information, a tenant moving in would not know whether the rent being asked represents an increase over what the departing tenant paid. Section F gives them the comparison point they need to decide, if appropriate, to ask the Tribunal to fix the rent.

How do you fill in Section F step by step?

Identify the lowest monthly rent paid during the 12 months before the new lease (accounting for discounts and any rent fixed by the Tribunal), enter that amount in Section F, and keep your supporting documents. For a never-rented unit, mark "not applicable" and activate the 5-year exemption clause if it applies.

Here is the procedure for a plex owner preparing a new lease:

1. Reconstruct the rent history for the unit over the 12 months before the new lease begins (previous lease, modification notices, receipts, bank records).
2. Identify the lowest amount actually paid, not the nominal rent. If you granted a discount or reduction, that reduced amount is what counts.
3. Check whether a rent was fixed by the Tribunal during that period; if so, that rent must appear.
4. Enter the amount in Section F of the lease, legibly.
5. Keep your evidence in the building file in case of a rent-fixing application.

Sources: Administrative Housing Tribunal — the lease and Éducaloi — legal information.

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How does the 5-year exemption for new units work?

Article 1955 of the Civil Code of Quebec exempts from rent fixing a dwelling whose construction is not complete or that has been ready for habitation for five years or less. During that period, the landlord sets the rent freely and the tenant cannot apply to the Tribunal to fix it — provided this restriction is clearly stated in the lease.

The Civil Code of Quebec provides an important exception to encourage housing construction. Under article 1955 C.C.Q., the tenant of a dwelling whose construction is not complete, or that has been ready for habitation for five years or less, cannot apply to the Tribunal to fix the rent or change other lease conditions. The same rule applies to a dwelling whose use for housing results from a recent change of use — for example a former commercial space converted into a dwelling.

For the owner of a new building, this means the rent can be set freely for the initial lease during that five-year window, with no risk of review by the Tribunal. But this protection is not automatic: the restriction must be stated in the lease (generally in Section G, "Restriction on the right to have the rent fixed"). If the clause is not included, the landlord may lose the benefit of the exemption.

What happens if Section F is missing or wrong?

If Section F is left blank, or if the amount stated is higher than the lowest rent actually paid the previous year, the tenant may ask the Administrative Housing Tribunal to fix the rent. The deadline is 2 months from the start of the lease, or 2 months from the day the tenant learns the true information.

The penalty for a poorly completed Section F is not automatic: the tenant must act. If they find that Section F is missing, or that the amount entered is higher than the lowest rent they should have found there, they may apply to the Administrative Housing Tribunal to fix the rent. The Tribunal can then set the rent according to the regulatory criteria, which may wipe out all or part of the increase you had planned.

The deadline is framed. As a general rule, the tenant has two months from the start of the lease to file. Where the landlord failed to complete Section F or stated false information, that two-month period instead runs from the day the tenant learns that the lowest rent of the previous year was lower. In other words, an omission does not erase the recourse — it can actually extend it.

Source: Administrative Housing Tribunal — setting the rent and Civil Code of Quebec, arts. 1896, 1950 and 1955.

What are the most common landlord mistakes?

Across our North Shore plex transactions, here are the traps we see most often around setting the first rent and Section F:

• Confusing initial setting with the annual increase. Section F governs disclosure when signing a new lease; raising a renewing lease follows a separate logic.
• Entering the posted rent rather than the lowest rent paid. A discount given to the previous tenant lowers the amount to declare in Section F.
• Assuming a new unit is automatically protected. Without the restriction clause in the lease, the 5-year exemption can be lost.
• Mis-dating the 5 years. The period runs from when the unit is ready for habitation, not from the first rental.
• Keeping no proof. In a rent-fixing application, your documentation justifies the amount you entered.

Setting the rent on a first lease and completing Section F rigorously is not a formality: it secures your rental income and avoids an imposed rent fixing. When in doubt, consult the official Administrative Housing Tribunal lease and, if needed, a legal advisor.