Ontario, Quebec Step In After Trudeau’s Real Estate Plan Flops

(Bloomberg) -- Canada’s two largest provinces are helping businesses that can’t pay their rent during the coronavirus shutdown after a federal aid measure failed to gain traction.

Prime Minister Justin Trudeau announced a plan in April to subsidize rents for small business, but not many landlords have applied. On Monday, Quebec gave them an incentive to participate by offering to shoulder a higher portion of the cost. In Ontario, Premier Doug Ford announced a temporary ban on commercial evictions.

“Your clients, your tenants need it. We’re counting on you,” Quebec Economy Minister Pierre Fitzgibbon said in an address to real estate owners during a press conference.

The program required landlords to swallow a temporary 25% reduction in rent for some business tenants. In return, the federal and provincial governments agreed to pay at least half of a tenant’s rent in the form of a forgivable loan to the landlord.

Fitzgibbon said the new rules will reduce the obligation of Quebec landlords to a 12.5% rent cut.

The program, which started running May 25, hasn’t proved popular so far. Applications as of June 4 covered only 26,000 tenants for a total of C$90 million ($67 million) worth of subsidies, a far cry from almost C$3 billion envisaged by Ottawa.

Quebec, which had also previously announced a moratorium on evictions, said the measures aim to give about 35,000 retailers and restaurants more financial room for maneuver.

The Chamber of Commerce of Metropolitan Montreal called it a “powerful incentive” and urged the federal and provincial governments to extend the aid from June to September to help struggling downtown businesses.

Ford’s ban, which applies to evictions from June 3 to Aug. 31, emulates similar moves in provinces including British Columbia and Saskatchewan.

“I’m here for the little guy,” the Ontario premier said, criticizing landlords who refuse to lose 25% in rental income.

Lack of willingness is only part of the problem, according to the Canadian Federation of Independent Business. Another is the strict qualifying criteria: Tenants need have to lost 70% of revenue due to the pandemic. Tenants and landlords have also both complained that the application process is confusing, according to the business group.

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