The 2026 TAL base percentage is a starting point in a calculation, not a universal ceiling on rent increases. A well-supported adjustment may be higher. For an owner, the useful approach is to explain the dollars behind the request; for a tenant, it is to understand which expenses actually apply to the dwelling.

This example concerns an ordinary residential lease renewing July 1, 2026, with a modification notice given on or after January 1, 2026. Earlier notices follow the old method. The applicable reference period also matters: the TAL distinguishes renewals beginning April 2, 2026 through April 1, 2027 from the preceding cycle. [1]

The reform uses the average of three annual changes in Quebec’s general Consumer Price Index, replacing the former operating-income-and-expense calculation. Add the three annual inflation rates and divide by three; this is not the cumulative inflation over three years. The published base for the cycle used here is 3.1%. Applied to a $1,500 monthly rent, that gives $46.50. [2, 4]

Municipal and school property taxes and fire/liability insurance are considered separately. When an eligible bill increases, only the portion of its percentage increase above the base rate generates an additional adjustment. Apply that excess to the earlier bill, allocate the dwelling’s share and divide by twelve. A smaller positive increase adds nothing; a decrease produces a downward adjustment. [3]

Eligible capital expenditures, such as a major roof replacement, use a 5% annual factor on the allowable cost—not an extra 5% of the rent. Allocate the work to the dwellings benefiting from it and deduct applicable grants or insurance compensation. New recurring costs from introducing an eligible service can be considered separately; they are different from the rising price of an existing service. [2, 3, 4]

The dwelling’s share generally follows its rent relative to the building’s rental income, including required estimated rents for vacant or owner-occupied units. It is not automatically one divided by the number of apartments. Work affecting only certain dwellings is allocated among those benefiting from it. [4]

For our July renewal, compare municipal taxes for 2026 and 2025, school taxes for 2025–2026 and 2024–2025, and the insurance policies in force on December 31, 2025 and December 31, 2024. Use eligible work from the 2025 reference year. Keep invoices, payment records and financial-assistance details; the official tool is a negotiation aid, not a TAL decision validating the entries. [3, 5]

Assume three residential units each renting for $1,500 monthly, no other income, no subsidies or insurance reimbursements, and qualifying work benefiting all three. Each unit represents one-third of the income. All property figures below are hypothetical.

Base adjustment: $1,500 × 3.1% = $46.50 monthly.

Municipal taxes: $6,000 rises to $6,600, or 10%. The excess is 10% − 3.1% = 6.9%. Thus $6,000 × 6.9% ÷ 3 ÷ 12 = $11.50 monthly per unit.

School taxes: $600 rises to $612, or 2%. Because that positive increase is below 3.1%, the additional adjustment is $0.

Insurance: $3,000 rises to $3,300, or 10%. Thus $3,000 × 6.9% ÷ 3 ÷ 12 = $5.75 monthly per unit.

Eligible roof work completed in 2025: $18,000 × 5% ÷ 3 ÷ 12 = $25 monthly per unit.

Total: $46.50 + $11.50 + $0 + $5.75 + $25 = $88.75. The calculated new rent is $1,588.75, rounded to $1,589, an increase of approximately 5.93%. This illustrates how a justified result can exceed 3.1%; it does not establish the increase for another property. [3–5]

Separately, a qualifying newly introduced service costing $720 annually for the entire building would add $720 ÷ 3 ÷ 12 = $20 per unit monthly, if fully eligible. It is not included in the total above. Confirm classification and any deductions before including it. [3, 4]

A higher mortgage payment, a new purchase price or the wish to match an advertised market rent does not itself add a line to this calculation. For a rented condo, do not enter the entire condo-fee increase or a contingency-fund contribution as though it were completed eligible work. Identify the underlying allowable expenses and their timing with the TAL; do not count the same cost twice. A reserve contribution and a repair expense are different things.

The parties can agree on an increase. For a standard lease, a tenant can refuse the proposed change and remain, subject to the applicable rules. The tenant generally has one month after receiving the notice to respond; silence normally means acceptance. After refusal, the landlord has one month to apply to the TAL, otherwise renewal is on the existing terms. [1, 6]

Special rules apply to certain newer buildings, cooperatives and subsidized housing. In particular, a valid restriction for a building constructed or converted within five years changes the refusal consequences; required lease disclosures, including a maximum-rent disclosure in qualifying newer cases, matter. Check that situation before relying on the standard example. [6]

For owners and investors, transparent calculations make the conversation more productive. I can help organize the property and lease information; a disputed amount or exception should be confirmed with the TAL or a legal professional before it becomes part of your investment assumptions.