CANADA – QUÉBEC Trends and Developments Contributed by: Eleonora Eusepi and Bruno Burrogano, BCF Business Law LLP
programme delivery mechanisms, and aligning fed - eral financial support with provincial and municipal housing supply targets. This framework complements Québec’s own housing strategy and interacts with municipal densification policies, particularly in Mon - tréal, creating a multi-layered system of incentives, obligations, and opportunities that developers must carefully navigate when structuring major residential projects in the province. Tax measures further influence project economics in meaningful ways. The GST/HST rebate for new pur - pose-built rental housing (available for eligible projects that started construction after 13 September 2023) has become a significant financial incentive for rental developers, effectively reducing the tax cost embed - ded in eligible new construction. Accessing this incentive requires careful coordination with Québec’s parallel QST regime and attention to the specific eli - gibility criteria established by the Canada Revenue Agency. The Underused Housing Tax (UHT) continues to impose annual compliance obligations on certain foreign and corporate owners of residential property in Canada, notwithstanding the exemptions that limit its practical application across parts of Québec’s resi - dential property market. Federal infrastructure transfers, including bilateral housing agreements between Canada and Québec, and the Canada Community-Building Fund, support the municipal servicing capacity required to accom - modate densification. The complex relationship between federal funding conditions, Québec’s own policy objectives, and municipal planning frame - works creates a complex regulatory environment that developers, investors, and their legal advisors must carefully navigate when structuring major residential projects across the province. Environmental and Sustainability Mandates Québec’s regulatory environment increasingly reflects the provincial government’s commitments to climate action and the growing integration of environmental, social, and governance (ESG) considerations into both real estate investment and development prac - tice. The province’s building code and energy effi - ciency standards are subject to ongoing revision in alignment with national and provincial climate targets,
with anticipated tightening of requirements relating to building envelope performance, mechanical system efficiency, and the embodied carbon content of con - struction materials. Developers and asset managers should anticipate that these requirements will become progressively more stringent over the coming years, and should incorporate forward-looking compliance planning into project design and capital expenditure budgeting. The City of Montréal has adopted targets for car - bon neutrality and has implemented, or is in the pro - cess of implementing, policies directed at reducing the carbon footprint of both new construction and the existing building stock. These policies include requirements or phase-out timelines relating to fossil fuel heating systems, as well as measures intended to facilitate and encourage the electrification of building energy systems, reflecting the distinctive advantage of Québec’s predominantly hydroelectric power grid, which provides a comparatively low-carbon source of electricity relative to other Canadian provinces. Green building certification, including LEED (Lead - ership in Energy and Environmental Design), BOMA BEST, and Passive House standards, is increasingly expected by institutional investors and major occupi - ers as a baseline condition for investment-grade real estate assets. These certification standards are also becoming a factor in the financing conditions imposed by lenders operating under ESG mandates, meaning that assets without credible sustainability credentials may face higher financing costs or reduced access to certain pools of capital. Climate resilience is an emerging and increasingly important dimension of real estate due diligence. Flood plain mapping, urban heat island analysis, and the assessment of extreme weather exposure are increasingly being incorporated into site selec - tion processes, insurance underwriting, and ongoing asset management practice. Québec’s distinct geog - raphy, encompassing significant riverine environ - ments, coastal territories, northern regions subject to permafrost change, and areas exposed to ice storm and flooding risk, creates specific and varied climate vulnerability considerations that are beginning to be
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