Two legal routes exist: negotiate an increase the tenant accepts, or pay for a voluntary departure (cash for keys) and re-rent at market. You can never force the departure or impose the increase — but you can make one or the other attractive enough that the tenant says yes. And the math is spectacular: a $700-per-month gap locks up roughly $168,000 of building value on its own. Here's how to get out of it cleanly.
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What a $700 gap is really worth
Before choosing a strategy, you have to see the real stakes. A unit rented at $700 when it would fetch $1,400 at market isn't simply "$700 less per month." It's a mass of real estate value sitting dormant.
The gap is $700 per month, or $8,400 per year in missing net income.
The value of an income property is calculated from its net income: value ≈ annual net income ÷ cap rate. At a 5% cap rate (capitalization rate), each additional dollar of annual income multiplies value by 20.
Result: $8,400 ÷ 0.05 = $168,000 in locked-up value in this single unit.
This is arithmetic, not speculation. As long as the rent stays at $700, that $168,000 is invisible on the balance sheet, non-refinanceable, and lost at resale. Unlocking it doesn't mean adding "a few hundred dollars" of rent: it means injecting a six-figure value, permanently. To picture the effect on your own building, our value calculator converts a monthly gap into value created and refinanceable cash.
Route 1 — The negotiated increase (cash for raise)
The first route is to keep the tenant but raise the rent by agreement. In Québec, a landlord cannot impose an increase: they propose it, and the tenant can accept or refuse. If they refuse, the TAL sets the increase using its own method — an amount generally far below a $700 jump. The key to "cash for raise" is therefore to bring the tenant to accept a larger increase voluntarily, because they see their own interest in it.
How? By making the yes worthwhile: work or improvements they want, a new lease with clear terms, an increase phased over two years rather than a shock, or a benefit that's useful to them. Even a partial increase changes everything: going from $700 to $1,050 adds $350 per month, or $4,200 per year — and about $84,000 of value recovered, without anyone moving out. It's the gentlest solution when the tenant is good and you'd rather keep them. We detail the mechanics in our guide "Raising a tenant's rent in Québec."
Route 2 — The paid voluntary departure (cash for keys)
The second route is to take back the unit through a voluntary move-out agreement, then re-rent it at its fair value. The principle is simple: the tenant holds a right that has value (occupying a unit worth $1,400 for $700); you pay them compensation so they agree to terminate the lease by mutual agreement and leave on an agreed date. It's an amicable termination, fully recognized by the Civil Code.
Value unlocked by the departure: $168,000.
A departure payment, even a generous one, at $30,000: that's only 18% of the value recovered.
Net gain after compensation: about $138,000 — a return of more than 5 to 1. And with a 75% refinance, you can pull out nearly $126,000 in liquidity once the unit is re-rented and the building reappraised.
This is the heart of it: even a five-figure departure cheque stays a fraction of the value the departure creates for you. Paying someone to leave isn't money thrown out the window; it's the most profitable investment a landlord can make on a stuck unit. The whole thing hinges on drafting the written agreement well and tying payment of the balance to the actual handover of the keys. Our complete guide "Cash for keys in Québec" covers every step.
Which route should you choose?
Both routes are legal and profitable. The right choice depends on the context.
| Negotiated increase (cash for raise) | Voluntary departure (cash for keys) | |
|---|---|---|
| Does the tenant stay? | Yes, at a higher rent | No, they leave and you re-rent at market |
| Ideal when | Good tenant you want to keep | Huge gap, renovation or sale plans |
| Effect on the rent | Partial or full increase, per the agreement | Direct return to full market rent |
| Cost to you | Often a benefit or some work | A one-time departure payment |
| Consent required | Yes: they accept the increase | Yes: they agree to leave |
In practice, you often start by testing the increase route: if the tenant is open to a fairer rent, you keep a healthy relationship and avoid re-listing costs. If the gap is too wide to bridge with an acceptable increase, or if you have a renovation or sale plan, the voluntary departure becomes the cleanest route. In both cases, everything rests on the tenant's consent.
Key takeaway
Two levers, one principle: the tenant has to say yes. You never force. You make the yes — increase or departure — attractive enough that it's chosen freely. And since the $700 gap is worth $168,000, you have an enormous margin to be generous while staying highly profitable.
The triplex under-rented by $400 per door
The reasoning compounds when the gap affects several units. Take a triplex where each door is $400 below market. The total gap is $1,200 per month, or $14,400 per year. At a 5% cap rate, that represents $288,000 of value locked up in the building.
The strategy: handle each unit separately, door by door, starting with the one with the widest gap or the most open tenant. For one, a negotiated increase will do; for another, a voluntary departure will be a better fit. Even by paying, say, $60,000 in total compensation across the three doors, you unlock nearly $288,000 in value: the operation stays firmly in the black. Watch out, though, for sublet or hand-me-down units: you must first identify who actually holds the lease rights before negotiating or having anyone sign.
What the law does not allow you to do
These two routes work because they are voluntary. The red line is clear: a tenant who complies with their lease cannot be forced to leave or to pay more. Concretely, the following are prohibited and can backfire on you:
- Imposing an increase beyond what the tenant accepts or what the TAL sets.
- Threatening, harassing, or intimidating to provoke a departure.
- Cutting off services (heating, hot water) or deliberately causing disruptive work.
- Invoking a fake repossession or a disguised renoviction to take back the unit and re-rent it for more.
The Civil Code of Québec and the Administrative Housing Tribunal (TAL) protect the tenant's right to stay. Repossession does exist, but only to house yourself or an eligible relative — not to "take back a unit in order to re-rent it for more." That's exactly why the negotiated increase and the voluntary departure are so useful: they are the only routes that resolve a below-market rent when the tenant is in good standing. Done well, they're fast, safe, and free of dispute risk, since everyone agrees.
A unit at $700 that's worth $1,400 isn't a fate to accept: it's $168,000 of value waiting for an agreement. Whether you choose to keep the tenant at a fairer rent or fund their departure to re-rent at market, the path is the same: assess the gap precisely, calculate the value at stake, and present a proposal attractive enough to be accepted willingly. That's the whole difference between a building running at half speed and a fully productive asset.
This article is provided for informational purposes and does not constitute legal advice. The rules of the TAL and the Civil Code evolve — always confirm the applicable terms or consult a professional.