A group representing landlords in Nova Scotia says the province’s already-strained rental supply will decrease further if fixed-term leases are restricted or eliminated.
The Investment Property Owners Association of Nova Scotia (IPOANS) recently released survey results of what members would do if the province moved to restrict or eliminate fixed-term leases, despite the fact that no potential measures have been announced.
Kevin Russell, executive director of IPOANS, said they ran the survey in response to a number of media reports in recent months “demonizing” the use of fixed-term leases.
“The fact of the matter is they do play a very important role in keeping tenants in housing, and we thought it was important to find out from our members what would be the impact if fixed-term leases were altered or restricted, or even abolished,” he said.
Those media reports include multiple stories from tenants who, despite making timely rent payments and having no other complaints, have been forced out of their homes and into a tight rental market after their leases weren’t renewed.
A survey among those sleeping rough in Halifax over the summer also indicated that fixed-term leases and renovictions were responsible for 22.5 per cent of them losing their homes.
Unlike periodic leases – such as month-to-month or year-to-year – fixed-term leases have fixed start and end dates, meaning they are not automatically renewed.
Critics have decried fixed-term leases as a “loophole” for landlords to get around the provincial rent cap, as rent increases do not apply to new tenants.
But Russell said fixed-term leases help manage the landlord’s risk when renting to tenants.
He said many of the association’s members use fixed-term leases to provide housing to supportive housing organizations, rent supplement recipients, Department of Community Services clients and other people in a financially precarious position.
More than 180 people responded to the IPOANS survey, representing 7,400 fixed-term lease units.
Of the respondents, 78.5 per cent said they would stop renting to tenants at high risk of rent default if fixed-term leases were restricted or abolished.
And around half said they would stop renting to supportive housing organizations, rent supplement recipients, Department of Community Services clients, and students.
“We just thought it would be prudent for us to provide data to show how important they are in the marketplace, particularly in the housing of vulnerable people who would not normally qualify to have an approved lease, if it wasn’t for fixed-term leases,” Russell said.
As well, 63.5 per cent said they would stop future investments in rental properties or switch to another type of investment, nearly 56 per cent said they would sell their properties, and almost 30 per cent said they would repurpose their property to another use.
Nearly a quarter also said they would leave their rental units empty if fixed-term leases were restricted or eliminated.
“They would rather leave their unit empty so (they wouldn’t) incur any lost revenue from non-payment of rent or any resulting damages of somebody in the unit that might occur,” he said.
“They would rather not have the unit filled because of the risk that would be involved if it wasn’t for fixed-term leases.”
Power imbalance
But a group representing tenants in the province says there’s more than just risk management at play.
Heather Clark, spokesperson for ACORN Nova Scotia, noted that having a fixed-term lease means the landlord can end the lease at the end of the term, “even if they are a good tenant.”
“Once they vacate the property, then the landlord is free to put up the rent to whatever rate they want,” she said.
“It’s something that is exploiting a lot of people, and we just don’t feel that it’s the right thing to do.”
Clark said she hears from tenants “daily” who are on fixed-term leases and are afraid of losing their homes.
She said there’s a large “power imbalance” between tenants and landlords, and tenants have no recourse if their lease is ended.
“The provincial government has relied far too highly on the private sector to provide housing for people for far too long, and that’s why we’re in this situation” she said.
“And in my opinion, the landlords are taking advantage of that because they know they have the upper hand right now because of the housing crisis.”
She is calling for fixed-term leases to be abolished.
“We need these fixed-term leases gone because it’s harming too many people,” she said.
Meanwhile, it remains unclear if the province actually intends to take action on fixed-term leases.
Service Nova Scotia Minister Colton LeBlanc said Friday that they’re “always looking for opportunities to modernize and strengthen our residential tenancies program,” but wouldn’t commit to introducing legislation targeting fixed-term leases when the legislature sits again in the spring.
“We’ll have to wait to see what the session brings,” he said
LeBlanc said there are approximately 300,000 tenants and 6,000 landlords in the province, “all with different needs.”
“Fixed-term leases have been raised by both sides, as well as a number of different issues, so we’re taking that feedback into consideration.”