N.B. tenants, landlords taken off guard by rent increase cap

After repeatedly publicly refusing to do so for the past year, the New Brunswick government has announced it will implement a one-year cap on rental increases in Tuesday’s budget.

The 3.8 per cent cap is retroactive to Jan. 1, meaning rental increases issued after that date are invalid if they surpass the cap.

On Tuesday, Finance Minister Ernie Steeves said the possibility to extend the cap after the one-year period was on the table.

“I would only commit to one year at this point and we’ll see what happens. There’s an awful lot of stuff going on in the world and it’s hard to predict where we’re going to be,” Steeves said.

Apartment Owners Association president Willy Scholten said landlords are in shock over the announcement, saying that coupled with rising property taxes and what his organization calls a “double tax” only being reduced by 50 per cent, some landlords will have to forego maintenance on their buildings to make ends meet.

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“There are landlords that won’t be able to upkeep their buildings. Our costs will be too much, so we won’t be able to do normal maintenance or extra maintenance or be as responsive as we were before. The economics are just not going to work.”

Economist Richard Saillant called the move a massive surprise.

“The fact that the government has had to this about-face, this 180-degree shift, speaks to the failure of affordable housing policies in this province,” he said on Wednesday.

He said while the housing crisis is a problem nationwide, New Brunswick has the most urgent need for affordable housing in the country.

He said the problem won’t be solved with a rent cap alone, as many factors, such as a labour shortage in the construction industry, are contributing to the housing crisis.

Though the New Brunswick Coalition for Tenants Rights has long been advocating for such a cap, member Angus Fletcher said they have some reservations.

“Given that landlords have to give about a six-month notice for a rent increase that, means increases (issued) on July 1st would technically take place next year. Without any hard commitment to continuing the rent cap, this would severely restrict the ability for tenants to contest that increase,” he said on Wednesday.

He is also concerned about the fact that there is no rent control on unoccupied units, so tenants could still get evicted for renovations, allowing landlords to make more substantial increases between tenants.

Saillant believes the rent cap is likely to be renewed in 2023, as the underlying problems of the industry are not likely to abate by then.

“We’ll be closer to an election. Once you put a measure like that in place, people tend to want it to carry on.”