LIBERALS ANNOUNCE 3% RENT CAP, WITH A CAVEAT

Under the proposed new rules, New Brunswick landlords will be able to apply to the Tenant and Landlord Relations Office for approval for a rent increase above three per cent but less than nine to cover “capital renovations,” which could include maintenance, reporters heard during a technical briefing Wednesday morning.

“It’s not to step in and put in stainless steel appliances,” Hickey later told reporters. “It’s needed renovations that are important for the safety of the tenant but also for the safety of the unit.”

If passed, the rent cap would come into effect on Feb. 1, but any existing rent increases above three per cent that are already in place will remain in effect. However, any future years of phased-in hikes will be capped at three per cent, according to a presentation delivered by New Brunswick Housing Corporation officials Wednesday morning.

New Brunswick landlords will still need to give tenants six months’ written notice of a rent increase and can still only give notice of a hike once every 12 months.

The Liberal government’s housing plan is to strike a “balance” between renters and landlords, Hickey said, by implementing a rent cap to protect tenants and removing the provincial sales tax off new multi-unit builds to incentivize developers.

On Wednesday, Progressive Conservative Leader Glen Savoie questioned whether the government had done a scan of other jurisdictions with rent caps to measure the potential impacts on renters and landlords alike.

“The (housing) minister talked about trying to encourage more development,” Savoie said. “Well, developers told us that having a rent cap that limits their income discourages development, so has the government asked those questions to make sure that this is not going to have an unintended consequence or negative effect?”

Tenants and housing advocates have been calling for years for the return of a rent cap in New Brunswick after the former Blaine Higgs Progressive Conservative government decided against extending a temporary 3.8 rent cap it put in place for 2022.

Instead, the Tories introduced a phased-in mechanism where tenants could apply to the then Residential Tenancies Tribunal (now the Tenant and Landlord Relations Office) to have above-inflation rent increases spread out over two or three years.

That mechanism was tweaked earlier this year by the Tory government in an effort to balance the interests of renters and landlords. However, the process still required tenants to apply for assistance – a major criticism of housing advocates.

Under the new process, New Brunswick landlords will now have the burden placed on them to apply to the Tenant and Landlord Relations Office. Each landlord who applies for a rent increase above three per cent must show evidence that the renovations have been completed, according to Paul Steeves, deputy chief residential tenancies officer with the New Brunswick Housing Corporation.

Proposed rent cap isn’t tied to unit

Green Party housing critic Megan Mitton is concerned by the fact that the proposed new rent cap won’t be tied to the unit, “so there is nothing to protect the affordable housing stock that we have in New Brunswick when it changes hands between renters.”

New Brunswick lost 8,600 affordable rental units, valued at $750 a month or lower, between 2016 and 2021, according to a New Brunswick Coalition for Tenants’ Rights report released last year.

“I know of examples where somebody moves out and the rent goes up $300 before the next person comes in, so I think (tying the rent cap to the unit) would be a step that would really help protect affordable housing,” Mitton said, adding she also wants to see measures introduced to protect tenants against discrimination and retaliation.

New Brunswick landlords are required to apply to the Tenant and Landlord Relations Office if they wish to terminate a tenancy for renovation purposes. According to that office’s data, 53 termination requests for renovations were made in 2023, with only one approved.

So far this year, the office has received 123 applications and approved nine.

Further changes will be coming to the Residential Tenancies Act, Hickey said Wednesday, but the government wanted to act quickly on a rent cap to give tenants “the stability and the dependency they need.”

New Brunswick’s average rent rose 10.8 per cent – the second highest in the country – between April 2023 and April 2024, according to Statistics Canada data released this spring. Meanwhile, the province’s vacancy rate has hovered around 1.5 per cent.

If passed, the rent cap will be reviewed annually to consider the current rate of inflation, the rental market survey and vacancy rates.