New Brunswick

New Brunswick landlords dispute the need for rent controls

The New Brunswick Apartment Owners Association has written to the premier and MLAs trying to make the case that rent controls would not only hurt their industry but also exacerbate the problems they're intended to solve.

Regulation would make housing shortage worse, say apartment owners

Landlords say they are forced to increase rents because of increased costs of everything, including assessed property values. (CBC)

New Brunswick landlords are pushing back against calls for rent controls.

The New Brunswick Apartment Owners Association has written to the premier and MLAs trying to make the case that regulation would not only hurt their industry, it would also exacerbate the problems it's intended to solve.

"If these politicians are putting forth rent controls we're going to have a much worse situation," said Willy Scholten, the association's president.

"People will stop building and we'll have more people on the street."

Green Party Leader David Coon introduced a private member's bill last month proposing changes to the Residential Tenancies Act to ensure rent would not be increased in the first year of a lease, it could only go up once a year and there would be an established annual rent increase cap.

Some tenants have been coming forward in recent weeks to say their rents are being hiked by up to 50 per cent and they can't find anywhere else to live that they can afford.

Some elected representatives in southern New Brunswick say they've been receiving many calls from constituents this has happened to.

In the early days of the pandemic, landlords were prohibited from evicting tenants who suddenly couldn't pay their rents. Now that order is over, and some tenants are facing eviction and a tight rental market. We talk to Green Party MLA Megan Mitton about what she'd like to see the government do to help. 7:37

A new association has been formed to lobby for better tenant protections.

But Scholten rejected the idea that large rent increases are happening on a widespread basis.

He suggested a handful of isolated cases are being "recycled through the media." And he feels "horrible" that someone might have been slapped with a steep rent increase and been forced to move.

"Our company doesn't do that. And the vast majority of landlords would never even consider it."

"But you don't need to put a major government policy of rent control in that sends a message to the market that New Brunswick is a bad place to do business."

This older apartment building on High Street in Moncton is one of two bought by an Ontario firm for $1.55 million, 50 per cent above the assessed value. (Pierre Fournier/ CBC)

In Scholten's view, the root of the problem is an issue his group has been lobbying about for the past 16 years — so-called "double-taxation." 

The tax rates for rental properties are essentially double what they are for homeowners. Technically, the province rebates its half of the tax bill on owner-occupied properties.

In any case, property taxes cost New Brunswick landlords about 60 per cent more than Nova Scotia landlords pay, for example.

The Higgs government announced plans last March to reduce the rates, but implementation was delayed because the pandemic worsened the province's financial situation.

The "double taxation" policy is already sending a repressive signal, said Scholten, to anyone who might consider getting into the property rental business.

That's why vacancy rates in the province's largest cities are very low, he suggested.

And low vacancy rates, he said, are the condition that allows landlords to increase their rental fees by large increments.

Big rent hikes weren't a problem, said Scholten, when vacancy rates were in the range of five to eight per cent.

The vacancy rates in October 2019 were 1.4 per cent in Fredericton, 2.2 per cent in Moncton and 3.3 per cent in Saint John, said Scholten, and they are estimated to be half a point lower than that now.

Willy Scholten, president of the Apartment Owners Association, warns rent control may make the market even worse for renters.  12:05

The province has a "major vacancy crisis," he said, which is going to get worse if population growth targets are met to deal with labour shortages.

But Scholten said implementing rent controls would be like trying to fix the problem "with a sledgehammer."

It's not clear how much taxation is actually hindering development.

The cities of Fredericton, Moncton and Dieppe all reported record values of building permits issued in 2019.

With files from Information Morning Fredericton

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