New Brunswick

Rising rents and 'economic evictions' spur housing group to buy a Saint John apartment building

A Saint John housing group has jumped into the city's red hot market for apartment buildings to preserve some lower cost units for renters but warns more has to be done by government to protect tenants and keep neighbourhoods affordable for all groups.

Non-profit group concerned high rent costs are pushing people out of their own neighbourhoods

This 12-unit building on Lauder Court in Saint John is assessed to be worth $503,800 by the province. However, the non-profit group Rehabitat Inc. had to pay $780,000 to compete with private buyers. (Google Earth)

A Saint John housing group has jumped into the city's red hot market for apartment buildings to preserve some lower- cost units for renters.

But Rehabitat Inc. warns more has to be done by government to protect tenants and keep neighbourhoods affordable for all groups.

"Diversity is absolutely essential to a healthy community," said Kit Hickey, executive director of Rehabitat.

"There is room for all of us."

Rehabitat, a private non-profit organization, owns and manages affordable housing units in Saint John.

Kit Hickey, executive director of Rehabitat, said the local non-profit housing group jumped into Saint John's sizzling housing market last month to buy an apartment building it can rent at below-market rates. (CBC)

Two weeks ago the organization responded to an apartment building buying spree underway in the city by both local and national investors by stepping into the market itself and snapping up a 12-unit building in the Saint John neighbourhood of Millidgeville.

Group pays 54% above property's assessed value

The group had to pay $780,000 for the building on Lauder Court to compete with prices private buyers have been paying, 54 per cent above the property's assessed value.

But Hickey said it had to be done.

"We thought that it was important that we do our absolute best to acquire the building," said Hickey   

"We've become increasingly concerned about the lack of affordable housing for the modest income population. We, as others have seen in the recent headlines, [see] properties being purchased, renovated and the rents increasing exponentially."  

Vancouver investors bought two five-unit apartment buildings on Sherbrooke Street in Saint John in October for $470,000. The investors gave notice to tenants in one building, right, to vacate by the end of January to accommodate renovations. (Robert Jones/CBC)

Properties have been in high demand all over New Brunswick this year and that has been driving up prices, especially since late spring.   

According to provincial government tax records $1.28 billion worth of real-estate sold in the province in July, August and September this year.

That's $250 million more than the same three months last year and 36 per cent above what the province had been projecting.

Investors buying across Canada

Included in that shopping frenzy were more than 100 apartment buildings purchased by investors from across the country. Often prices that buyers paid were substantially above "market value," as set by provincial government property assessors.

That has not been a problem for some tenants who have experienced a seamless change in ownership so far.

But others haven't been so lucky.

Skyrocketing rent and nowhere to turn

1 year ago
Duration 1:48
When William Morissette's two-bedroom basement apartment went from $740 a month all inclusive to $1,200 plus heat, he realized too late there was nothing he could do but pay or move. 1:48

Earlier this fall, Moncton's William Morissette was given notice of a 61 per cent rent hike at his apartment.

He received a letter on Oct. 1 letting him know his rent would be going up by $460 a month starting Jan. 1.

William Morissette shows the notice he received of a 62 per cent rent hike after his Moncton apartment building was sold to a Montreal company in August. He and his family could not afford the increase and moved. (Guy Leblanc/CBC)

Others, like tenants at 332 Sherbrooke St. in Saint John, were given notice to vacate by new owners by the end of January so renovations on their apartments could be carried out and ultimately rents increased.

Province wants to prevent 'ripple' in economy 

The province has expressed concern about landlords forcing renters to move out during the current surge in COVID-19 cases in southern New Brunswick but has been reluctant to ban the practice and disturb the flow of investment.

Quebec investors paid $760,000 for 10 apartments in these two buildings on Mill Road in Moncton last month, as income properties in New Brunswick continue to attract the interest buyers. The price was 56% above the properties' assessed value. (Google Earth)

"We want to make sure we don't cause any ripple within the economy or within the whole housing market," Social Development Minister Bruce Fitch said last week about why the province would not temporarily ban the eviction of tenants during the pandemic.

All three opposition parties have been pushing against that position.

But Hickey believes much more effort is needed on the larger problem of maintaining affordable housing in neighbourhoods, where real-estate prices and rents have been escalating 

The province has asked landlords not to put tenants out of their apartments during the surge in COVID-19 in southern New Brunswick but won't ban the practice. Social Development Minister Bruce Fitch said the province doesn't want to cause a 'ripple' in the economy. (CBC)

"Many families are facing economic evictions," said Hickey.  

She said new housing units coming on the market are priced well-above the affordability range for modest income individuals or families.

"The options are very limited for modest income households."

ABOUT THE AUTHOR

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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