P.E.I. rents see biggest increase in a decade
‘Their approach to building affordable units isn’t working’
The cost of renting spiked on P.E.I. last year, according to a report from the Canada Mortgage and Housing Corporation (CMHC), and the Opposition Green Party says it's time for the government to reconsider its housing strategy.
The average rent, including apartments and townhouses, rose to $1,017 in 2021, an increase of 8.1 per cent.
'The rent increases, we've known about them for a long time but they are nonetheless shocking," said Green housing critic Karla Bernard.
"When we look at that report and we consider government action, you know, there's a huge gap there."
The increase is easily the largest in the last decade, and follows a 4.6 per cent increase in 2020. Increases in other years in the last decade were typically one to three per cent.
The cost was up despite the addition of about 120 of what the provincial government described as subsidized units. Overall the province added 520 apartments over those available in 2020, an increase of 7.9 per cent. And yet the vacancy rate still fell, from 2.6 per cent to 1.5 per cent.
The problem, said Bernard, is that building in the province is not keeping up with its growing population.
P.E.I. reported 2.8 per cent growth from October 2020 to October 2021. That led the country, and the province said it was the largest annual increase on record.
Government should be looking at adding to its own stock of rental units, said Bernard, ideally by quickly picking up some of the province's more rundown apartments and refurbishing them.
Lower rent apartments still available, says landlords' group
Islanders should be careful interpreting the CMHC report, said Cecil Villard, executive director of the Residential Rental Association of P.E.I., a group representing Island landlords.
The report does not mean the average tenant on P.E.I. experienced an eight per cent increase in rent. Rents are controlled on P.E.I., and legally landlords could not put rents up more than 1.3 per cent in 2021.
Most of the increase in 2021 came as the result of expensive new apartments becoming available, said Villard.
"Those new units were high-end units and the rents for those units would have been quite a bit higher than what would have been considered the average rent on P.E.I.," he said.
He estimated the price of these new apartments at about $2,000 per month, while the average price for a two-bedroom was $1,055.
"There's obviously a market for it because people are renting them," said Villard.
Another factor has been the increased cost of building in the last couple of years, he said, both for materials and labour, requiring higher rents to recoup investments. That's been frustrating for developers as well, said Villard.
Housing Minister Brad Trivers, in a statement to CBC News, supported this view.
"We have seen pressure in the construction and rental markets, creating pressure on price," said Trivers.
"Provinces and territories across the country also have similar challenges."
Government strategy may be part of the problem
Whatever the reason for the increase, said Bernard, it is clear that the province needs to create more affordable housing than it has been.
The province's two-pronged approach to rental housing — providing rental vouchers to those in need and subsidizing the building of affordable units — isn't working, she said.
"While they've made significant investments in mobile rental vouchers, rent supplements, they've done nothing to increase the actual capacity," she said.
And what's worse, she added, is those vouchers provided to tenants may be actually boosting the amount of rent landlords can get for apartments.
'Things are getting worse'
Connor Kelly, tenant network co-ordinator for P.E.I. Fight for Affordable Housing, said the report did not make good reading.
"All the CMHC report really tells me is things are getting worse and nobody is really committing to doing something that actually will solve the problem," he said.
As an example of how government strategies aren't working, Kelly talked in particular about Ironwood Estates in Charlottetown.
In July, the federal government provided a $19.2 million loan for the development through CMHC's Rental Construction Financing initiative. Ninety units were designated as affordable, with rents starting at $1,385. That designation is based on being less than 30 per cent the median income in Charlottetown. The developer said the rent was about 20 per cent below the market rate.
It is also 36 per cent higher than the average rent for an apartment in Charlottetown.
"Their approach to building affordable units isn't working," said Kelly.
Rather than basing the definition of affordable on median income, he said, it should be based on minimum wage.
"When you're talking about affordability it should be a conversation that starts from the very bottom," said Kelly.
"Otherwise you're immediately cutting out a huge chunk of people."
Kelly agrees with Bernard that funding of public housing would be a better approach, and in his statement Trivers referred to more government housing coming.
"We remain committed to adding additional social housing and affordable housing by increasing government owned inventory, supporting community organizations with their builds, working with the private sector to add affordable units within their inventory," he said.
Some data not available
Information that could have clarified the increase in rent on previously existing apartments was missing from this year's report for P.E.I.
CMHC's reports include a section that calculates average rents including only units that were counted in the current and previous year. For example, in 2020 it shows that rents for existing units were up 2.8 per cent in Charlottetown, while rents overall were up 4.7 per cent.
But this year that information was not included. CMHC said it did not gather enough data to ensure its accuracy.
It cited a number of reasons, including being unable to contact landlords, unable to locate them and refusals to respond.
The agency said it plans to devote more resources to getting a more complete picture this year, but noted responding to the rental market survey is not mandatory.