Landlords escaping requirement to impose large rent hikes gradually

Loopholes in a rule meant to guard New Brunswick tenants against large rent increases in a single year have rendered the protection useless for many renters, especially long-term tenants, figures are beginning to show.

According to early cases finalized by the Residential Tenancies Tribunal — the New Brunswick body that governs landlord and tenant issues — more than half of tenants seeking help with large increases in 2023 have found they don't qualify to have them phased in gradually because of various exceptions and exemptions built into the policy by the province.

That is riling Liberal MLA Benoît Bourque, who spent an hour in the legislature in December asking questions about exactly how the new rule would work. None of the answers suggested some tenants would be left outside of the new system.

"It does not align with what we were told in committee," Bourque said in an interview.

"This is absolutely not what I understood."

New policy has several exceptions

The New Brunswick government announced late last year it was ending a one-year experiment capping rent increases that tenants can be charged by their landlords.  

Instead, it introduced a new system that requires large rent increases that exceed the rate of inflation to be phased in over multiple years.

"Renters have been clear to us about their concerns, and we have listened," New Brunswick Housing Minister Jill Green said in a statement issued on the day she announced rent caps would end and be replaced with a new rent-escalation protection measure.

"The amendments brought forward today will help tenants adjust to the rising cost of housing and inflation."

According to the new rule, officials working with the Residential Tenancies Tribunal have the authority to review a rent increase proposed by a landlord and, if found reasonable, to require it be implemented over two or three years if it exceeds the recent rate of inflation.

This year a rent increase of 7.3 per cent in New Brunswick is considered to be at the inflation rate, and approved or uncontested increases at or below that amount are free to be implemented in full.

However, increases higher than 7.3 per cent qualify tenants to have the change in rent phased in over two years while increases of more than double the rate of inflation, or 14.6 per cent, qualify for implementation over three years. 

In December, Green told the legislature the changes would give landlords a path to raise rents to market levels, but at a "manageable rate" for tenants that would give them an extended period "to make financial adjustments" or plan a move.

"These amendments will help tenants adjust to the rising cost of housing and inflation that is being experienced around the world," she said.

Loopholes exist to allow single-year increases

That has been the case for some tenants seeking help, but others, especially long-term renters, have been finding they are not protected by the changes, even those facing double-digit rent increases.

Preliminary records compiled by Service New Brunswick show the Residential Tenancies Tribunal has approved 16 rent increases so far in 2023 that exceed 7.3 per cent.

In more than half of those cases, landlords are being allowed to impose the increase in full this year despite their size, including one in Moncton for 55 per cent.

"Nine cases (of sixteen) that were above inflation were not phased in," Judy Désalliers, a communications officer with Service New Brunswick, said in an email to CBC News.

"Seven rent increases were approved and phased in."

I understand why the rents have to go up. I expect them to go up. But when it jumps that much. That's where my problem is.-Greg Pringle

According to the tribunal, it can disqualify a tenant facing a large rent increase from having it implemented in stages if a tenant's current rent is "well below" amounts being paid by others in similar units in the same building.

Large rent increases can also be charged all at once if a tenant has not had a rent increase in "several years" or if a unit has been substantially renovated. There is also an exception to the phase-in rule if comparable rents in similar apartments in the neighbourhood will still be "well above" the new higher amount being charged to a tenant.

'That's going to be extreme hardship'

As a group, those exemptions mostly affect tenants like Greg Pringle, who have been in their apartments for several years and who are suddenly dealing with new landlords and rapidly escalating prices for apartments in their neighbourhoods.

Pringle has been in the same Saint John one-bedroom apartment for 15 years and currently pays $860 per month, plus heat and lights. His building sold to new owners twice in the last three years and he is facing a $290 per month, or 34 per cent, rent increase in October if the tribunal does not intervene.

Pringle was feeling optimistic about the rule requiring large increases like his to be phased in over three years, but is now worried it may not apply in his case.

Turnover in his building over the last two years already has some new tenants paying substantially more than he does. If that disqualifies him from the protection of a multi-year phase-in of his rent increase, he believes he will be in danger of losing his housing.

 "That's going to be extreme hardship," said Pringle.

"I understand why the rents have to go up. I expect them to go up. But when it jumps that much. That's where my problem is."

MLA says policy not working as expected

New Brunswick's largest landlord group has not opposed the policy phasing in large rent increases to help tenants. Last week, the president of the New Brunswick Apartment Owners Association said he personally favours it.

"If you would have talked to me five years ago about having the ability in the province for somebody to tell a business what we can and cannot charge I would have said I wouldn't support it," Willy Scholten said in an interview on CBC's Information Morning in Fredericton.

"But, given the bad apples in the market and giving unreasonable increases, I think that's fair right now."

A request to interview Green about the number of tenants not being protected against large single-year rent increases by the new policy was not granted on Friday.

But Bourque said something is wrong if half or more of the cases being decided by the tribunal are finding tenants are not covered by the new protection against a large single-year increase.

"That goes against what the minister told me," said Bourque.