Tenants caught in a vice between landlord, government tax refund battle

New Brunswick tenants stung by rent increases after property taxes shot up say they are not necessarily benefiting when their landlords win tax refunds.

Property taxes were increased this year after several botched assessments by Service New Brunswick.

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"It would be nice if they would pass it back," said one Moncton tenant of M.L. Rentals Ltd. Their landlord increased rent by $25 per month to pay for a tax hike on the building. But that tax hike has now been repealed. 

The tenant asked not to be identified for fear of retaliation by their landlord, but said notices were placed in mailboxes last spring at the Sunnyside Terrace Apartments stating that rent increases were needed to pay for the sudden jump in property taxes.

These [long-term] people are already paying a lot less than the market and those are the ones that I put the rent up on. I hate doing it, but I did it.—Julien LeBlanc

There has been no further information that the increase was withdrawn and no rent reductions.

"There was a letter sent around indicating that the property taxes had been increased and the rent would subsequently be increased," said the tenant. 

"I wasn't aware of the refund."

M.L. Rentals owner awarded tax refund

Property tax records show that the 24 unit apartment complex owned by M.L. Rentals on the Shediac Road received a property tax increase of $6,807 in March after the province's new assessment system calculated a $240,000 increase in its market value.

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M.L. Rentals owner Julien LeBlanc said he notified some long-term tenants that the tax increase required a rent increase but he also launched a fight with the province over the tax bill.

Last month he won that fight.

The province acknowledged the value of his Shediac Road property had actually fallen — not increased — and he was awarded a 115 per cent ($7,870) property tax refund on the buildings, but has decided against reducing rents that funded the original tax increase.

"This rebate that I got paves the way for the next couple of years. There definitely isn't going to be any increases for a while now," he said Friday.

'I was hoping for a flood of calls'

LeBlanc said rent increases were only to long-term tenants whose rents had fallen below current market levels and were not really caused by the tax increase.

The rent increases were coming anyway, he claims. He said tenants were told increases were specifically caused by the tax hike to try and get them to join a long running fight between landlords and the province over property tax rates for apartment buildings. 

Unlike homes, apartment buildings pay two property taxes, municipal and provincial, and landlords have been campaigning for a repeal of the provincial portion for several years. LeBlanc says he thought he could get tenants to support that fight if he blamed increasing rents on property taxes.

It's still an $11,000 [tax] increase and we're looking at ever-increasing costs on the water and the sewer and electricity and insurance.—Michael Zabywalski

"I was hoping for a flood of calls to our government officials," said LeBlanc.

"Yes their rents went up $25 but they still pay $50 less than their neighbours because of their loyalty. When people move out, that's usually when I put the rents up."

"These [long-term] people are already paying a lot less than the market and those are the ones that I put the rent up on. I hate doing it, but I did it."

'OK, I'm making more'

In Fredericton, landlord Michael Zabywalski has also decided against refunding rent hikes after winning a partial refund of his tax increase.

Zabywalski sent letters to all the tenants at his 45-unit building on McKnight Street in March explaining he was being forced to raise their rents after the province hit him with a $32,600 increase in his property tax bill.

"Due to the major increase in property tax this year I am forced to increase the rent," he wrote, informing all tenants they would have to pay $30 per month more starting July 1.

That covered about half the tax increase and Zabywalski explained he would be covering the other $16,000 himself.

But Zabywalski also challenged the province, claiming the tax increase was unfair. Last month he won an acknowledgement stating his original assessment had been in error and he was credited with a $22,000 tax refund.

Because it was only a partial refund, and the building's tax bill is still $10,600 higher than it was last year, Zabywalski said he has decided to leave the rent increases in place to pay for other expenses.

"It's still an $11,000 [tax] increase and we're looking at ever-increasing costs on the water and the sewer and electricity and insurance," he said.

"OK, I'm making more, but it is more than being taken away from me on the other end."

Irene Murphy is one of Zabywalski's tenants and isn't happy with the way the property tax increase affected people like her but mostly blames the province — not her landlord.

"We're the one that's paid for their mistake," said Murphy.

Service New Brunswick has been forced to lower assessed values and taxes on more than 10,000 properties since first issuing bills last March, including those on hundreds of apartment buildings.

There is no central record of how many tenants were given rent increases because of property tax tax hikes that were later repealed.