Rent cap rollout not 'wonderful' for all tenants

The New Brunswick government may be relying on the goodwill of landlords to implement their rent cap before it's even made law, but early indications are that it may not unfold smoothly.

Gail MacDonald of Miramichi says in the wake of this week's announcement, she was told that her 43 per cent rate hike on March 1 was not covered by the cap, because her landlord notified her of the hike last year.

"He thinks that submitting that paperwork in December '21 somehow relieves him of abiding the 2022 rules," MacDonald said Friday morning. 

That's why she says she nearly lost it when she read comments by Service New Brunswick Minister Mary Wilson that "most landlords in the province are wonderful."

"I nearly jumped out of my skin when I saw that," MacDonald said.

The 3.8 per cent cap announced in Tuesday's budget is retroactive to Jan. 1, even if tenants were told of increases before the new year.

"For me, that would be an increase in the time period when we said there would be a 3.8 per cent cap," Premier Blaine Higgs said of MacDonald's case.

MacDonald had been paying $450 for her apartment, one of seven units in a building in Miramichi.

But after new owners took over the property last fall, she was given notice Dec. 31 of a $200 increase taking effect March 1. That's 43 per cent, well above the cap.

Contacted by CBC News midday on Friday, the building's manager, John Terry, said he had spoken to the province's Residential Tenancies Tribunal and now understood the increase was indeed subject to the cap.

"Hallelujah," MacDonald said when informed of his comments. "This is a relief for so many."

Terry blamed his misunderstanding on the suddenness of the province's announcement in Tuesday's budget and the lack of a single online source of information on the change.

"Nobody knew this was coming. There was no specific information or pamphlet or website," he said.

Terry said he found "bits of information" on different government web pages and in news reports, but didn't get things sorted out until he spoke to the Residential Tenancies Tribunal Friday morning.

He said staff there also had very little notice of the policy change.

"They didn't know about this before two days ago, when they made that announcement."

Liberal Leader Roger Melanson said it's another example of how the Progressive Conservatives have bungled what was supposed to be a good-news announcement of the cap.

Higgs said Friday the province will launch an advertising campaign so that landlords and tenants understand the cap.

On Wednesday, Higgs suggested the cap could be implemented by a quick regulatory change instead of a more time-consuming legislative amendment. 

Wilson said Thursday it will actually require legislation to be introduced next week, debated in May and passed into law in June.

"It's completely confusing and mind-boggling," Melanson said Friday. "Actually it's incompetence. It is really total incompetence, not understanding first of all what's happening out there — it took them two years, almost, to realize that — and how government works."

Green MLA Kevin Arseneau said the Tories missed a chance for a simpler process last year when they defeated a bill from his party that would have allowed for a rate cap.

"They weren't listening. They weren't looking forward. They were ignoring completely that there was a problem."

Even though the retroactive cap won't have legal effect until June, Terry was told by the tribunal that it was "requiring" him to deduct MacDonald's overpayment from her rent next month.

"We'll probably adjust what their April rents will be to offset whatever they would have overpaid, technically, in March," he said.

"We'll just have to make math adjustments for April's rent to bring everything back to where it's supposed to be." 

But he said the change will be harder to absorb in the long term for the company that owns the Miramichi property.

"We purchased the building based on certain metrics. … It really throws the cost and metrics into complete disarray," he said.

Terry said not all apartment building owners are major out-of-province corporations looking for big profit margins.

The Higgs government is hoping a 50 per cent cut to the property tax on apartment buildings being phased in over three years will entice developers to build more units and address the shortage of housing. 

But Terry said that cut probably won't offset the combined impact of the cap and other costs, such as the price of renovation materials being driven higher by inflation.

"I'd guess it's not going to make as much of a difference as they wish," he said. "Definitely not as much as we wish."