Tenants in N.B. hit with large rent increases have success fighting back

Tenants fighting large rent increases at New Brunswick's Residential Tenancies Tribunal have been scoring some important wins since rent caps ended in January. And there are lessons in the results for both renters and landlords.

According to figures released by the tribunal this week, it has so far accepted as reasonable 19 large rent hikes proposed by building owners for 2023, ordered to be phased in over multiple years for being higher than inflation.

That is potentially good and bad news for Greg Pringle.

Pringle has been a tenant in the same Germain Street apartment building in Saint John for the last 15 years. He pays $860 per month for a one bedroom, unheated unit.

Last fall, he received notice of a $50 rent increase for May 1, but two weeks ago that was retracted by his landlord and replaced with a $290 increase to take effect Oct. 1.

"It's going to make life a lot tougher, I'll tell you that," said Pringle of what would be a 33 per cent change in his rent.

Officially assessed for taxes by Service New Brunswick on Jan. 1, 2020, to be worth $251,800, Pringle's building was sold in June 2020 for $520,000. Then last September it was resold to a numbered company controlled by Halifax investors for $815,000.

That second sale burdened the property with a high debt load and also caused its tax assessment to more than double. That, in turn, forced a $7,000 increase in its property tax bill for 2023.  

'There's no empathy' 

The property management company looking after the building said Pringle's first rent increase was retracted, and replaced with one nearly six times larger, partly to cover some of the costs related to the consequences of its high purchase price.

"This was a decision made by the owner of the building," said Ben Freigang, the owner of Pink Penguin Property Management.

"From my understanding, the increase had to do with the doubling of property taxes he received for 2023 as well as the high mortgage rates, and increase on all other expenses, insurance, utilities, etc."

Pringle feels he is being asked to pay an extra $3,480 per year partly to fund real estate speculation, done at his expense, as a tenant in the building being bought and sold.

"There's no empathy for what's going on," said Pringle.

"Absentee landlords that don't live in the city or the province, all they see is, oh buildings are cheap. Let's just buy these cheap places, do a few little modifications and then jack the rent," he said.

Pringle plans to challenge the rent increase with the Residential Tenancies Tribunal, and he may find at least partial relief there.

A review by the tribunal will first determine whether the $1,150 his landlord wants to charge him is the going market rate for a one bedroom unit of that size and quality in his neighbourhood.  

Pringle suspects that it is, which would likely result in the increase requested by his landlord being approved.  

But under new regulations put in place this year, a 33 per cent rent increase, even when approved, will have to be phased in over three years in equal one third amounts.

According to Judy Désalliers, a communications officer with Service New Brunswick, those rules are clear.

"If the increase in rent is twice the consumer price index or more, the increase in rent shall be spread over three years, with one third of the increase in the first year, one third in the second year and one third in the third year," said Désalliers in an email, quoting the regulation.

For Pringle, that would lower the maximum increase he could be charged this year to one third of the $290 proposed by his landlord, or $96.67, with similar increases in 2024 and 2025.

He is hopeful that something like that can be done.

"I really don't want to pack up and leave because, you know, it's a decent apartment," said Pringle.

So far this year, according to Désalliers, 19 large rent hikes by landlords for 2023 that were challenged by tenants have been approved, but found to be more than the rate of inflation and split into multi-year increases.

The inflation rate used by the province is from the full previous year, 2022, which in New Brunswick was 7.3 per cent.   

That suggests any rent increase received by a tenant above 7.3 per cent for 2023 would have to be split up over at least two years if challenged at the tribunal.   

It also suggests any increase above 14.6 per cent, like the 15 per cent increases recently sent to tenants of Historica apartments in Saint John,  would trigger an automatic three-year phase in, if opposed by a renter.