Wellington tenants' rent spikes by up to 34% after they lose IRAC appeal

A number of tenants in Wellington, P.E.I., will be paying a couple of hundred dollars a month extra after losing their fight against a rent hike.

They had appealed a decision by the Island Regulatory and Appeals Commission that allowed the property owner to increase rents by between 30 and 34 per cent this year.

The commission heard the appeal against its own decision, and has ruled once again that the rent hike is justified.

That means the tenants' rent has gone from $760 a month to just over $1,000.

"I was very angry — not for myself, but for some of the people that are going to have a hard time to pay that rent," said tenant Earle Arsenault.

"They could've done this over time, progressively."

Under P.E.I.'s new Residential Tenancy Act, the maximum rent hike permitted in any year is just six per cent.

But while the new law was approved by the legislature back in the fall, it didn't take effect until April, after the provincial election.

To add another 260-something dollars onto your rent, besides all the other increases you've had in the last two years, it gets to be a burden.— Marcel Arsenault

In the months before the law was due to take effect, dozens of property owners applied to IRAC for much larger increases.

The owners in the Wellington case, Arsenault Pondside Inc., were approved for hikes of between 30 and 34 per cent.

Six tenants, including Marcel Arsenault, appealed.

"To add another 260-something dollars onto your rent, besides all the other increases you've had in the last two years, it gets to be a burden," he said.

Negative return 'not sustainable'

But IRAC said its original decision stands, saying in its written decision that without the increase, the landlord will be investing more in the units than it gets in rents. 

"A negative return on investment is not sustainable as it would discourage continued investment in residential rental housing and further exacerbate the housing crisis on Prince Edward Island," IRAC wrote.

The property owners didn't respond to interview requests from CBC News.

But tenant Karl Proude, who was not part of the group appealing the ruling, said IRAC made the right call.

He said the owners raised rent by just $60 total over the past decade, and having to pay a few hundred dollars more now is reasonable.

Not only would they lose money, but I think we'd be losing landlords.— Karl Proude

"Not only would they lose money [by freezing the rents], but I think we'd be losing landlords," he said. "I truly believe they would've sold these.... Where do you go for this kind of money? You show me anything any better, and I might get myself a U-Haul."  

The tenants who appealed the IRAC decision maintained that imposing such a big jump all at once isn't fair, especially for the many seniors on fixed income who occupy the units involved. They argued that the landlord is still building plenty of equity in the property.

Also, they said the provincial government should have brought in the new rental laws earlier, before landlords had a chance to get in ahead of them.  

CBC News reached out to the government for comment on Wednesday, but did not hear back.