The provincial government is extending the cap on rent hikes to the end of 2025 and increasing the amount landlords can raise rent to 5%.
Colton LeBlanc, the minister responsible for Service Nova Scotia and the Residential Tenancies Act, introduced amendments to the Interim Residential Rental Increase Cap Act on Wednesday.
The current rent cap of 2% expires at the end of 2023. The former Liberal government imposed the cap during the COVID-19 pandemic, and Premier Tim Houston’s PC government extended it. Last month, LeBlanc told reporters “all options are on the table” with regard to the rent cap.
The new amendments extend the cap to Dec. 31, 2025. The province said it “intends” to set the new maximum hike at 5% through regulations as of Jan. 1, 2024. That means landlords would be able to increase rents by 5% on Jan. 1, 2024, and again on Jan. 1, 2025, or whenever leases renew.
The cap applies to the renewal of periodic and fixed-term leases.
Fixed-term lease loophole left open
But the new legislation doesn’t close the loophole allowing landlords to circumvent the rent cap. The Residential Tenancies Act allows landlords to unilaterally remove tenants at the end of a fixed-term lease and increase rent on their unit beyond the cap.
As the Halifax Examiner reported last week, one landlord is using fixed-term leases to increase rents up to 46%.
LeBlanc told reporters on Wednesday he thinks the abuse of fixed-term leases stems from the 2% cap.
“I am hopeful a 5% rent cap will alleviate some of these challenges. We continue to support the intended use of fixed-term leases in this province,” LeBlanc said.
LeBlanc said the Houston government does not support permanent rent control, and these are interim measures.
Halifax-Chebucto NDP MLA Gary Burrill said he was disappointed the government’s amendment to the rent cap did nothing to address the fixed-term lease issue.
“We need permanent rent control because it plugs the fixed-term lease loophole,” Burrill told reporters.
“Unless the government plugs this loophole, any extension of the rent cap is not going to be effective. Any journalist that talks to people looking for an apartment will quickly discover nine out 10 are only being offered fixed-term leases.”
Joanne Hussey is a community legal worker with Dalhousie Legal Aid. She said most leases being offered to Dalhousie students, for example, are fixed-term leases.
Hussey still celebrated the extension of the rent cap as a win for tenants.
“This amendment is a positive step and some of the credit has to go to some the 310,000 tenants in the province who have signed petitions and written to their MLAs and that’s significant, considering how well-funded this [landlord] lobby has been,” Hussey said.
“It’s not exactly what we would like to see but it’s not as bad as what we were afraid could happen.”
Landlords disappointed rent cap will stay
Peter Polley of Polycorp Properties Inc. owns or manages 500 rental units in HRM and the Annapolis Valley. He told reporters he was disappointed the rent cap wasn’t lifted entirely.
“I think this amendment is too little, too late. If you add together the 2% increase over the last two years plus 5% going forward, that would be less than half the broad-based inflation level,” Polley said.
“And that’s a fraction of what’s happening with our property taxes that are skyrocketing, insurance costs, water bills and everybody knows about electricity rates. Things are falling further and further behind and this is not good for rental housing providers around the province.”
Polley said the solution to the housing crisis is more supply.
“Rent control has been studied to death and hasn’t worked anywhere in the world,” he said.
Amanda Knight is a landlord and property manager in northern Nova Scotia, with about 24 units in Colchester, Pictou, and Antigonish counties and CBRM. She said being permitted to increase rents by 5% isn’t enough. She talked about “exponential increases in the cost of oil and other building expenses.”
“Today’s decision to extend the rent cap leaves me considering selling our properties and I have already had to sell one building,” Knight said.
“I have talked to other rural property owners who are also thinking about getting out of the rental housing business.”
LeBlanc’s bill passed first reading at the house on Wednesday. Later in the session, it will go through second reading, law amendments committee, and then third reading before becoming law.