Paying more for a roof over your head
Despite freeze on rent increases, more than 1,200 tenants could see hikes
Despite a legal change aimed at freezing most tenant rents in 2023, more than 300 tenants have received notice of rent increases this year following decisions by the province's rental office.
The Island Regulatory and Appeals Commission (IRAC), which oversees the province's rental office, has confirmed 28 landlords have been granted what is known as a greaterthan-allowable rent increases this year, affecting 307 rental units.
Of these, 131 tenants have been issued rent increases of between zero and five per cent. Seventy-eight tenants have been issued rent increases of between five and 10 per cent, while 66 tenants have been issued increases of between 10 and 20 per cent.
Another 30 tenants received increases of more than 30 per cent.
Hundreds more could see rent increases. As of April
12, IRAC has confirmed 126 more landlords have submitted applications for greater than allowable rent increases that have yet to be heard by the commission. This represents close to 1,200 apartment units in the province, on top of the 307 units that have already been granted an increase.
Decisions on these 1,200 applications have not yet been rendered by the IRAC rental office.
There are 7,327 private apartment units in the province, according to the Canada Mortgage and Housing Corporation.
RENT INCREASES WERE SET TO ZERO
Last November, P.E.I. lawmakers voted to quash an order by IRAC allowing up to a 5.2 per cent rent increases for unheated apartments and 10.8 per cent increases for those in which heat was included in the rent. The bill, introduced by Social Development and Housing Minister Matt MacKay, who was still serving in that role at the time this article was written, set the rent control amount in the province to zero per cent, effectively freezing rents at their 2022 levels.
But under the province's tenancy law, landlords can apply to increase rent above the rent control amounts, provided they meet some conditions, such as demonstrating that operating or capital costs have increased.
In an interview on April
12, MacKay confirmed a large number of landlords have applied for greater than allowable rent increases despite the 2023 freeze.
"The whole goal was, if a landlord is losing money, to allow them for the greater than allowable (rent increase)," MacKay said of the bill he introduced in the legislature last fall, which set rent control amounts to zero per cent for 2023.
MacKay said a government program, introduced in January, also allowed landlords to access relief on their property taxes. He said 1,300 landlords have applied for this program, which he said disqualified them from applying for greater than allowable rent increases.
In an email, IRAC spokesperson Jaclynne Hamel said MacKay and his staff “would be well aware” of the factors considered by rental office staff in adjudicating rent increase applications.
“Landlords must justify the increase they are seeking by demonstrating an increase in actual costs, expenditures and revenue," Hamel wrote in an email.
"Year-over-year inflation is not a factor included in the act or regulations.”
NEW ACT TO CAP HIKES
A new Residential Tenancy Act, passed by the legislature last fall, would cap greater than allowable increases granted by IRAC's rental office at three per cent per year.
The new act, which overhauled tenancy law in the province, was proclaimed on April 8.
But for most of the tenants facing rent increases, this cap will not likely apply. Because their landlord applied for rent increases before April 8, their cases will be adjudicated under the previous act – the Rental of Residential Property Act. This does not place a cap on greater than allowable rent increases.
MacKay said changes were made to regulations of the previous Act on March 4, removing the ability of landlords to claim payments on the principal as operating expenses that could justify rent increases.
He acknowledged the recent provincial election slowed down the proclamation of the new act.
"We couldn't do it during the election because we didn't have cabinet, I guess," he said.
"As soon as the election was over, it was done and ready to go."
RRAP RESPONDS
An organization representing landlords, the Residential Rental Association of P.E.I., had warned in January that the rent increase freeze would mean higher rents for tenants.
Chris LeClair, a representative of RRAP, said apartment owners faced escalating home heating, mortgage and interest costs throughout 2022.
He said the legislature's vote to overrule allowable rent increases set by IRAC last September amounted to a “unilateral” decision.
"At the end of the day, people renting properties are operating businesses. And these businesses have faced enormous costs,” LeClair said.
LeClair said he and his members had attempted to meet with MacKay since late fall.
“He would not meet with us. He would not respond,” LeClair said.