Landlords and tenants alike raise concerns about extension of N.S. rent cap

For six years, Robyn McIntosh has signed fixed-term leases with the owner of her north-end Halifax building. The leases would be renewed each year with "reasonable" rent increases in a process that she said worked well.

And then it didn't.

At a legislative committee meeting on Monday, McIntosh told MLAs that without any explanation, her lease is not being renewed and she will be out of her building in August.

"My small, 600-square-foot one-bedroom apartment is moving from $1,248 a month to $2,195 come September," she told MLAs.

"This increase of $947 a month was made specifically to avoid the rent cap and I, along with other people in my building, are being forced to leave our homes at the end of the summer."

Concerns about fixed-term leases

McIntosh, who declined to identify where she lives, was one of 10 presenters speaking about Bill 262, legislation that will continue the province's temporary rental cap until the end of 2025.

The rent cap was introduced by the former Liberal government at the height of the COVID-19 pandemic, when public health restrictions meant many people were unable to work.

Beginning in January, the Tory government will increase the cap to five per cent from the current rate of two per cent.

But McIntosh and other presenters said that the rent cap can only be successful if the government addresses the fact that it does not apply to fixed-term leases. Increasingly, some presenters said, landlords are using fixed-term leases to raise rents well beyond what the rent cap permits.

Katie Cheslock, one of five students who founded the Dalhousie Mutual Aid Organization, told committee members that the vast majority of the student community she knows is dealing with fixed-term leases, which leaves them unable to budget with any kind of certainty from one year to the next.

"From my own personal experience, I can share that when looking for a lease I have never once been offered anything other than a fixed-term lease," the third-year student told MLAs.

"I know that that's not a unique experience."

Costs outstrip cap

The use of the leases is pervasive and forces students into situations where rental rates are driven higher and higher, Cheslock and other members of her group said.

If the lack of rules around fixed-term leases is troubling for renters, property owners and the people who represent them told MLAs that the continuation of the rent cap is creating a hardship that is forcing many property owners to sell.

Kevin Russell, executive director of the Investment Property Owners Association of Nova Scotia, said that defeats the purpose of the rent cap — because a new owner could raise rents higher.

If there's going to be a cap, Russell said it should have flexibility to reflect the fact that older homes cost more to maintain, or there should be an application process for property owners who need to do critical maintenance work.

It's also problematic that the cap is not targeted to tenants in need, he said.

"The two per cent rent cap on a $700 a month unit is the same one that's applied on a $6,000 a month unit on the Halifax waterfront."

Ursula Prossigger manages 500 residential units in the Metro Halifax area for various families, including her own, through Urchin Property Management.

She said the past two years of the rent cap and the prospect of it being extended "has particularly devastating consequences on smaller landlords."

"While any increase to the current cap of two per cent is better than nothing at all, inflation is driving increased costs for landlords and we are also subjected to higher interest rates," she said.

Limits of the Residential Tenancies Act

Property taxes, utility rates and maintenance costs are all greater than the revenue landlords can bring in while the rent cap is in place, she said.

"By restricting the property owner's ability to recover costs, the government is effectively forcing the private sector to subsidize the difference to make itself look good to voters."

Tammy Wohler, a lawyer who represents low-income tenants, said the best answer to the housing crisis the province faces is to ensure people are able to stay in their homes.

Doing that means putting defined rules on how and when fixed-term leases can be used to make clear that they "are not intended to oust an existing tenant's security of tenure," she said.

Wohler said it also means addressing the fact the Residential Tenancies Act and program has limited ability to assess what is fair when it comes to rental increases.