Hey Landlords,
Landlords in Nova Scotia received some news that will work well for both tenants and landlords. The rent cap has been extended to the end of 2025, it has been increased from 2.5% – 5% per year. New leases will be signed at market rent.
Lots of news articles on the topic have been written in the past week.
Here are some excerpts and links.
The Nova Scotia government is extending the cap on rent increases until the end of 2025, but raising the cap from two per cent to five per cent beginning next year.
Service Nova Scotia and Internal Services Minister Colton LeBlanc introduced the legislation on Wednesday. During a briefing, he said the move is a recognition that renters are struggling financially while also nodding to the challenges some landlords face with the cost of maintaining their properties.
“We chose five per cent to allow landlords to catch up to inflation, while avoiding any large rent increases for tenants,” he said.
LeBlanc noted that when the former Liberal government introduced the rent cap, it was at the height of the COVID-19 pandemic and at a time when many people were unable to work due to public health measures.
“Two per cent today doesn’t work.”
The goal, said LeBlanc, is to balance the rights and needs of tenants and landlords in the province until enough new housing stock can be added to the market. The government estimates about a third of Nova Scotians are renters and the province has about 6,000 landlords.
Inflation raises landlord’s costs
Polley’s company, Polycorp Properties Inc., manages 500 units in the Halifax area and Annapolis Valley. He said the limits on rent increases mean landlords can’t keep up with higher costs from inflation.
Polley sees little change ahead until more housing is available.
“It’s not good for anybody, but to the degree that the government is limiting what’s happening in the rental market, it’s long-term negative for the housing industry.”
Landlord Amanda Knight said she wanted to see some recognition by the government of the different challenges rural landlords experience.
Knight said her leases include the cost of utilities and their rising cost, combined with the rent cap, has her contemplating selling units.
“As anyone knows in the province and across the country, utilities have gone up exponentially and when they’re included in rent, I’m basically paying for them,” she told reporters.
Fixed-term leases ignored
Joanne Hussey, a community legal worker with Dalhousie Legal Aid, said she was relieved to see the government extend the rent cap and listen to the concerns renters have expressed through protests, petitions and calls to MLAs.
But Hussey said she was disappointed the government is not taking steps to limit the use of fixed-term leases. Many renters have reported landlords making the switch to fixed-term leases because they are not subject to the rent cap.
That, in turn, is increasing demand for affordable units that were already scarce, she said.
“We’re actually seeing increasing pressure on that affordable housing stock from people who are middle-income earners because we know that it is just disappearing so quickly.”
LeBlanc said “it’s fair to acknowledge” that some landlords are using fixed-term leases for unintended uses, but he said he did not want to “create another problem by addressing one problem.”
There is a role for fixed-term leases when used appropriately, said LeBlanc. He said he hopes increasing the rent cap to five per cent will reduce instances of landlords using fixed-term leases to get around it.
This article was written by CBC reporter Michael Gorman – he can be contacted for story ideas @ michael.gorman@cbc.ca
Tenants Hail N.S. Rent Cap Extension, While Landlords Flail
This article was written by MONTAGUE, DEREK of Huddle
HALIFAX — Tenants in Nova Scotia will continue to be protected by a rent cap for at least another two years. On March 22, The provincial government announced it was extending the cap until the end of 2025. But there is an important change happening next year.
Starting January 1, 2024, the cap will increase from two per cent to five per cent per year. The two percent marker has been in place since November of 2020, originally as an emergency measure during the Covid-19 pandemic.
The cap protects long-term tenants who are renewing their annual lease, or a fixed-term tenant signing a new agreement for the same unit. It does not apply to new tenants moving into a unit for the first time.
According to the provincial government, one in three Nova Scotians are renters.
In a press release, Colton Leblanc, Minister of Service Nova Scotia and Internal Services, said by keeping the cap in place, and by raising it to five per cent, the government struck a balance for landlords and tenants.
“Nova Scotians are facing challenging financial times, and that factors greatly in every decision we make,” said Leblanc. “We are always working to balance the rights and needs of tenants and landlords. Extending the rent cap by two years will protect renters while adjusting the amount rent can increase will support landlords.”
Kevin Russell, the director of IPOANS, which is a provincial organization representing landlords, disagrees with Leblanc. He said the extension of the rent cap marks an imbalance that doesn’t favour landlords.
Russell says since 2020, landlords have faced two-digit increases in insurance, energy, and other ongoing expenses. He argues a five per cent cap won’t cover the inflation felt by these property owners.
“This does nothing for the smaller landlords who have been under a rent cap since 2020,” Russell told Huddle. “The fact of the matter is, the smaller landlords are well under market rents, and the rent increases under 5 per cent, are not going to cover the expenses. So they’re falling further and further behind.
“At the end of the day, this is just going to result in more landlords, smaller landlords, most commonly called Mom and Pop landlords, to exit the business, because it does not make economic sense for them to remain in the industry.”
ACORN, the prominent tenants’ rights organization, applauded the decision to keep a cap in place. But the organization is still looking for more protections, such as a ban on renovictions and fixed-term leases. Renovictions were banned for a time during the pandemic but the ban was lifted a year ago. The government did introduce new rules around compensation for people displaced by renovictions, however.
Pat Donovan, the co-chair for Spryfield ACORN, called the rent cap extension a victory.
“It gives us two years to contemplate it, to continue working with the government, and hopefully get (permanent) rent cap, which is what we want,” Donovan told Huddle.
“I have no problem with (raising the cap to five percent) at the moment. Hopefully down the road we can get it lowered a little bit. But for right now, it is a good victory.”
Derek Montague is a Huddle reporter in Halifax. Send him your feedback and story ideas: montagued@huddle.today.
Province leaves rent cap loophole open for landlords Plus Nova Scotia’s 2% limit on rent increases is going up to 5% next year.
By Matt Stickland – The Coast
In a press conference Wednesday about proposed legislative changes, Colton LeBlanc, the provincial cabinet minister responsible for the Residential Tenancies Act, said his government will extend Nova Scotia’s current rent cap through the end of 2025, and raise the cap on rent increases from 2% to 5% starting Jan. 1, 2024. When asked about landlords exploiting fixed-term leases to get around the rent cap, LeBlanc told the gathered reporters that the extra 3% landlords could charge starting in January should fix the fixed-term loophole. The problem, according to LeBlanc, was that the cap was too low.
Read more at: https://www.thecoast.ca/news-opinion/province-leaves-rent-cap-loophole-open-for-landlords-30472929
However, if a landlord wants to make as much money as possible on a rental unit, they are still able to sign a fixed-term lease with a tenant, and then jack up the rent on the next person who rents that unit—even if that’s the current tenant. When The Coast reported this on Oct. 17, 2022 a residential property manager told The Coast: “Due to changes in the Tenancy Act, the industry has moved away from month-to-month leases and moved to fixed term so that both tenants and owners are on equal footing in regards to the terms and options of the lease.” Did you catch that? The appeal of fixed-term leases isn’t money, it’s power. A fixed-term lease in Nova Scotia has a lot of benefits for a landlord. Not only do fixed-term leases allow landlords to circumvent the rent cap, but it means tenants have no legal right to stay in a unit at the end of a lease. Periodic leases, the ones that typically last for a year and then roll over into month-by-month, provide tenants with legal protection under the Residential Tenancy Act. Fixed-term leases have no such tenant protections. So on top of fixed-term leases allowing landlords to bypass the rent cap, it also means landlords are less likely to have a prolonged legal battle with a tenant they are trying to evict. Essentially the problem with this legislation is the complete lack of incentive for landlords to stop using fixed-term leases and adhere to the rent cap. Can you imagine a military operation being planned assuming the enemy would just voluntarily not exploit a glaring, publicly known critical weakness? This is the legislative equivalent of that type of naive planning. LeBlanc told reporters fixed-term leases have a role when used appropriately, and that he hopes increasing the rent cap to 5% will stop landlords from exploiting the loophole his government left open, which will continue to allow landlords to use fixed-term leases with little to no consequence. The good news for residents of Halifax is that unlike provincial ministers, the city’s director of housing and homelessness, Max Chauvin, lives in the real world. And he warned council that if the province gets rid of the rent cap, a COVID policy which had been due to expire at the end of 2023, the city would have to figure out how refugee camps work. Today’s announcement doesn’t eliminate the rent cap until 2026, but it also does nothing to make landlords adhere to it. We should start planning for refugee camps.
Read more at: https://www.thecoast.ca/news-opinion/province-leaves-rent-cap-loophole-open-for-landlords-30472929
Until next time,
Design your landlord experience,
Michael P Currie
Landlord by Design
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