Neither landlords nor housing advocates are happy with P.E.I.'s newly announced rental cap for 2024.
Next year, landlords can raise rents for housing units by a maximum of three per cent without having to go through the Island Regulatory and Appeals Commission, as long as they give tenants three months notice.
Landlords can then apply for another three per cent increase, so some Islanders may end up paying six per cent more for rent in 2024 than they did this year.
Rosalind Waters with the P.E.I. Fight for Affordable Housing says that kind of rent increase will leave struggling Islanders in an even more desperate situation.
The province's Director of Residential Tenancy calculated the maximum increase based on last year's inflation rate as well as submissions from the public. Waters said that means the cost of inflation is being passed down entirely onto tenants.
"The landlords' increased costs are passed through into tenants' rent with no consideration of the tenants' ability to pay," Waters said.
Rosalind Waters with P.E.I. Fight for Affordable Housing says another rent raise will leave struggling Islanders even worse off. (CBC)
"It's a bit of a recipe for social unraveling, I think, on Prince Edward Island. It's dumping the cost of inflation onto those who are least able to absorb it."
The increase is the first since P.E.I.'s Residential Tenancy Act came into effect earlier this year.
The King government set the maximum allowable rent increase for 2023 to zero after IRAC said the commission would have allowed rents to go up by as much as 10.8 per cent given its past formula. However, landlords could still increase peoples' rent if they applied to IRAC for an exemption and the commission approved it.
Landlords' association hails 'a step forward'
A group that represents Island landlords said the three per cent increase is a step in the right direction, but falls short from the 6.1 per cent figure that IRAC calculated as reflecting their increased costs based on inflation.
The six per cent maximum rent increase that can be awarded to a landlord who applies successfully to IRAC, "my understanding is it's case by case. So it's not automatic by no means," said June Ellis, executive director of the Residential Rental Association of P.E.I.
The Residential Rental Association of P.E.I. is asking for the ability to increase rents after a tenant leaves a rented house or apartment — something the Residential Tenancy Act currently restricts. (CBC)
"Yes, [tenants] would end up having some of the cost. But they also got to take into consideration there's repair works, there's upgrades that have to be done. There could be no appliances, new flooring.... They're not paying for the whole thing."
Ellis said the association is working with the government to try to make the new system work for property owners while also helping tackle the housing crisis.
Some of those rentals, of course, just aren't sustainable. — June Ellis, Residential Rental Association of P.E.I.
One of the things landlords are asking for, she said, is the ability to increase rents after a tenant leaves the unit but before a new one moves in — something the Residential Tenancy Act currently restricts.
"We really need the fair market value for when a new tenant is coming in," she said. "We have some tenants that have been in rentals, for example, for 30 years and the landlords haven't kept pace with the increasing [costs]… Some of those rentals, of course, just aren't sustainable."
Green MLA Karla Bernard said the new legislation alone won't be able to keep rents affordable. (CBC)
The Green Party fought to have a permanent rent cap included in the Residential Tenancy Act. But on Tuesday, Green MLA Karla Bernard said that alone wouldn't be able to keep rents affordable.
Bernard said the government should be focusing on incentives that encourage developers to build new units, while keeping rents low.
"It seems like we're kind of back and forth with solutions: a solution that better supports landlords, and then a solution that better supports tenants," she said. "It would be nice if we could come to a place where we would find support for both tenants and landlords."
Group asks for another rent freeze
Waters said the new legislation doesn't change the factors that are looked at when reviewing applications for rent increases above the three per cent cap.
We have no reason to believe that landlords would apply for smaller increases than they're applying for. — Rosalind Waters, P.E.I. Fight for Affordable Housing
"We can continue to expect the 20, 30 per cent increases to be approved, although only three per cent can be added to the guideline each year. The full 20 or 30 per cent increase can be approved and can be phased in over time," she said.
"We have no reason to believe that landlords would apply for smaller increases than they're applying for."
She said tenants are anxious and feeling the squeeze already, so the government should continue freezing rents for another year.
"The phasing in will help some tenants, but it's maybe small comfort that they may be experiencing a large increases for three or four years into the future."