On Thursday at the provincial legislature, Service NB Minister Jill Green effectively ruled out an extension of the current temporary rent cap in New Brunswick, which had limited rent increases in 2022 to 3.8%. Instead, Green introduced a bill to add a phase-in mechanism that could be used by the Residential Tenancies Tribunal on a case by case basis. If landlords raise rents by more than the Consumer Price Index in a given year, and if a tenant formally complains to the tribunal about that increase, the tribunal would then have the power to require a ‘phase-in’ of the increase over two to three years.
“The rent cap is off the table right now,” Green told reporters after the law was introduced Thursday. But she also left open the possibility that the government could react later if needed. “Last year, if we needed to make a change quickly, we did it and we will do it again,” she said. “We will not hesitate to do more should we find there’s a bigger problem than we understand.”
In the meantime, the new system will “requires everybody to be working together,” said Green. “We need the landlords to step up. And we need the tenants to talk to us and tell us when they have a rent increase that they think is inappropriate.”
One housing researcher says requiring tenants to complain about rental increases is not reasonable, given the power dynamics between tenants and landlords. Julia Woodhall-Melnik is the Canada Research Chair in Resilient Communities, and an Associate Professor of Social Science at UNB in Saint John.
“Tenants are in a vulnerable position,” says Woodhall-Melnik. “The landlord holds the power, right? And asking the tenant to complain to a tribunal because they feel like they’ve received an unfair rent increase is putting the onus on the victim to complain.”
Woodhall-Melnik says the government could have asked landlords to apply to the Residential Tenancies Tribunal for rent increases, and have them pre-approved. ”It should never be left up to the tenants to complain,” says Woodhall-Melnik.
Green told reporters on Thursday that Service NB would make sure tenants had the help they needed. “Give my office a call,” said Green, “and we’ll help them. We have controls in place to help. We can do it by phone, you can do it in person. And there are many different avenues to help them.” Green also promised a campaign by Service NB to “make sure that people have an ability to access help.”
Green said the main reason the government decided against a rent cap was the effect some predict it may have on housing supply, saying they “have been shown not to have the desired effect.”
“You look at any article by an economist and they say rent caps don’t work,” said Green.
But that opinion is contested by Woodhall-Melnik, who says there are different types of caps and not all of them have been found to have the same effects.
“There’s three different generations of rent caps,” says Woodhall-Melnik. The first generation were complete rent freezes, and those were more likely to hinder supply, says Woodhall-Melnik, adding that sometimes they might still be necessary, depending on market conditions.
“The type of rent control we have now is a third generation rent cap, and those ones actually haven’t been shown to have impact on supply,” says Woodhall-Melnik, “because landlords are still making profit through a whole bunch of different mechanisms.”
Green called the government’s plan a “balanced approach” which she says will “encourage development and at the same time protect tenants.” But according to stats from the Canada Mortgage and Housing Corporation, New Brunswick had more new housing units at various stages of construction in early 2022 than it has had since 2002.
According to Woodhall-Melnik, the reluctance of the government to extend the cap shows they are inclined to “protect the wealthy few at the expense of the many.”
Acorn NB and the New Brunswick Coalition for Tenants Rights have been calling for an extension of the rent cap, and are planning a rally this Saturday in Fredericton to call for the protection to be made permanent. The rally starts at 1pm Saturday on the front lawn of the legislature.
