Year In Review: Kevin Russell Reflects On Challenges For Rental Property Owners
To cap off 2021, Huddle sat down with some of the most important figures in Atlantic Canada’s business community – folks representing everyone from tourism operators to energy producers to housing advocates.
We asked each to reflect on the challenges, successes, and surprises that most impacted their industries, and the lives of Atlantic Canadians, this year.
In the latest of several conversations we will bring you over the next week, Huddle reporter Samuel Macdonald spoke with Kevin Russell, executive director of the Investment Property Owners Association of Nova Scotia.
His answers have been edited for length and clarity.
What is the most significant challenge your industry has faced in 2021? What impact did it have?
The event that impacted us the most this year was the two percent rent cap the province extended to Dec. 31, 2023. It couldn’t happen at a worse time for the industry. We have expenses rising in the double-digits and the key (landlords) being impacted are the operating primary rental property.
There are double-digit increases in all expenses required to maintain a property. Our insurance premiums have risen an average of 35 percent, and landlords of older buildings are experiencing increases of 63 percent.
Insurance providers are demanding landlords perform repairs and major upgrades to electrical systems, in some cases coming at a cost of about $5,000 per unit. We’re seeing energy costs, on average, rising year-over-year. These are significant cost increases.
This has made smaller family-managed businesses reassess their operations and sell their properties. Others have had to cut back on building maintenance and upgrades, so they’re running in a survival strategy until they can determine the impact of this cap.
Many small-family managed providers of rental housing have portfolios of single-family home rentals. They’re obvious targets of people trying to buy a home, so a lot of those rentals will be removed from the rental housing supply and go back to homeownership and that makes a very competitive market for renters.
The two percent is not covering the cost of operation and when expenses outstrip revenues, it’s not a good situation for a business to be in.
What is the coolest thing that happened in your industry in 2021?
The most interesting thing is how the impact of government regulations has galvanized our industry. We’re seeing strong support coming from every region of the province. It’s growing our membership.
That’s a good sign of the health of the industry. It’s a sign that the rental home providers of Nova Scotia are engaged and want to remain in the business and are looking to lead the charge to get the regulations amended so it makes for a more amenable marketplace – and allows them to survive as we move into 2022.
We’re ready to tackle those roadblocks in the way of growing our businesses and the rental housing sector. We don’t only need growth; we need to be maintaining our current portfolio of rental units existing in the market today.
How do you think your industry most impacted the lives of Atlantic Canadians in 2021?
When a government implements a rent control program, it’s first followed by small rental providers exiting the industry, reducing the affordable rental housing supply. This is at a time when the government wants more rental supply in the market. The impact is going to be wide and felt across the province.
In new units, we’re growing (at a rate of) 2,500 new units a year. The market is growing but it’s not growing fast enough to meet demand. It’s no secret that Nova Scotia’s population is growing. We need more workers with trades to do these construction projects coming onstream, but the costs are rising in tandem with everything else.
What do you think needs to be done to rectify Nova Scotia’s housing problems?
There needs to be industry consultation. So far, it’s been lacking. We always step up when we’re asked. If you go back, we always step up to resolve housing issues. We stepped up when Syrian refugees arrived in Halifax, we provided homes for almost all of them.
When Covid-19 arrived in March 2020, we led the country in self-mediated rental repayment plans, providing relief to thousands of renters.
During the first year of Covid, most of our landlords went without rent increases. We want to help and want to be at the table – and hope that in 2022, the government brings us to the table. This is a complex issue and we want to resolve this as much as anybody.
Every day this goes on that it’s not resolved, there’s another person going homeless. What’s needed is to increase the inventory and supply and this issue is impacting a lot of Nova Scotians – and we’re here to help.
Other feature interviews in this series:
- Monette Pasher On How Covid Forever Changed Atlantic Canada’s Airline Industry
- Kathryn Lockhart On A New Crop Of Founders Shaking Up Atlantic Canada’s Startup Ecosystem
- Fredericton Chamber CEO Krista Ross On Supporting Businesses Through Tough Times
- Mayor Mike Savage On Managing Growth In Halifax