Value of Average Halifax Apartment Unit Now $134,000
HALIFAX–If you are a landlord in Halifax, there’s a good chance you’ve been paying a lot more in taxes over the last few years. A new report from Turner Drake And Partners shows the average assessment of a single apartment unit rose 43 percent between 2016 and 2022.
Six years ago, the average value of a unit was $94,158. Now, that number is into six figures: $134,544. That represents only the value of an apartment, not an apartment building or block of units.
Given the way municipal taxation works, increased assessments don’t always mean a higher tax bill. Councils can play around with the property tax rate to balance out higher assessments, but that doesn’t always happen.
The city of Halifax has decided to increase the average tax bill by 4.6 percent, which is less than what was proposed by staff in November (5.9 percent). Council has yet to decide on the actual tax rate yet, however.
A 5.9 percent increase would have added more than $2,000 to the average commercial tax bill in Halifax. But, as Turner Drake notes, rental property assessments in the city have been anything but average.
According to their report, between 2016-2021, other commercial properties have only seen one-figure assessment increases on average. Industrial rose by just six percent over those five years, while office buildings gained an eight percent value.
Shockingly, Turner Drake reported that retail property assessments declined by one percent in that timeframe.
Kevin Russell, the director of the Investment Property Owners Association of Nova Scotia (IPOANS), says it is difficult to predict an average increase to rental properties in 2022 in Nova Scotia because of all these factors. But the organization is expecting it to be significant for most properties.
“Every property’s different, every property is assessed, and it’s all over the map,” said Russell. “We’ll probably see a double-digit increase on property taxes.”
The Turner Drake report also noted faults with the province’s Capped Assessment Program. This program, in place since 2005, prevents residential homeowners from getting huge increases in their tax bill from higher assessments.
This program does not extend to apartment buildings–an issue that has been criticized in the past. As many have noted, tax increases to rental units will, eventually, be passed down to renters.
An all-party committee looked into the pros and cons of the cap in 2020, about a month before the Covid-19 pandemic started.
“Residential rental apartments continue to shoulder a larger and larger share of the tax burden in the Halifax Regional Municipality,” reads the report from Turner Drake.
IPOANS is one of the organizations that has critiqued the assessment cap in the past for this very reason.
“It’s very unfair,” says Russell. “Renters are the only residential sector that’s not under the cap. So, they’re being penalized.”
“It’s a story that shows what we’ve been saying for years and now it’s confirmed in this report.”
For small landlords, any tax increases will be burdensome given the inflation on essential products and services over the past year. Landlords across Nova Scotia have reported major increases to the cost of insurance, heating, labour, construction material, snow removal contracts, and more.
It’s also become harder for smaller landlords to recoup these costs due to the two percent rent cap implemented by Nova Scotia. The cap was implemented during the pandemic when many renters reported getting notices from landlords who were planning massive rent hikes.
The cap is tied to the renter, however, rather than the unit itself. So, landlords can raise the rent once tenants move out. But, as studies have shown from other jurisdictions, renters who are protected by rent caps tend to stay in their units longer.
Russell warns that having a rent cap at a time when landlords are facing increased expenses will have unintended consequences. Studies have shown that, in jurisdictions with rent caps, deferred maintenance is common.
“Any capital improvements are on hold until things return to normal,” says Russell.
“The only maintenance being performed is if it must be needed. That’s the only options we have.”
There’s also a risk of landlords choosing to sell their properties. According to an internal survey conducted by IPOANS in December, there are 9,000 units across Nova Scotia where the landlords are selling or planning to sell.
One such example was reported by Huddle back in December. Kim Newsome, a landlord with dozens of units in Digby Nova Scotia, sold three of her seven buildings. She said a combination of increased expenses and the rent cap would have forced her to operate the buildings at a loss.
Derek Montague is a Huddle reporter in Halifax. Send him your feedback and story ideas: [email protected].