People Cities
The Saturday Huddle is a weekly column that features opinion, analysis and reflections on Huddle stories, podcasts and business news in the region. Mark Leger is the editor of Huddle and the Director of News Content for Acadia Broadcasting.
I have two confessions to make regarding the 3.8 percent rent cap announced by the New Brunswick government as part of the provincial budget introduced earlier this week.
One: I was very relieved that we had sold our one remaining rental property late last year. The rents were relatively low, but the building needed some work. I’m not sure if we could finance renovations with a rent cap in place, retroactive to the beginning of the year.
I realize most renters don’t sympathize with the landlords, but I can confidently say that for people who only own one or two properties, the margins are thin. It’s not easy to make even a small profit if you charge relatively low rents and do even routine maintenance on a building.
Two: I didn’t have a lot of sympathy for renters when we began more closely covering the issue of rising rent in the early days of the pandemic when the rent control debate was heating up in New Brunswick and Nova Scotia.
I’ve lived in the south end of Saint John for 25 years and watched the core of old red-brick and clapboard housing gradually decay; the rents were low, but most buildings were poorly maintained.
A decade ago, I served on a housing committee for a time and listened to fire department officials talk about how the city was close to a tipping point where too many buildings were firetraps and nearly beyond repair.
Ten years later, I walk the city streets and still see buildings in need of TLC, but a remarkable transformation has also taken place. Now, I see block after block of recently constructed and restored buildings with new and renovated apartment units–expensive apartment units, with monthly rents of $2,000-plus not unheard-of.
Two years ago, I would have said that was just the cost of rebuilding a decayed urban core; tenants with low rents had it good for a long time and they now had to help bear some of the costs of rebuilding and maintaining the city centre apartment stock.
But that was before I realized the problem was widespread; that prices were continuing to go up for renters and homebuyers across the region. It was before we all realized the price of everything was on the rise. Now, a year into the pandemic, people are paying markedly more for things like housing, groceries and gas, with no commensurate increase in pay unless you get promoted or find a new job.
As I’ve said, I’ve owned buildings and I understand that rising costs for materials and labour are making new construction and renovations more expensive, and new problems may be created with the introduction of a cap for this year on rent increases in New Brunswick (a two percent cap was put in place in Nova Scotia in 2020).
In a Huddle story earlier this week, Huddle reporter Sam MacDonald spoke with Willy Scholten, the chair of the New Brunswick Apartment Owners Association. He said that rental property owners were already contending with rising taxes and assessments, jeopardizing 4,530 potential developments across the province.
Even though the budget also included a 50 percent rate reduction on the provincial portion of property taxes, Scholten said development on that scale likely won’t proceed.
“The response I’m getting from landlords and developers is that those developments are not going to happen,” said Scholten.
Scholten also said building owners will do less maintenance because the cap on rent increases won’t give them enough money to cover the costs.
In conversations about economic development, we often rightly focus on creating the best conditions for investment; to make doing business easier and cheaper for the entrepreneurs who create wealth and employment. Blunt instruments like caps on rent increases are a disincentive to invest, from this point of view.
But we’re also dealing with labour shortages across the region and the employees of those same entrepreneurs are facing cost increases in their daily lives that they’re worried they can’t manage.
For them, a cap on rent increases is a necessary measure – even if temporary – for an acute problem, though affordability advocates said the Higgs government still didn’t go far enough with its investments and protections for people in need of affordable housing.
They also worry about the temporary nature of the protections being put in place. For the duration of the state of emergency in Nova Scotia, the province banned “renovictions.” It ended earlier this week, and Dartmouth South MLA Claudia Chender said she was contacted by nine people who had been informed they were being evicted shortly after the ban was lifted on evicting tenants to renovate a unit.
People are rightly worried about not receiving some protection from the effects of the rising costs of living.
Earlier this week, Narrative Research said its Atlantic Canadian Consumer Confidence Index (CCI) had reached a record low in its 25 years of doing the survey.
“While there is reason to be optimistic with evidence of a good job market recovery, and provinces easing mandates and restrictions, Atlantic Canadians are clearly concerned about their current and future financial wellbeing,” she said.
At the beginning of this piece, I said I was lucky we sold our rental property at the right time, leaving behind the worry about how we would make necessary investments in a time of rent control. I also said the aging buildings in Saint John’s urban core received much-needed investments, alleviating the concern they might soon get torn down even though it led to significant rent increases.
It’s time to shift some of our concern to the people living in those buildings too.