Has The Rental Crisis Hit Rock Bottom?

The Saturday Huddle is a weekly column that features opinion, analysis, and reflections on Huddle stories, podcasts, and business news in the region. Derek Montague is a Huddle reporter based in Halifax.

I once read a quote that things must hit rock bottom before we can rise up again, but when you bring a jackhammer there is no bottom. Since Halifax is built on unforgiving bedrock, it’s a fitting analogy for what has happened during the rental crisis.

It was November 2020 when then-Premier Iain Rankin announced a temporary measure to protect tenants: a two percent cap on rent increases. New Brunswick soon followed with its own version of a cap (more on that later).

We live in a country where it is rare for a government to so directly intervene in how businesses operate. We’re far more capitalistic than we ever like to admit in Canada. For better or worse, we have relied almost entirely on a business model to give us a roof over our heads. Now, it feels like our collective roof is on us.

For governments in Atlantic Canada to take such a drastic step seemed like a sign that the housing crisis had hit rock bottom. The rent cap was temporary until we got more housing stock, we were told.

Almost two years to the day that temporary measure to curb our crisis is still in place, and it will remain for at least another year. In that time, things have only gotten worse.

A new survey from rentals.ca reveals statistics that would have shocked you in 2019. The average rental price in October of this year in Nova Scotia, according to the site, is $2,448 per month. Only British Columbia, at $2,534, is higher.

This number is even more ridiculous when you factor in that wages in Nova Scotia are far too low to even come close to meeting such an expense. In 2020, the median household after-tax income was $62,400. The national average was $73,000. Keep in mind this is household income, not personal.

We were once sold a bad narrative that we can be paid less in Atlantic Canada because the cost of living is so much lower than B.C. or Toronto. With food inflation piling on top of insane rent, no one can make that argument to justify low incomes anymore. But employers, many of whom have struggled themselves since 2020, aren’t going to line up to give people an extra $10,000 a year.

Rent increases also show a flaw in the province’s rent cap. It applies to current tenants, not the units themselves. Once a tenant moves, landlords have the right to demand market value for the unit.

And while it’s wildly unpopular to show landlords any sympathy these days, I feel like the two percent rent cap has harmed many good property owners who now can’t keep up with runaway inflation.

Since Nova Scotia first introduced the cap, insurance has gone up roughly 50 percent for apartment buildings. Home heating oil has more than doubled in price. Materials for repairs, labour, even snow clearing have seen sudden jumps.

The two percent cap is forcing many landlords to decide if they want to remain in the business. I fear the “small” landlord will disappear and we will be left with only the big real estate companies that own huge tracts of real estate.

If you read about the current housing crisis in Berlin and other European cities, one of the main factors driving up prices is the consolidation of units under a handful of rich, powerful companies.

But, without an alternative, getting rid of the rent cap also seems unfeasible. For all of its flaws, the rent cap does one thing well: it protects renters who stay in their units long-term. I’ve rented the same place since 2020. There’s no doubt the rent cap has kept things affordable. So, can you imagine the chaos if the provincial government decided to lift the cap without a plan?

Funnily enough, Nova Scotia’s closest neighbour may give us a living experiment into what that can look like. The New Brunswick government, led by the master of empathy Blaine Higgs, has given renters a one-month notice that the rent cap is ending.

But the same thing will eventually happen in Nova Scotia. The effects of inflation keep piling, and we can’t expect landlords to defer the costs forever; unless we come with a more flexible model that takes inflation into account.

So, we’ve hit rock bottom with our rental crisis. But what are the alternatives in the works to replace this temporary rent cap?

It’s clear we can no longer believe the charlatans who have told us how housing markets will right themselves. Faith in that old system is long in the toilet. The clear solution is one that provincial governments seem to loathe: actually owning and investing in public housing.

I tried doing research into how the Nova Scotia government is doing on that front. According to this insightful article, its been a shameful attempt.

“The bulk of public housing in Nova Scotia was developed before the 1970s. After World War II, the federal government made major investments in public housing across the country, but by the 1990s those investments largely disappeared.”

In other words, our public housing stock are certified antiques.

The article then points out one of the provincial government’s more pathetic attempts at “affordable” housing: $22 million given to a local real estate developer to build 370 units. The rent will be based on a percentage of market value, not a person’s income. It’s mindboggling that this is the equation chosen to define “affordable.”

And the inflationary pressures just won’t stop. A report from the Halifax Regional Municipality suggests a tax increase that will see the average property tax bill jump by 8 percent this fiscal year.

For commercial buildings, like apartment complexes, that will be thousands of dollars more each year.

If you were looking for reassuring words from elected councilors, you may want to look away. Hours before I started typing out this piece, the new HRM Deputy Mayor, Sam Austin, posted this:

“Today: Budget deliberations today at City Hall. Setting tax bill percentage for the draft budget. looking like a challenging year.”

At least he’s honest.

The only bright spot is that there are thousands of units being built in the HRM right now that will, someday, add to the housing stock. But how expensive those new units will be remains to be seen. They are being built at a time of high inflation in the construction industry. And when these apartments will be ready to house people remains to be seen. Given the high costs of materials, labour, and interest rates, it could be a slow process.

I only hope that this is finally rock bottom. And no one brought a jackhammer.