What you need to know about the 3% rent cap that starts Saturday

A rent cap goes into effect in New Brunswick on Saturday, limiting annual rent increases to three per cent a year.

The cap was promised by the Liberals during the fall provincial election, and they brought in legislation after they were elected.

Most people are likely to know what a rent cap means in general, but the plan coming into effect still raises questions.

Here are some answers.

Is this rent cap new?

This rent cap is new, but it's not the first time the provincial government has tried to control rising rents.. The Blaine Higgs government implemented a temporary cap on increases in 2022, but that ended in 2023.

Other measures were put in place instead, including a rent bank that was launched in December, and an option for some rent increases to be phased in if they exceeded the inflation rate.

David Hickey, the minister responsible for the New Brunswick Housing Corporation, said passing the rent cap was a priority.

"We've seen over the past four years a 40 per cent increase in rent in New Brunswick," Hickey said. 

"We've seen people continue to struggle with unpredictable, unstable rent increases, and we felt that we needed to act as soon as possible."

What happens if my rent was raised before the cap takes effect?

Any increases greater than three per cent that came into place before the cap will not change, including those covered by rules that allow the spreading out of large increases over two to three years.

But the portion of any phased-in increase taking effect on Feb. 1 or later will be capped at three per cent.

Landlords couldn't squeeze in any increases greater than the cap before Saturday because an already existing regulation requires six months' notice of a rent increase.

Is it possible my rent could be raised more than 3%?

Landlords will be able to apply for increases above three per cent, to a maximum of nine per cent, and only if they can show that the increases are needed because of renovations to their units.

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A three per cent rent cap comes into effect in New Brunswick on Saturday but only applies to people already living in their apartment. The rent for an apartment can go up higher than three per cent for people just moving in.

Hickey said he doesn't think this will undermine the policy because the tenant and landlord relations office will decide whether those renovations are justified.

"No one's going to get a nine per cent increase so they can get stainless steel appliances in their apartment," Hickey said. "These are important, necessary renovations."

He said the office has been staffed with a bigger team to make sure there is the capacity to deal with these requests, and make sure there's enough people to respond "to an inevitable increase in calls to our office as of Feb. 1."

Are there loopholes for landlords?

Some tenants' rights groups have also warned about loopholes in the rent cap. 

Nichola Taylor, chair of New Brunswick's ACORN chapter, has said that protection won't work as intended without other changes to the Residential Tenancies Act.

She had asked the government to strengthen protections for areas, such as fixed-term leases, which automatically end on an agreed-upon date. That allows the landlord to change the price to rent the unit, regardless of the cap.

Hickey said "some big conversations" have to happen around the Residential Tenancies Act. He said his team has already identified 30 items that would be ideal to have changed as part of the act.

He said those changes will come in the summer and fall, and closing the loophole with this legislation would not have been enforceable because there is no database that tracks the rents across the province.

A database is in the works, Hickey said, but the government didn't want to delay the rent cap until this and other changes were ready.

How will the rent cap affect landlords?

Willy Scholten, a board member with the New Brunswick Apartment Owners Association, has previously said that if there's going to be rent control, there needs to be "cost control," too. 

He said developers will be reluctant to build new properties if they know their rental income won't be allowed to keep up with property tax increases.

Hickey said it's all about balancing protections for renters while making sure the development market remains competitive, but he isn't concerned that the rent cap will slow development.

"From the landlords that I've had discussions with, they're eager to move forward because of the significant change that is going to bring about by this removal of the HST, by property tax reform, by efforts of this government to make sure that our development landscape is the most competitive in Atlantic Canada, because that's what the that's what we're striving for."

What if I want to challenge a rent increase?

According to the New Brunswick government's website, a tenant has a choice of requesting a review through the tenant and landlord relations office or ending their lease.

The tenant must apply within 60 days of being given the notice of the rent increase.

Applications for assistance are available online.