Nova Scotia government extends cap on rent increases to the end of 2025, raising it to 5%

The Nova Scotia government is extending the cap on rent increases until the end of 2025, but raising the cap from two per cent to five per cent beginning next year.

Service Nova Scotia and Internal Services Minister Colton LeBlanc introduced the legislation on Wednesday. During a briefing, he said the move is a recognition that renters are struggling financially while also nodding to the challenges some landlords face with the cost of maintaining their properties.

"We chose five per cent to allow landlords to catch up to inflation, while avoiding any large rent increases for tenants," he said.

LeBlanc noted that when the former Liberal government introduced the rent cap, it was at the height of the COVID-19 pandemic and at a time when many people were unable to work due to public health measures.

"Two per cent today doesn't work."

The goal, said LeBlanc, is to balance the rights and needs of tenants and landlords in the province until enough new housing stock can be added to the market. The government estimates about a third of Nova Scotians are renters and the province has about 6,000 landlords.

In what could be a sign that LeBlanc found the balance he was seeking, landlords and housing advocates gave the proposed changes mixed reviews.

"[The cap] should have come off entirely," developer Peter Polley told reporters at Province House.

Inflation raises landlord's costs

Polley's company, Polycorp Properties Inc., manages 500 units in the Halifax area and Annapolis Valley. He said the limits on rent increases mean landlords can't keep up with higher costs from inflation.

Polley sees little change ahead until more housing is available.

"It's not good for anybody, but to the degree that the government is limiting what's happening in the rental market, it's long-term negative for the housing industry."

Landlord Amanda Knight said she wanted to see some recognition by the government of the different challenges rural landlords experience.

Knight said her leases include the cost of utilities and their rising cost, combined with the rent cap, has her contemplating selling units.

"As anyone knows in the province and across the country, utilities have gone up exponentially and when they're included in rent, I'm basically paying for them," she told reporters.

Fixed-term leases ignored

Joanne Hussey, a community legal worker with Dalhousie Legal Aid, said she was relieved to see the government extend the rent cap and listen to the concerns renters have expressed through protests, petitions and calls to MLAs.

But Hussey said she was disappointed the government is not taking steps to limit the use of fixed-term leases. Many renters have reported landlords making the switch to fixed-term leases because they are not subject to the rent cap.

That, in turn, is increasing demand for affordable units that were already scarce, she said.

"We're actually seeing increasing pressure on that affordable housing stock from people who are middle-income earners because we know that it is just disappearing so quickly."

LeBlanc said "it's fair to acknowledge" that some landlords are using fixed-term leases for unintended uses, but he said he did not want to "create another problem by addressing one problem."

There is a role for fixed-term leases when used appropriately, said LeBlanc. He said he hopes increasing the rent cap to five per cent will reduce instances of landlords using fixed-term leases to get around it.