P.E.I. landlords' group says 0% rent cap for 2023 will force some to sell units

A bill to set rental increases for 2023 at zero per cent across the province passed in the P.E.I. Legislature on Wednesday.

All MLAs present voted in favour except PC MLA Brad Trivers, and Liberal MLAs Hal Perry and Robert Henderson

This means rental increases set out by the Island Regulatory and Appeals Commission no longer apply.

In September, IRAC had set maximum allowable rent increases — 5.2 per cent for unheated rental units or those heated with sources other than furnace oil, and 10.8 per cent for units that are heated with furnace oil and have heat included in the rent — to be effective Jan. 1, 2023.

The bill to set rent increases at zero per cent was tabled by Minister of Social Development and Housing Matthew MacKay on Tuesday and went through first and second reading.

However, some landlords are wondering why they weren't consulted before the bill was presented and why the provincial government hasn't yet announced any incentives for landlords to counteract the proposed freeze.

"As a business in a regulated market they should have the right to recover their cost," said Chris LeClair, senior policy adviser with the Residential Rental Association of P.E.I.

"If government has decided unilaterally that they are going to simply impose a cost restriction on the sector then the government needs to come up with a solution."

During the debate over the bill, MacKay said he has met with the association — but LeClair said the zero per cent figure was never discussed.

"We were kind of flabbergasted when we saw the zero per cent," said LeClair.

MacKay made it clear Wednesday landlords would not incur the cost of a freeze on allowable rent increases.

"This was not the landlords' fault in any way. I need to work with the landlords. We are going to be aggressively running out support for landlords here over the coming weeks as well," MacKay said, adding he has been calling landlords back who have left him messages.

"I know this has been a big hit for the landlords, but please just be patient until we can get these programs out. I need you to be landlords. I need you to continue being landlords. I need you to build and it is government that needs to incentive you to do that."

In the provincial budget, $100 million has been earmarked to create an additional 365 social and affordable housing units within the next five years.

The market needs to be competitive.- Chris LeClair, senior policy advisor with the Residential Rental Association of P.E.I.

A zero per cent cap on rent means some landlords will have to sell off units, LeClair said.

"I think there will be a number of landlords who will take their properties off the market, seek to sell them outright or condo-ize them in some manner. I do not believe the zero per cent increase will go unnoticed by the sector."

CBC News has talked to several tenants since the proposed rental cap by IRAC who have said they wouldn't be able to afford a rental increase.

"The market needs to be competitive," LeClair said, adding the association agreed with the initial rental increases set out by IRAC.

Although the bill has passed in the legislature, LeClair said landlords can apply for a greater-than-allowable rent increase.