Why new P.E.I. legislation may not stop your rent from going up next year

Members of P.E.I. Fight for Affordable Housing say they're hearing from Island tenants who've been notified their rent will increase next year, despite recently passed legislation that sets the maximum allowable increase for 2023 at 0 per cent. 

The bill, which passed in the P.E.I. Legislature this fall, came soon after the Island Regulatory and Appeals Commission had set the highest allowable rent increase rate in its history.  

But Cory Pater with the P.E.I. Fight for Affordable Housing said while the maximum allowable increase has been set to 0 per cent, it's not a guarantee. Landlords can still apply to increase rental rates above the allowable limit.

"It's not surprising," Pater said. "We've heard about these above-allowable increase rent notices for a while now." 

Pater said the organization has heard from about a dozen tenants who say their landlords have given them notice that their rent will go up next year. He said the recently passed legislation limiting increases doesn't change the process landlords need to go through to increase rent above the maximum. 

According to IRAC's Office of the Director of Residential Rental Properties, which manages matters between landlords and tenants, a landlord must first notify tenants of a rental increase and then apply through the agency within 10 days. 

IRAC's rental properties office will then hold a hearing and a decision will be made based on a number of factors. 

These include:

• Whether the increase in rent is necessary to prevent the landlord from sustaining a financial loss;
• The increased operating costs or expenses the landlord has;
• The landlord's reasonable return on their investment;
• And how long it's been since the last rental increase.

Pater said he thinks the approval process favours the landlord and he'd like to see it change. 

"They still have to consider the same factors, which favour the landlord making a sustainable profit off the property rather than keeping the property affordable [for tenants]," Pater said. 

"[Tenants] are disappointed and it's a real kick in the gut because housing is not affordable anywhere on P.E.I. and it's just going to keep getting more expensive." 

Officials with IRAC said since the legislation to limit rental increases passed, the office "has been extremely busy helping landlords and tenants" — but it's too soon to provide any statistics about how many landlords have applied to increase rents. 

Rental cap positive for renters 

Pater said there isn't a limit to how much landlords can request to increase rental rates, but a change under the new Residential Tenancy Act will put a cap on how much of that increase is applied each year.

Under the new act, rental increases will be capped at three per cent per year and landlords can only apply for an additional three per cent over that maximum — making the total maximum increase possible six per cent. 

The new act is expected to come into effect next spring and Pater said while it's a start, he'd like to see the cap go further. 

"It's nice to have a guarantee that you're not going to have rent set at something like 10, 20 per cent above the allowable increase," Pater said. 

"It will help them in that their housing won't get more expensive as quickly as it used to, but the housing is still most of the time too expensive. It's still going to be a 3 to 6 per cent increase for people that are already struggling to make ends meet."