N.B. tenants facing large rent increases lose automatic right to get them phased in

A key protection for New Brunswick tenants in 2023 required rent increases above the inflation rate to be spread over multiple years — with "no exceptions" — if a tenant asked, but that won't happen this year, according to a new interpretation of the policy quietly adopted by the province.

The protection against excessively high increases is no longer automatic.

In an email to CBC News explaining how disputed rent increases will be adjudicated this year, a government spokesperson said tenancy officers will take a case-by-case approach to deciding whether tenants faced with rent increases that exceed inflation qualify to have them phased in.

"It is at the discretion of the Residential Tenancies Officer whether the phased-in approach is deemed acceptable," according to the email.

There are no listed reasons why a tenant might not qualify to have a large rent increase implemented gradually. On the Tenant and Landlord Relations Office website it says only that phased-in awards will be made "if contributing factors warrant it.'

That is a change from last year, when New Brunswick Housing Minister Jill Green intervened with tenancy officers who were not phasing in large increases for tenants in all cases. She told the officers there was no room in the policy to decline a tenant's request.

Killam Real Estate Investment Trust reported last fall that its rents in Saint John, including on its 153-unit Fort Howe building, increased an average of 7.5 percent over 12 months. (Robert Jones/CBC)

"There aren't exceptions built into the rules around the rent increases," Green said last April about whether the protection for tenants was to be automatic or discretionary

"If it's over [inflation] then it will be phased in over two to three years."

Green created the phase-in policy in 2023 as a replacement for a hard cap on rent increases that New Brunswick used for one year, in 2022.

Nichola Taylor, chair of the New Brunswick branch of national housing rights group ACORN, said the phase-in policy has been a less effective and overly bureaucratic substitute for the rent cap.

But the policy will be weaker still if its protection ceases to be automatic, she said.

"The only thing to stop all this is to put a rent cap back into place like they had," Taylor said.

According to legislation, the annual rate of inflation in New Brunswick each year is used to measure whether an approved rent increase the following year can be implemented all at once by a landlord or should be phased in to give tenants who ask for help time to adjust to a big increase.

In 2023, any rent increase above 7.3 per cent, which was the annual inflation rate in New Brunswick in 2022, was eligible to be phased in.

Linda Patterson got a three-year phase-in of a $150 rent increase on her Oromocto apartment under last year's protections for tenants. (Mike Heenan/CBC)

In 2024, a rent increase above 3.6 per cent, which was last year's inflation rate, is the new level at which phased-in rent increases will begin, depending on the decision of a tenancy officer.

Increases that are up to double the rate of inflation are meant to be implemented over two years with increases more than double the rate of inflation taking effect over three years.

The policy has been effective for many tenants but still gets mixed reviews from those who used it because rulings can take weeks and the process forces tenants into an openly adversarial relationship with their landlord

Linda Patterson of Oromocto applied for help last year after learning her rent was going up 20 per cent, or $150. She was successful in having it broken up into three separate $50 increases over three years.

But Patterson said many of her neighbours were intimidated by the idea of opposing their landlord and declined to seek help.

"I told them that they should be applying," she said. "Some of them did. Some of them didn't."

New Brunswick remains one of only four provinces without a hard limit on annual rent increases.

This year, British Columbia, Manitoba, Ontario, Quebec, Prince Edward Island and Nova Scotia have all set maximum rent increase limits, with some allowed adjustments, of between 2.5 and five per cent.

Nichola Taylor of the housing rights group ACORN says the automatic right to phased-in rent increases if they exceeded inflation wasn't much protection for tenants, but the new approach is even weaker. (Shane Fowler/CBC)

In his state of the province address last week, New Brunswick Premier Blaine Higgs said his government has a goal of limiting rent hikes to below three per cent per year but wants to do it indirectly, through market forces, by encouraging the construction of more housing.

"Our goals are clear … create the market conditions to hold annual rent increases to 2.5 per cent," he said

It's been a slow process so far.

New housing starts in New Brunswick in 2023 were down from 2022 and ended the year both below the national average per capita and in last place among the three Maritime provinces.

In the meantime, rents have continued to escalate.

In its latest financial filings, New Brunswick's largest landlord, Killam Real Estate Investment Trust, reported that rent on its 997 apartment units in Saint John climbed an average of 7.5 per cent over 12 months ending on Sept. 30.

That was the largest rent increase recorded by Killam on properties it owned over the full year, covering more than 200 buildings in 12 Canadian metropolitan areas.

Rents in more than 2,000 apartments in Killam buildings in Moncton and 1,500 apartments in Fredericton increased an average of 5.1 and 6.3 per cent respectively during the same period, both above the company's average national increase of 4.7 per cent