Nova Scotia keeping rent cap until end of 2025, but higher increases to be allowed

HALIFAX — The Nova Scotia government will extend a cap on rent hikes, but it plans to ease the restriction at the end of the year to allow increases of up to five per cent.

The amendments announced Wednesday by Service Nova Scotia Minister Colton LeBlanc will see a five per cent cap introduced on Jan. 1, 2024, and remain in place for two years. Nova Scotia’s existing two per cent cap, established in November 2020, remains in effect until Dec. 31.

Joanne Hussey, a legal aid worker with Dalhousie University’s Schulich School of Law, called the announcement a positive step but said the province is failing to tackle a “loophole” that allows landlords to raise rent beyond the cap with fixed-term leases.

“Every day we are hearing that people are not just facing rent increases of a couple hundred dollars — which is the situation we were in when the rent cap was first in place — we are hearing from people whose rents are being doubled and tripled,” Hussey said Wednesday.

Fixed-term leases, unlike periodic year-to-year or month-to-month leases, are not automatically renewed. This means that landlords can elect not to renew a lease with someone when the term ends and then post the unit for rent at a higher cost.

The provincial rent cap covers lease renewals and situations where a landlord allows someone on a fixed-term lease to sign a new agreement for the same unit — but it does not apply to leases signed with new tenants.

Hussey said this is a significant concern among renters who come to Dalhousie legal aid for help and it would appear that fixed-term leases are becoming more common.

Tim Allenby, a spokesperson for the Dartmouth chapter of the Association of Community Organizations for Reform Now, or ACORN, said Wednesday that he would like to see the rent cap tied to the housing unit instead of a lease in order to keep rents under control.

“It seems like a common-sense solution ? this rent cap should be complied with, and it should be applied consistently,” Allenby said.

During a bill briefing Wednesday, LeBlanc said “it’s fair to acknowledge that some landlords have used fixed-term leases for unintended use ? and it is frustrating.” He suggested the current two per cent cap has led more landlords to turn to fixed-term leases. “I am hopeful that this five per cent rent cap will alleviate some of those challenges,” he said.

Pictou County landlord Amanda Knight and Halifax landlord Peter Polley say the existing two per cent rent cap has put significant strain on landlords and the five per cent increase is too small to recoup losses.

Knight, who currently owns six properties in Pictou and Colchester Counties, said the financial pressure caused by the rent cap led her to sell one of her buildings.

She said that under the newly announced five per cent cap, “we will continue to see people selling their (rental) properties. We will continue to see people displaced.”

Polley, a landlord whose company operates 500 rental units in Halifax and the Annapolis Valley, said Wednesday’s announcement is “too little, too late.”

He said the allowable rent increase covers “only a fraction” of the costs landlords are incurring due to rising costs of electricity, property taxes, insurance and water.

LeBlanc said capping rent hikes until the end of 2025 will keep residents’ costs stable while construction work continues to increase the housing supply in Nova Scotia. He said the move reflects the “challenging financial times” that both tenants and landlords are facing.

The minister also reiterated his government’s stance that this measure should be temporary and that it is not in favour of establishing permanent rent control.

This report by The Canadian Press was first published March 22, 2023.

—

This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.