Minister moves to quell rent-cap confusion

The Higgs government tried to clear up growing confusion Thursday over its new rent-cap policy, suggesting some landlords will voluntarily cap rents April 1 even though it won't be legally required for another three months.

Service New Brunswick Minister Mary Wilson, who vocally opposed a rent cap last November, said she expects the policy to work smoothly because most apartment owners will be happy to comply. 

"Most landlords in the province are wonderful," she said in a Zoom call with reporters. "The majority have been very good with their tenants."

Still, Wilson and her department had to undertake some renovations to the government's message after a Wednesday scrum by Premier Blaine Higgs, in which he misstated key elements of the policy.

The cap announced in Tuesday's provincial budget limits rent increases to 3.8 per cent this year and is retroactive to Jan. 1. Tenants might not immediately get back any excess rent they've paid since Jan. 1 because the promised cap still has to be legislated.  

The rent cap is meant to put a lid on headline-grabbing examples of tenants getting rent increases of several hundred dollars.

Higgs said Wednesday that any tenant already hit with a cap-busting increase this year would have to file a complaint to the Residential Tenancies Tribunal. 

"Then there'll be a hearing," he told reporters. "The decision will be based on what we've put in place right now," and the landlord would be ordered to "roll it back." 

But later in the day, Service New Brunswick contacted reporters to "clarify" that tenants themselves should apply the cap, by calculating how much they'd overpaid and deducting it from their next rent payment.

Spokesperson Jennifer Vienneau said "no action is required from the landlord" to begin the process and tenants with questions or concerns should contact the tribunal. 

Liberal finance critic Rob McKee criticized Higgs on Thursday for creating confusion.

"It's just creating chaos in the industry," McKee said. "He's pitting landlords and tenants against each other … letting everyone fend for themselves." 

In her Thursday call with reporters, Wilson said many landlords were already proactively contacting their tenants about the cap, so in many cases tenants wouldn't have to do the math themselves.

But she said the onus was "not necessarily" on landlords to take the lead. 

"Many of them are volunteering to do this for their tenants," she said.

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Any tenants who don't hear from their landlords have two options, Wilson said.

"They can calculate it themselves, make the call, change the post-dated cheques, change the automatic withdrawal amount." 

Or they can contact the Residential Tenancies Tribunal for help, she said. 

She added that her department's website will soon have a rent calculator that will help tenants figure out what the cap means for them.

New Brunswick Apartment Owners Association president Willy Scholten said his group doesn't like the cap but will comply, even if it's a hassle.

"Yeah, it is complicated," he said. "There's a lot of administration to it. But the law is the law. It has to be done." 

Wilson to introduce bill next week

Another source of confusion has been whether the rent cap requires legislation, which can takes weeks or months, or just a quick change to regulations by cabinet order.

"As far as I'm concerned, it's law now," Scholten said.

Higgs was less definitive on Wednesday.

"It's a regulation. I don't think we have to legislate it. … I can confirm that. I'm not sure."

On Thursday, Wilson confirmed she'll introduce a bill next week to put the cap in effect. 

Based on the legislature's spring sitting schedule, a bill introduced next week wouldn't be debated until May and would not get royal assent, and take effect, until June.

Wilson predicted many landlords will voluntarily apply the cap April 1 even if they're under no legal obligation until July 1.

Some are already sending letters out to tenants to tell them about the cap, she said, and at least one landlord is reducing rents for April. 

"They don't have to do that. It's not required. But many of them are." 

Cap applies to all rental properties 

Higgs's Wednesday scrum also left the impression that landlords who make major capital renovations to their properties can increase rents higher than the cap to pass on the costs.

The premier said the tribunal would weigh what kind of increase was justified.

"Ideally each renovation would have to be judged on the reality of the investment that's put into it," he said.

But Wilson said Thursday that the cap will apply to all rental properties, even if they've had major renovations.

While the minister was clearing up the premier's statements, she also had to explain her own reversal on the issue.

A report on rent and housing issues last May by civil servants recommended against a cap, and Wilson denounced the idea repeatedly in November during a committee debate on rent legislation.

"Rent caps are ineffective in achieving the goal of increasing affordable housing options," she said.

"The province has to be very, very careful of interfering too much. Any time we try to control the market, it has not proven to be effective." 

She also said a cap would deter developers from spending money to maintain and upgrade properties and from building new units.

"Research suggests that rent caps are ineffective and serve as a disincentive for landlords to invest financially in their properties," she said.

On Thursday, Wilson said a permanent cap could have that effect, but soaring rents demanded a short-term fix.

"These are extenuating times … and we just felt it was important to try to do something this year."