May rent surge in N.B. was province's highest recorded in 43 years

The cost to rent an apartment in New Brunswick surged so much in May, it forced the province's entire inflation rate above the national average and is renewing calls among tenant advocates for the Higgs government to rethink its opposition to rent control.

"We've been warning the government that this was going to happen," said Matthew Hayes with the NB Coalition for Tenants' Rights  

"This is going to spark a massive housing crisis that's going to cost the public in New Brunswick a lot of money to manage. And it could have been avoided."

On Wednesday, Statistics Canada reported the average cost of rent in New Brunswick jumped 3.9 per cent between April and May, the largest single monthly increase detected since record keeping began in the province in September 1978, nearly 43 years ago.

The May bump pushed the 12-month increase in rent in New Brunswick to 10.9 per cent, also an all time record.

Nationally the cost of rent was up 0.7 per cent in May and 2.5 per cent for the year.  

"The largest rent movement in the country in May 2021 was New Brunswick," said Statistics Canada analyst Andrew Barclay. 

The jump was so large it helped force New Brunswick's total annual inflation rate up to 4.3 per cent, well above the national rate of 3.6 per cent. Most of the difference between the two was caused by the escalating cost of rent to New Brunswick tenants.

Barclay said an internal  review of the rent data by Statistics Canada shows the increases have been "broad based" and occurring across the province and are not the result of a sampling error. 

"The numbers are solid. The sample is good," said Barclay. "What we can probably say with some certainty is that yeah, it's a pretty big movement."

The surge in rental prices is tied to a pandemic related real estate boom that has energized the sale of both houses and apartment buildings in New Brunswick for the past year.

In the case of rental properties, buyers paying 150 per cent of assessed values and more have not been uncommon, with many new building owners then moving to recoup the purchase price with higher rents.

Stories of tenants like William Morissette in Moncton and Bernadette McGregor in Lincoln being given notices of 50 and 60 per cent rate hikes by new landlords began appearing in the media in the fall of 2020 and Hayes says it was obvious then New Brunswick's rental markets were changing rapidly.

"It happened really quickly, but we knew what was happening last fall. This is a crisis of their making," said Hayes.

The Higgs government did conduct a review of rental issues during the late winter and early spring and in May a report on that study concluded rent controls were generally not required in New Brunswick except in undefined excessive cases.

In speaking about the report on the day it was released Higgs said he had  "sympathies" for tenants who experience "rate shocks" but did not specify how that should be dealt with.

"I believe there needs to be some protection there for tenants in relation to the frequency and the extent to which a rate could be changed in a span of time," he said.

But at the time the report was put together the annual average increase in rent in New Brunswick had just hit 4.8 per cent. Now that it is 10.9 per cent Hayes believes rent controls need a second look.

"I know several people who have seen their rent increased by one hundred dollars or by two hundred dollars. This is pushing them into that kind of precarious condition where they may not be able to afford to rent any longer," said Hayes.  

"The market is failing New Brunswickers on this, which is why we need to have government regulation of the rental market."  

The province did not immediately respond to a request for comment about the surge in rental costs in May and whether the idea of capping excessive increases is still being considered.

Jeremy Trevors, speaking for the New Brunswick Department of Social Development, said in an email Wednesday the province is looking at putting a halt to "extreme" rent increases "but is not considering across the board rent controls at this time."