Rent increase protections for New Brunswick tenants weakened by provincial changes

Rules in place to help protect New Brunswick tenants against rent increases that exceed the rate of inflation for the coming year have been weakened by the province.

New provincial regulations raise the level of rent increases landlords can impose — before a tenant can ask for the amount to be phased-in gradually — from the current level of 3.6 per cent to 4.7 per cent.

The change will be in effect for 12 months beginning in July.

The province hasn't said who, if anyone, asked for the change but tenant groups say they were not consulted.

"This came as a shock," said Peter Jongeneelen with the Association of Community Organizations for Reform Now, a community group more commonly known as ACORN.

"We were not informed. We try and educate tenants, so we need that."

Over the last four years New Brunswick renters have experienced some of the largest average increases in housing costs in the country.

According to Statistics Canada, between January 2020 and April this year average rents in New Brunswick increased 34.2 per cent, nearly double the rate of inflation over the same period.

New Brunswick does not set a hard cap on annual rent increases by landlords like most provinces do, including the other two Maritime provinces.

Instead, New Brunswick allows landlords to raise rents once each year by any amount, if the new rent generally matches local market conditions. 

Tenants facing an increase that exceeds certain thresholds are then allowed to apply to have a large amount phased-in gradually.

Those thresholds had been tied to the rate of inflation from the previous calendar year.

In 2023, tenants could seek a phased-in rent increase if it was above 7.3 per cent (the inflation rate in 2022). This year the threshold was lowered to 3.6 per cent (the inflation rate in 2023), but has now been raised by the province to 4.7 per cent.

In an emailed statement, a spokesperson for the province said raising the threshold at which tenants can ask for help is part of a larger reform that is beneficial to landlords this year but would have benefited tenants last year had it been implemented earlier.

Under a complex formula established by the new regulation, the threshold for when tenants can request to have a rent increase phased-in is now set higher than the cost of living, when inflation is below 5 per cent.

However, when inflation is above 5 per cent, help for tenants comes sooner.

For example, if in the future inflation reaches 7.3 per cent again, under the new formula tenants will be able to apply for a phased-in award for any rent increase above 5.9 per cent.

That may come late for tenants who were facing those increases last year but the province insists the purpose and timing of the changes is not to make raising rents easier for landlords.

The new rules "provide a more balanced approach to phased-in rent increases, especially at a time where the Consumer Price Index (CPI) level was aggressive," the province says in its statement.

However, the new formula comes at a time when the province is not expecting inflation to be anywhere near the 5 per cent level for several years. Consequently, tenants are unlikely to derive any benefit from the reform in the foreseeable future.

Official New Brunswick government estimates released in March show inflation in the province is expected to average 2.7 per cent in 2024 and then 2.1 per cent in 2025 through 2028.

Another downside in the policy for tenants is that those who receive a rent increase above 4.7 per cent this year may not get help — even if they ask for it.

Phased-in rents were granted automatically to tenants who qualified and asked for the help through much of 2023 but assistance this year is not guaranteed.

In its statement, the province says although it has the power to "distribute a rent increase over a period of two to three years," it will not necessarily do that for tenants who seek that protection.

"Whether or not the increase is phased in will depend on many factors and this information will be gathered during the investigation process," the province says.

Matthew Hayes is with the New Brunswick Coalition for Tenants Rights. He said his group was also not consulted about the new rules and is disappointed by them.

"Tenants have to apply" for help and "are not automatically entitled even if they do apply for it," said Hayes.

"If the province wants to stabilize rents, and it needs to, there is a mechanism for doing so and this is not it."

Both the coalition and ACORN have called for the implementation of annual caps on rent increases as the only effective way to limit the size of changes.

New Brunswick has rejected that idea as a disincentive to the development of new housing, even though housing development in New Brunswick trails most provinces that do have rent caps.