There is something not right about how much rents are going up on P.E.I., Housing Minister Brad Trivers acknowledges in response to CMHC data for 2020.
Trivers was asked to comment on a comparison made by CBC News between the average rent increase on P.E.I. as measured by CMHC and the maximum amount landlords were allowed to increase rent, as set by the Island Regulatory and Appeals Commission.
In 2020, IRAC set the maximum allowable rent increase at 1.3 per cent, but CMHC measured a 3.0-per-cent increase in Charlottetown and a 3.4-per-cent increase for the Island as a whole.
In making this measurement, CMHC included only units that were on the market in both 2019 and 2020, thereby excluding new units that might be coming on the market at higher-than-average rents.
Landlords who had extraordinary expenses — for example, due to a renovation — could apply to IRAC for approval of a higher rent increase.
According to IRAC, that approval was granted in 28 decisions involving 72 individual units in 2020, including 40 in Charlottetown. This is out of a total of 6,375 units across the Island and 5,427 in Charlottetown, as counted by CMHC.
IRAC does not keep records of the amount it allows rent to increase on appeal, but in order for those approved increases to account for the difference between the 1.3-per-cent approved rate and the 3.4-per-cent actual rate, the rent on those 72 apartments would have had to roughly triple.
"There definitely is an issue here and there's a problem," said Trivers, when shown the comparison, adding government has heard anecdotal evidence as well.
"We've heard from tenants, whether it be groups like the P.E.I. Fight for Affordable Housing, about this."
'It's an honour system'
But under existing legislation, there is little IRAC or the government can do with this information.
The existing system for rent control on P.E.I. is complaint-based. If tenants believe they are being charged a rent that is higher than legally allowed, they can make a complaint to IRAC. If on investigation IRAC finds that to be the case, it can order that the rent be lowered.
But there is no mechanism for investigating general, rather than specific, evidence of illegal rent increases.
"We know that illegal rental increases are happening," said Opposition housing critic Hannah Bell, the Green Party MLA for Charlottetown-Belvedere.
"It's an honour system. And unfortunately, you don't need very many people to, you know, maybe not understand what the law is, or they can choose to ignore it because they know that there are no consequences."
Bell and the Green Party have been advocating for a rental registry — a place where rents are recorded. In that way, when you come into a new apartment, you can look up what the previous tenant paid without having to track that tenant down to ask.
Looking for a 'speedy response'
The government has also come out in support of a registry, and Trivers has ordered that a study be done of the specifics of how it would work.
That response concerns Bell.
"I don't have a huge amount of faith in any speedy response from government, because it takes a very long time to even acknowledge there is a problem and then they want to study it," she said.
But Trivers said the study will address some important questions.
"Some of the tenants have said they don't feel comfortable complaining because they feel like their housing situation could be precarious," he said.
"One of the recommendations that could come out of this comprehensive research study would be: 'Maybe we need to look at whether a complaint-based system is the best way to go forward.'"
He added, however, that early analysis by Housing Department staff suggests complaint-based systems can work.
There is also the question of how to deal with landlords in the system.
"I definitely don't think all landlords are trying to skirt the rules. There may even be an education component here where both tenants and landlords don't understand the rules," he said.
"I think the majority of landlords want to follow the rules."
Questioning the numbers
The Residential Rental Association of P.E.I., a group of Island landlords, wants to know more about the CMHC survey.
"We were very surprised and immediately reached out to our members," said association president Bill McInnis, when asked about the 3.4-per-cent overall increase in 2020.
"We simply asked our members if they were contacted by CMHC, and an overwhelming majority said they were not contacted."
McInnis said one member who was surveyed by CMHC had just completed renovating a building and had put up the rents beyond the allowable increase with proper IRAC approval.
McInnis's questions led CBC News to contact CMHC for more information about its methodology.
"We usually contact on-site owners, supervisors/managers, or building superintendent to answer our questions," CMHC responded in an email.
"This may not be the same as the principal of some of the rental firms who would make up the RRAPEI membership."
In 2020, CMHC said it collected 417 responses to its survey, and those responses represented 4,885 apartment and townhouse units.
McInnis said his group would be approaching CMHC directly for more information on how its survey is done.
Change will take time
Meanwhile, Bell is concerned the proposed study will take too long, and Trivers admits the process is not going to be quick, but he said he is trying to find ways to speed it up.
The first step is to seek a request for proposal (RFP) for the study, and getting bids and evaluating them could take a few months.
"That's not quick enough for me," he said. "We're looking at how we can shorten that and maybe not go for a full-blown RFP process."
His aim is that the study reaches out to tenants, landlords and IRAC, which will have responsibility for implementing any new system.
If it turns out that changes to legislation are required, that won't happen before the fall session, he said.
"I don't want to set unrealistic expectations, but I would say a new rental registry would be, at the earliest… December 2021, maybe even January 2022. I don't want to overpromise," said Trivers.
In the meantime, Trivers encouraged tenants to make the most of the system that is in place.
"The rules are already there, and right now, today, tenants can put complaints in," he said.
The minister suggests that renters "really put their trust in IRAC, because I know that IRAC is very, very diligent."
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