Minister pledges ‘solution' for phased-in rent increase confusion

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Housing Minister Jill Green says she’s working on a “solution” to address confusion over the province’s phased-in rent increase legislation.

Under that law, New Brunswick renters can have above-inflation increases spread out over either two or three years following a review by an officer with the Tenant and Landlord Relations Office.

But it’s unclear whether officers are mandated or have the discretion to phase in rent increases based on different interpretations of the legislation over the last year.

Last May, Green said that all above-inflation rent increases would be phased in to match the intention of the legislation after announcing financial aid for a handful of tenants who had been denied the measure. However, that same month, a Court of King’s Bench judge found that, based on her interpretation of the legislation, officers have the discretion – not the mandatory power – to order phased-in rent increases.

The lack of clarity has caused concern among both landlords and tenants who say the phased-in system is unpredictable.

When asked whether phased-in rent increases are mandatory or discretionary in the province, Green said she recognizes there needs to be “more clarity” and that she’ll “be coming out with some information very soon.”

“We are working on a solution,” she said last week following a press conference in Oromocto.

When asked if this solution was a legislative change, Green declined to say before reiterating she’d tell the media about the solution “very soon.”

Constitutional lawyer Lyle Skinner first flagged last spring that the legislation may need to be tightened up if the Higgs government’s intention is for phased-in, above-inflation rent increases to be mandatory.

According to the Residential Tenancies Act, an officer “may” spread an increase “in the manner determined in accordance with the regulations,” but the regulation states a rent increase “shall” be spread out over two or three years.

“Under statutory interpretation principles, ‘may’ confers a discretionary power to a decisionmaker where ‘shall’ requires a decisionmaker to perform a specific action,” Skinner said in an email at the time.

“Further, an act takes priority over a regulation.”

Last year, the Higgs government introduced the phased-in mechanism to replace a one-year, 3.8 per cent rent cap in the province. It’s now the only form of protection renters have in the province from significant single-year rent hikes.

But tenants’ advocates have complained the system is too cumbersome, requiring renters to apply for a rent review and be aware of the consumer price index figure.

As of right now, a rent increase is eligible to be spread out if it’s above 3.6 per cent – the consumer price index of the previous December, as per the legislation. If approved, an increase between 3.6 and 7.2 per cent would be spread over two years. If it’s above 7.2 per cent, it would be phased in over three.

Karen Sharp, who successfully challenged the mandatory use of phased-in rent legislation in court, recently told Brunswick News she’s still waiting for clarity on the rules from the provincial government.

“The issue that I have is that they’re saying it’s discretionary,” said Sharp, who is the president and owner of Saint John-based management firm, Leading Edge Property Solutions.

“Well, we all use our discretion in different ways, so to me, there is no sort of uniformity there.”

The easiest solution would be the return of an annual rent cap, but if not, the phased-in legislation should at least have a cap on the amount of the increase that can be spread out over multiple years, according to Peter Jongeneelen, co-chair of tenants’ rights group ACORN NB.

Sharp said she’s heard from fellow landlords considering large phased-in hikes to bring their rents up to market value in three years’ time.