June 14, 2023
Sarah Stoodley, Minister
Department of Digital Government and Service NL
Confederation Building
P.0. Box 8700
St. John’s, NL
A1B 4J6
Dear Minister Stoodley,
I urge you to implement rent stabilization measures that will protect those in current lease or rental agreements or those seeking rental housing. Government's market housing approach to addressing homelessness, and its failure to heed warning signs and act promptly to address the housing shortage have placed people at risk of homelessness. Recently announced and hastily implemented financial supports for Ukrainian newcomers have exacerbated the risk further. Vacancy rates have dropped since 2020, and chronic homelessness and shelter use has reached record highs. Unscrupulous landlords, seeing an opportunity to increase profit, are raising rents and jeopardizing the affordability and housing security for their tenants. Government must act swiftly to protect people and prevent homelessness. Rent stabilization that protects existing tenants and new tenants is an important short term first step.
Last July I emailed Minister Abbott concerning excessive rent increases and suggested some form of rent control. Your July 18 letter in response to my email dismissed the idea. You stated:
Measures to control rental rate increases were evaluated during the review that led to the 2018 Act. However, at that time the overall annual rate of rent increases in Newfoundland and Labrador were either on par or lower than rental rate increases in provinces that had implemented rent control measures. My officials have updated that information and it continues to support that rent increases in this province are on average lower than those other jurisdictions. Since 2011, the average annual increase has been 2.85 per cent, while the jurisdictions with rent control have had average annual increases of approximately 4 per cent. Since the legislative change in 2018 that restricted rent increases to once in any 12-month period, the average annual increase in this province is 2.05 per cent. The average annual increase in the other jurisdictions in that same period is in excess of 4 per cent. Given there continues to be no observable benefit to implementing rental rate control, coupled with the potential negative impacts such as reduced capital investment in rental housing and reduced supply of rental property, rent control measures are not currently being considered.
In the past two weeks I have had two couples from opposite ends of my district renting from different rental companies contact me with experiences of what can only be described as gouging.
Case 1 Middle age couple
Prior to December 2022 rent was $745 a month. In December 2022 rent increased by $155 to $900 or a 20.8% increase.
Recently, tenants were notified that as of December 2023 rent will be increased by $300 to $1,200 for a 33.3% increase. That's a 61.07% increase in a little over a year.
Case 2 Senior Couple on fixed retirement income Prior to December 2022 rent was $1050 a month. In December 2022 rent increased by $70 to $1,120 or a 6.6% increase.
Recently, tenants were notified that as of December 2023 rent will be increased by $125 to $1,245 for a 11.1% increase - an 18.57% increase in a little over a year.
These increases are far in excess of the 2.85% and the 2.05% annual increases you reference for Newfoundland and Labrador and exceed the 4% increase you reference for jurisdictions with rent control. In April 2022, 99 people were experiencing chronic homelessness. That number swelled to 167 in March 2023 - a 69% increase. Provincially, emergency shelter use has exploded from 173 in January 2022 to 326 in May 2023. That’s an 88.4% increase with the largest numbers - 67.8% - on the Avalon Peninsula. The federal and provincial measures you listed such as the elimination of retail tax on house insurance will do little to offset the rent increases or help those who have nowhere to live.
Given the current situation, there is "no observable benefit" to maintaining the status quo. I fail to see how the "potential negative impacts" you mention in your letter will make matters worse for tenants than they are now and reduce investment in and the supply of rental housing. The tenants who approached me said they could understand (if not accept) the increases if they saw the money was being reinvested into the building. However, that is not the case. What would we expect from for-profit rental companies devoted to minimizing expenditures and maximizing profits?
The Residential Tenancies Act, 2018, is not protecting tenants the way it should. Implementing rent control is an immediate step that government could take to shield tenants in this province. If done correctly, it will protect existing tenants and dis-incentivize landlords from evicting existing tenants to charge higher rent to new tenants. This could be administered through the Residential Tenancies office. Other jurisdictions have successful rent control models which seem not to have negatively affected investment in and supply of rental housing.
In addition to rent stabilization, I would urge the provincial government to amend the Residential Tenancies Act to eliminate no-fault evictions. Instead, focus on implementing measures and providing supports to keep people housed. Currently, Newfoundland and Labrador is the only jurisdiction across Canada that still allows no-fault evictions. This must change.
I look forward to your reply. My caucus and I welcome the opportunity to sit down with you and your officials and housing advocates on how this could be done.
Sincerely,
James Dinn, M.H.A.
St. John’s Centre
Leader, NL NDP