Despite rent controls, P.E.I. rental costs growing faster than most provinces

Rental costs on P.E.I. are rising at one of the fastest rates in the country, despite the province having what Housing Minister Rob Lantz describes as "the most rigorous rent control regulations" in Canada.

Data from Statistics Canada show rental costs on P.E.I. increased by 23.6 per cent between 2019 and 2023. Those numbers give P.E.I. the third largest increase in the country, well above the national average of 16.5 per cent. 

Growing rental costs have also been one of the key components driving P.E.I.'s inflation rate. 

As to why rents have gone up so much even with rental controls in place — there are a few reasons. 

"Certainly with the pressure with population growth and rising costs and everything here, I guess it's not surprising" rents have increased, Lantz said Friday.

"We've got a lot of new development, a lot of new rental units in this province and they tend to come on the market at a much higher rate than our older stock that's been there a while."

Unless there's a funding agreement with government stipulating what rents have to be set at, new units come onto the market at whatever price the market will bear. Rent controls only kick in afterwards.

With a vacancy rate measured last fall at less than one per cent, the market currently favours landlords, not tenants.

Last month, a researcher told the P.E.I. Federation of Municipalities that the province is currently short about 5,000 housing units, and that the province will need to build about 2,600 homes a year over the next decade in order to bring some balance to the market, given current rates of population growth.

Speaking in the legislative assembly Thursday, Lantz said his priority right now is to keep building and increase the housing supply as quickly as possible.

While P.E.I. has had rent controls in place for years, there was no upper limit on how big annual increases could be if they were approved by the Island Regulatory and Appeals Commission, until the new Residential Tenancy Act came into effect in April.

Under the new Act, there's up to three per cent that landlords can implement automatically, set by IRAC, and a further limit of three per cent above that landlords can obtain by applying for a higher increase through the regulator.

In the lead-up to the law coming into effect IRAC received applications for increases involving more than 1,500 rental units. In some cases landlords applied for — and were granted — increases of more than 30 per cent.

But Thursday in the legislature PC MLA Brad Trivers said the new cap is driving landords away.