Key New Brunswick tenant protection policy dealt a setback in court decision

A pair of investors from Coquitlam, B.C., who bought a Saint John apartment building in 2022 and financed the purchase with a large variable-rate mortgage, are having some success challenging a provincial government rent control policy that spared two of their tenants from rent increases above 20 per cent earlier this year.

The court challenge is aimed at undermining the provincial government's policy of phasing-in large rent increases over multiple years. That policy is the key piece of rent control protection currently offered to tenants by the New Brunswick government.

Karen Sharp owns Leading Edge Property Solutions in Saint John and manages the six-unit building on Saint John's Tartan Street for the B.C. investors.  

She delivered rent increase notices to tenants in all six apartments in September 2022 that were to take effect in March.  She then went to court in April after two renters, who were being asked to pay an extra $200 per month, filed objections and won the right to have those amounts implemented over three years.

Sharp says the building owners supported the court action, which remains unresolved. However, Sharp did win a key ruling in the case back in May.

"It's been six months now and my legal fees are over $3,000," said Sharp.

"There's no consistency, that's my problem. It just depends on the officer that you get." 

Property records show the apartment building in the middle of the case sold to B.C. residents Ying Li and Huazhen Qin in March 2022 for $750,000. It was more than double its assessed value for taxes by Service New Brunswick at the time.  

The same records confirm it was financed with a $487,500 floating rate mortgage.  

Court documents submitted by Sharp show the interest rate on the mortgage, which was set at one per cent below the Royal Bank's prime lending rate, started out at 1.45 per cent in early 2022. However, by the end of December 2022 it had ballooned to 5.45 per cent.  

The escalation was enough to add $1,600 per month in interest to a mortgage of that size.

In September 2022, Sharp delivered rent increase notices to all six apartments in the building for March 2023, citing "increased costs."

Two of the six tenants who had been paying $860 and $900 per month in rent prior to the increase filed for a review with the former Residential Tenancies Tribunal, now Tenant and Landlord Relations Office, and won a partial victory.

The officer handling the case concluded the increases were "reasonable" given current market rents but determined because of their size they should be implemented gradually in three instalments of $67, citing a new 2023 provincial rent control rule that allows for that.