Killam likely to dodge rent cap on large portion of Halifax apartments

One of Nova Scotia's largest landlords will likely be able to sidestep newly extended rent controls on a significant portion of its Halifax apartment empire because the cap will continue to allow rents to rise without restriction when one tenant moves out and a new tenant moves in.

In recent years, upward of 30 per cent of the units owned countrywide by Killam Apartment REIT are turned over to new tenants annually.

In turnovers, Killam often extracts rent increases in the high single digits, according to the company's financial records.

That practice will be allowed to continue in Nova Scotia, even as the provincial PC government announced this week it would introduce legislation to keep rent increases at or below two per cent annually until Dec. 31, 2023.

Few details about the yet-to-be tabled legislation were shared when the announcement was made. But Colton LeBlanc, minister of Service Nova Scotia and Internal Services, told CBC News the rent cap legislation will mimic a temporary order that was introduced last year.

"This is a continuation of the existing rent cap, except in this case it's just going to be legislated," said LeBlanc. 

The existing cap, introduced last fall to protect renters during the COVID-19 pandemic, applies only to existing tenants. 

Financial reports from Killam, which is Atlantic Canada's largest landlord, offer insight into how it institutes rent increases for its 18,000-unit portfolio, which spans seven provinces. They suggest that rents for hundreds, if not thousands, of units in Nova Scotia could potentially rise much higher than the legislated cap.

While it's not clear from the reports how many units are turned over to new tenants in Nova Scotia each year, roughly a third of all Killam apartments are located in the province, largely in Halifax.

Even prior to the temporary cap being introduced, average annual rent increases for existing Killam tenants rarely exceeded two per cent. 

Much of its revenue growth has instead come from turnovers, with average rent hikes of between 6.5 and 9.3 per cent, a trend that's continued during the pandemic.

Killam declined to be interviewed by CBC News. A spokesperson said the company is in a "blackout period" as it prepares to release third-quarter results.

Killam is likely not the only landlord to operate this way. According to a recent report on rental housing affordability in Nova Scotia, many property management companies have enough annual turnover to do renovations on 10 to 20 per cent of their stock.

The report was written by Gardner Pinfold Consultants and commissioned by the Investment Property Owners Association of Nova Scotia.