Rent cap for tenants, tax cut for landlords unveiled in budget

The Higgs government will cap rent increases for tenants this year as it revives a COVID-delayed promise to reduce property taxes for the owners of apartment buildings.

Rent hikes will be capped at 3.8 per cent for all of 2022, retroactive to Jan. 1, Finance Minister Ernie Steeves announced in his budget speech to the legislature Tuesday.

Last year, the Progressive Conservatives rejected the idea of a rent freeze or cap, arguing the market forces of supply and demand would eventually take the sting out of rent spikes.

They're now admitting that hasn't happened yet, and are reversing themselves.

"Despite record levels of multi-unit construction and a growing supply of rental units, the vacancy rate continues to fall and rents continue to climb," Steeves said.

"While we are confident that the market will catch up with demand, and the property tax measures we have introduced today will help, our government acknowledges that more needs to be done for renters."

While he described the measure as a one-year rent cap, Steeves told reporters it could be extended past 2022 depending on what the market looks like next year. 

In addition to the rent cap, the province will also ban landlords from kicking out tenants without cause. Tenants who are kicked out without cause will be eligible for compensation, and landlords will be subject to penalties.

Steeves announced the changes in tandem with a 50 per cent cut to the provincial property tax rate applied to apartment buildings, rental homes and cottages.

Other residential properties such as nursing homes, and non-residential properties such as businesses, will see a 15-per-cent cut.

Those reductions were initially part of the March 2020 provincial budget but they were cancelled when the beginning of the COVID-19 pandemic upended the province's fiscal projections. 

Steeves said he hoped the property tax reductions would spur the construction of more apartment units in the province by landlords facing rising assessments.

The measures are part of a relatively spendthrift budget by the standards of the Higgs government, which held the line on expenses over the last two fiscal years to record surpluses of $408 million in 2020-21 and a projected $487.8 million in 2021-22.

Steeves is forecasting a much smaller surplus this year of $35.2 million as the Progressive Conservatives open the spending taps and reduce taxes.