Why both tenants and landlords are unhappy about P.E.I.'s 3% rent increase cap

Some tenants on P.E.I. will reluctantly be paying more rent starting Monday, but many landlords in the province aren't happy about the increase either. 

Landlords are allowed to start charging a maximum of three per cent more in the new year, as long as their renters have been given at least three months notice about the change. 

While neither group seems pleased with the increase, it's for very different reasons. Housing advocates think three per cent is too much, while landlords say it isn't enough to turn a profit. 

Cory Pater, a member of the P.E.I. Fight for Affordable Housing, said tenants are already struggling with high costs due to inflation over the last few years, and this increase will make it harder to keep a roof over their heads. 

"The market out there is not conducive to finding a new unit or looking around for something cheaper. There's not something cheaper out there," he said. "So it's a real slap in the face to people who have already been facing steep rent increases and are already in a very tight situation." 

The maximum allowable rent increase for 2024 was set by the Island Regulatory and Appeals Commission back in September. 

Landlords can raise rents by three per cent without having to seek IRAC approval, but they can also apply to the commission for up to an additional three per cent more, for a total increase of six per cent over what they charged in 2023.

The increase was announced according to guidelines set out in the Residential Tenancy Act implemented last year. However, separate legislation passed by the provincial government had capped most rent increases at zero per cent for 2023, in light of how much inflation was hurting Islanders on low or fixed incomes.

Landlords argue that housing in general could be harder to come by if they aren't able to turn a profit by raising rents to a higher level. 

June Ellis, executive director of the Residential Rental Association of P.E.I., said some units could be taken off the market if annual increase caps aren't set higher. Some companies have already sold off rental buildings on the Island. 

"Three per cent would work for some, but would not work for others, specifically those who have [charged] extremely low rent for years — if not decades — and need greater than three per cent in order to keep operating," she said.

Ellis said landlords are faced with increased costs for everything from heating and snow removal to insurance. Combined with the province's freeze in 2023, she said, it's making the market unviable for some rental owners.

"It is a business and like any business … you can only sustain [it] for so long by not making the profit." 

The rental association says without ensuring more flexibility on rent increases, the province will wind up having to build more subsidized housing in the long run.