Statement by Kevin Russell
Executive Director
Investment Property Owners Association of Nova Scotia
Standing Committee on Law Amendments
Bill 467
September 16, 2024
Thank you for the opportunity to speak on Bill 467.
Bill 467 prolongs the failed policy of rent control.
Before rent control was introduced in 2020, Nova Scotia experienced lower rent increases than Canadian jurisdictions like Ontario and BC that had rent control.
Since rent control was introduced in Nova Scotia, rents have skyrocketed on newly built units, driving up the overall rental costs.
This is why the independent Affordable Housing Commission recommended in 2021 to end rent control after the COVID-19 state of emergency.
But their independent, fact-based recommendation was ignored.
Three years ago, we told this committee that legislated rent control would result in higher rents and more homelessness.
MLAs across all party lines ignored our warnings and passed a law that made the housing and homelessness crisis worse.
Rent control caused thousands of rental properties to be sold.
In our 2022-member survey, over 3,000 rental units were reported at risk of being sold—a figure confirmed again in our 2023 survey.
With the rent cap now extended to 2027, we expect an acceleration in the number of small rental properties being sold.
Thousands more being sold to avoid the financial losses caused by rent control.
To put it in perspective: for every new rental unit that comes on the market, one is being taken out.
A positive aspect of Bill 467 is that it maintains the right balance that’s in place with fixed term leases.
Those who call for changes on fixed term leases are presenting a biased, unfair and incomplete account of this vital tool to providing affordable housing in Nova Scotia.
Why do I make this statement? Because we follow the data. We look at the facts.
First off, in some significant parts of the rental housing sector, fixed term leases are almost never used.
We asked our larger members – including Killam, CAPREIT, Southwest Properties, Skyline Living and Hazelview Properties – how many fixed term leases do they currently use?
Of Killam’s more than to 5,700 units in Nova Scotia, only about 285 units use fixed term leases. That’s 5%. Most of these fixed term leases are for Killam’s work with supportive housing organizations, including Adsum, Shelter Nova Scotia and YWCA.
CAPREIT: more than 3,400 units in Nova Scotia. None use fixed term leases. That’s 0%
Southwest Properties: 1,900 units in Nova Scotia. None use fixed term leases. That’s 0%
Hazelview Properties’ more than 800 units in Nova Scotia, none use fixed term leases. That’s 0%
Skyline Living: more than 740 units in Nova Scotia, none use fixed term leases. That’s 0%
Let’s do the math.
Of more than 12,500 rental housing units offered by several larger companies in Nova Scotia, only 2.3% use fixed term leases.
When private sector rental housing providers are contacted by government or not-for-profit agencies to provide emergency housing, the only way these rental housing providers will agree to provide emergency housing is by using a fixed term lease.
As Michael Kabalen, Executive Director of the Affordable Housing Association of Nova Scotia noted at a December 2023 meeting of the Standing Committee on Human Resources:
QUOTE:
“As a not-for-profit provider, for example, we’re often dealing with individuals who have been housing insecure for a long time. And so, we often will start with a fixed term lease… So to broadly say fixed term leases are a problem, I think there are lots of good reasons that a fixed term should be used… to say they are all bad, is also an overstep.”
When we surveyed our members in January, 62 out of 185 respondents said they used fixed term leases to provide supportive housing for the following organizations:
Adsum for Women and Children
North End Community Health Centre
Elizabeth Fry Society
Shelter Nova Scotia
Tawaak Housing Association
Welcome Housing
YWCA
Phoenix for Youth
John Howard Society
Ending or restricting fixed term leases makes it harder to house Nova Scotians in need who are forced to seek help from these supportive housing groups.
So where are fixed term leases used?
Remember that more than 90 per cent of private sector rental housing providers in Nova Scotia are sole proprietors.
They are not large companies.
They carry a great deal of financial risk and pressure.
Our organization has conducted two surveys of our members – in the spring of 2023 and the winter of 2024.
The spring 2023 survey focused on how fixed term leases are used by rental housing providers.
The winter 2024 survey asked about the impact of government ending or restricting fixed term leases.
Here are the highlights of both surveys.
The first survey was conducted April 18-26, 2023, with 208 rental housing providers responsible for 43,711 rental units responding to the survey. The findings of the spring 2023 survey are as follows:
55.6% of fixed term leases are for first-time renters.
87.24% of fixed term leases are being used for reasons other than Nova Scotia’s rent cap.
Top five reasons cited for rental housing providers offering fixed term leases are
- risk management
- allowing time to develop the tenant relationship
- first time renters
- limiting property damage; and
- lack of tenant credit history.
Tenants on fixed term leases are more likely to pay their rent and respect the Residential Tenancies Act.
Our second survey was conducted in January 2024 with 185 rental housing providers, representing more 37,000 rental units the province, responding.
As I mentioned, more than one-third of these respondents – 62 rental housing providers – use fixed term leases to provide emergency and supportive housing.
The survey concluded that eliminating or restricting fixed term leases would also result in rental housing providers – representing over 5,700 rental units – making the following changes in their operations:
- 24.31% would leave rental units empty;
- 55.8% would sell their property or properties;
- 29.83% would repurpose their property to another use; and
- 63.54% would stop future investments in rental properties/switching to other type of investments.
These survey results are clear: ending or restricting fixed term leases will result in less rental housing, more Nova Scotians becoming homeless and a worsening housing crisis.
We remind you that we warned this committee in the fall of 2021 that legislating rent control would increase homelessness and actually increase rental costs.
Our warnings went unheeded.
We have all witnessed the consequences of populist decisions that don’t align with data or actual evidence of housing realities.
Please listen to the people and businesses that provide the overwhelming majority of affordable housing in this province.
To conclude, what are some ideas that can actually help tenants and rental housing providers?
First, government should create an emergency rent bank to help Nova Scotians in need.
Non-payment of rent is a persistent problem among the 5,000 residential tenancy hearings over the last several years. It hasn’t gotten worse, but it hasn’t gotten better.
IPOANS have been asking FOR YEARS for the government to create an emergency rent bank to provide financial help for those in need.
Second, government needs to hire more residential tenancy staff to speed up resolution of residential tenancy issues.
As we know, the government has refused to create a compliance and enforcement unit, which would have seen a budget of $1.5 million and 10 full-time staff.
In the absence of such a unit, the government should invest that $1.5 million towards hiring more staff at residential tenancies. This investment could go a long way to fixing a broken system and making it better for those that use it – both tenants and rental housing providers.
Thank you.
Link to resource: Bill 467 Law Amendments Interim Residential Rental Increase Cap Act
Topics: Editorials