Alberta NDP is proposing a temporary cap on rent increases for what they claim will protect tenants from soaring housing costs, but critics are warning the policy could have disastrous consequences.
The Alberta NDP’s introduction of Bill 205, The Alberta Housing Security Amendment Act, seeks to cap rent increases altogether.
NDP housing critic Janis Irwin told reporters that this bill is an emergency measure to provide immediate relief amid concerns from renters, including some facing up to 50% rent increases.
“This is forcing families to stretch their household budgets to the breaking point,” said Irwin. The bill proposes capping rent increases at 2% for two years and then tying them to the Consumer Price Index for a maximum of 5% for the following two years.
Neil Sharma, a reporter who has covered the housing market for over a decade, said that a rental cap could only do so much given the immense housing demand driven by immigration.
Sharma, who lives in Toronto, not Alberta, said that renters in Ontario are also spending over 50% of their monthly income on rent..
Sharma said that unless immigration is addressed, the demand for housing and basic necessities will continue going up.
Jen Lamoureux, a mortgage broker and landlord for over 11 years, listed some concerns for renters as a result of the proposed policy.
The two most common leases in Alberta are fixed-term agreements—one with a specific start and end date—and periodic agreements—one with no end date, generally paid month-to-month.
Lamoureux said that all of her nine properties are on fixed-term agreements. She explained that this bill would cause tenants to move more often, as landlords would never renew leases if the market did not support them.
For example, if the rent agreed upon at the start of the lease was $1500/month, but the market supported rents of $1750/month at the end, a rent cap of 2% would not allow for this much of an increase. Therefore, landlords would find a new tenant and increase the lease to whatever the market allows them to charge.
She said that the provincial government does not have the time to audit every landlord in the province.
“The only way that an increase greater than 2% is going to get reported is if you were staying with your current tenant and tried to jack their rent,” she said.
Relief for Albertans’ housing costs should come through an increased supply, said Lamoureux and her husband, Trevor Adams, who is a landlord himself. This bill would do the opposite, they claimed.
A 2% cost increase cap would not even keep up with the increase in costs on mortgages, electrical, natural gas, property taxes, and more — all of which are not capped.
They said this bill would do the opposite and decrease supply, causing some in the rental market to sell their properties instead of dealing with the hassle or operating at a loss.
Adams’ sister had a rental in Comox, British Columbia, which they sold because a rental cap was introduced. The government gave the tenant all of the control. The owner was not able to raise rent to offset costs and decided to sell the home because it became too expensive.
“More people will become homeless because there will be no incentive to rent places,” said Adams.
Alberta’s Seniors, Community, and Social Services Minister Jason Nixon agreed that a province already short on housing and implementing rent caps would lead to more homeless people.
“Every jurisdiction that went down the road of rent control has been a disaster. There’s not a major economist anywhere in this country calling for rent control because it does not work,” said Nixon.
The couple believe that this bill will not pass in the legislature. They believe it is an election tactic for the NDP so that at the next election, the party can say they tried to help renters, and the UCP voted against it, even if the bill would realistically do more harm than good.
The UCP has committed to investing over $1 billion in the upcoming three years to enhance affordable housing options. As outlined in February’s budget, this plan includes allocating close to $235 million within the same period for programs assisting with rent.
Speaking on behalf of Nixon, Mental Health and Addiction Minister Dan Williams emphasized this commitment at the legislature on Tuesday. He highlighted the province’s concentration on constructing additional housing, aiming to introduce 25,000 new units by 2031.
A free market is the best system for rental properties in Alberta, say Lamoureux and Adams.
“When it has to go down, it goes down. It goes up when it can — when there’s an allowance for it. The market only bears what it can bear, only absorbs what it can absorb,” said Lamoureux.
