Minister pledges to step in as IRAC authorizes highest-ever rent hikes in Prince Edward Island for 2023

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The Prince Edward Island Regulatory and Appeal Board has set limits on the maximum allowable rent increases that will take effect on January 1, 2023 – the highest on record – and the Progressive Conservative government of Prince Edward Island pledges to fight them.

In a statement released Wednesday, the IRAC said a maximum allowable rent increase of 5.2% will apply to rental units that are unheated or heated with sources other than fuel oil. The same rate of increase will apply to rental mobile home units located in a mobile home park.

A maximum allowable rent increase of 10.8% will apply to all oil-heated rental units where heating is included in the rent.

This is by far the highest annual rent increase on record in Prince Edward Island. For the past two years, the maximum allowable increase for all rental units has been 1%.

The caps have fluctuated between one and two percent since 2014, according to statistics on the Office of the Director of Registered Rental Property website. Going back to 1989, this list shows that there has never been an increase like the one announced on Wednesday.

In a written statement, the commission said the increases are based on a Consumer Price Index (CPI) formula that helps determine how much rental property owners are spending to operate their rental units.

This encampment on the property of the Christian Reform Church in Charlottetown was one of many that sprung up across Prince Edward Island this summer. They are populated by people who cannot find affordable housing. (Kirk Pennell/CBC)

The IRAC said it also reviewed submissions received from 65 landlords and 201 tenants, as well as 109 submissions that did not specify whether they were from tenants or landlords.

Rent increases in Prince Edward Island are already the highest in Canada

Rent was a major factor to do with PEI’s inflation rate. the highest in Canada in recent months. In April, the annual rental inflation rate on the Island was 15.3%, compared to just 4.2% for Canada as a whole.

The population of the province is growing at more than double the expected rate, and a growing number of Islanders are already struggling to find affordable housing. Some are living in encampments in Charlottetown and Summerside, and food banks and shelters have reported an urgent increased need for their services.

“I will not let this happen on my watch,” Social Development and Housing Minister Matthew MacKay said of authorized rent increases for 2023. (Rick Gibbs/CBC)

Prince Edward Island Social Development and Housing Minister Matthew MacKay was quick to issue a statement in response to the increases.

“Now is not the time to introduce record rent increases in this province. Period,” the statement began.

“I am working with Ministry of Social Development and Housing staff to explore all options to intervene in this decision as soon as possible.

‘Not in the cards,’ says affordable housing advocate

“This is a decision coming from people who don’t experience any of the issues tenants face on PEI,” said Connor Kelly of the PEI Fight for Affordable Housing.

“There are people who are barely making it,” says Connor Kelly of the PEI Fight for Affordable Housing. (Steve Bruce/CBC)

“At a time when we are experiencing a housing crisis, compounded by record inflation, we cannot expect Islanders to pay 5-10% more in rent next year. It’s just not planned,” he said.

There are people who are already working three or four minimum wage jobs just to get by.—Connor Kelly

Kelly said the 200 submissions made by tenants to the IRAC should have carried more weight.

“There are people who are just barely getting by, paying for their medications, their pharmaceuticals…other people who might have to go without meals,” he said. “There are people who are already working three or four minimum wage jobs just to get by.”

Rise in rents “necessary”, according to the association of owners

Chris LeClair is a Senior Policy Advisor with the Residential Rental Association of PEI, which represents Island rental property owners.

“I think it’s necessary from a landlord’s perspective, because of the very reasons that led the IRAC to make this decision,” he said of the allowed rent increases for 2023.

“I think it’s necessary from a landlord’s perspective,” says Chris LeClair, senior policy advisor with the Residential Rental Association of PEI. (Steve Bruce/CBC)

He said the RAIC was reacting to Prince Edward Island’s inflation rate of 10.9% year-over-year in August, causing many different costs to increase for rental landlords in the province, more than 7,000 of whom operate only one or two rental units.

We have to be careful when we look to the private sector, to owners and operators, to subsidize a period of hyperinflation.—Chris LeClair

“These are Island families. These are small businesses,” he said. “I think we have to be careful in looking to the private sector, looking to owners and operators, to subsidize a period of hyperinflation.”

He said what was really needed was an affordable housing strategy for Prince Edward Island, adding that his association had repeatedly told the government that it would “come to the table” to create one.

Legislature’s job is to create policy, says IRAC

Asked to comment on the minister’s reaction to the rent hikes, the IRAC emailed a statement stating that it is the commission’s responsibility to set permitted rent increases under current residential tenancy legislation in the island.

“The commission does not have the authority to create or implement public policy,” the statement said.

“This power and responsibility to make policy and implement laws rests solely with the Government of Prince Edward Island.”

Islanders are still awaiting a new residential tenancy law, which could have the potential to change the way rent increases are handled.

A bill has been in the works since 2019, with the government saying it will provide more protection for landlords and tenants on the island.

Currently, the PEI rental industry. is governed by the provisions of the 30-year-old Residential Property Rental Act.

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