Community Services Minister Richard Mostyn speaks to reporters on May 13. (Haley Ritchie/Yukon News)

Community Services Minister Richard Mostyn speaks to reporters on May 13. (Haley Ritchie/Yukon News)

Cap on rent increases will take effect May 15

The rollout of the policy is creating ‘chaos,’ says opposition

A new rental cap is set to take effect on Saturday, but critics are saying lack of detail from the government is creating uncertainty for landlords and tenants.

“I’m fully confident we will make the deadline of Saturday to implement this initiative,” said Richard Mostyn, community services minister, following May 12’s legislative question period.

As of May 14, the government had still not announced how they will bring in the change. Mostyn suggested the implementation will require a “light touch” not requiring new legislation.

“How does it look? How will we do that? To those questions I will be making a public statement on as soon as we’ve finalized the approach,” Mostyn said on May 13.

The rent cap was part of the agreement forged by the NDP and the Yukon Liberals in order to secure support in a minority government.

The agreement stipulates that the cap for yearly rental increases will be tied to inflation. This means that this year rents can only be increased by a maximum of one per cent, based on the 2020 consumer price index for Whitehorse.

This means on a property that is currently being rented at a cost of $1,100 a landlord would only be able to raise the rent by $11 for this year.

The agreement between the two parties, and the commitment to keeping the cap, expires in January 2023.

The Residential Landlord and Tenant Act requires landlords to give three months’ advance notice to tenants before a rental increase can take effect. Since the policy comes into effect on May 15, only increases made before Feb. 15 will be valid, according to NDP leader Kate White.

Yukon Party opposes quick rent cap rollout

Since the start of the spring sitting the Yukon Party has brought forward two motions calling for a pause on the rollout of the new policy until consultation can take place.

Leader Currie Dixon described the policy effect as “chaos.”

“They’ve known about this policy for weeks. The fact that they have left this until the very last minute to even make a decision about what they’re going to do is problematic. It’s contributed to all the uncertainty and issues we’ve seen in the housing market to date,” Dixon said.

The party has launched their own consultation in the meantime.

NDP Leader Kate White said the policy is necessary in order to protect tenants from sudden rent increases.

“I think, honestly, if folks were in the position I’m in and they were getting the phone calls from people getting their $300 increases or $400 increases, they would understand,” she said.

White pointed out that many jurisdictions in Canada already have annual rent caps, and during COVID-19 both Ontario and British Columbia froze rent increases.

Some landlords are ‘throwing in the towel,’ realtor says

Realtor Jacklyn Stockstill argues the early announcement of the policy has created chaos for both landlords and tenants.

She said many tenants have seen large jumps in rent as landlords worry the policy won’t allow them to keep up with the rising costs of property taxes, utilities, insurance and annual repairs.

“This announcement came out guns blazing with no policy, no details whatsoever, and essentially scared the crap out of any landlord and all these landlords went, ‘Okay, I need to get my rents up to where they should be, because they’re going to be essentially frozen in time,’” she said.

Stockstill said a massive shortage of rentals has put a squeeze on families, people with pets and anyone who can’t afford a rental increase because they have no other options.

“They put this out that this rent cap increase was supposed to help current tenants. And those are the people that are getting hurt,” she said. “What we needed was more rental units. What this announcement resulted in is a decrease in units because a bunch of landlords kind of threw in the towel.”

She said contrary to popular perception, there are many landlords working with small margins in order to pay bills. Stockstill said the rental cap announcement has also affected property values. She said at least one sale has already fallen through, affecting the senior owners who were budgeting to retire on the sale of their property.

“He lost his retirement in one announcement. In one announcement lost it and we can’t get it back for him,” she said.

“Investors don’t invest in rental properties if they don’t have security in their investment,” she said. “This is something that throws security out the window as an owner because you have these constantly increasing expenses.

Mostyn said the Liberal Party has not ruled out implementing compensation for people who may have been negatively affected by the caps.

The Yukon Real Estate Association has called on the government to pause the policy, and the Yukon Residential Landlord Association has issued a survey to members and suggested rental increases should be sent out before May 15.

Others argue rent caps are ‘reasonable’

Not all landlords and tenants are opposed to the cap – which will be on the books until 2023.

Jean-Francois Deslauriers said he and his partner have a rental property and have been landlords for around 30 years.

“I think it’s important to have good tenants and for the tenants to have a decent and affordable place to stay,” he said. “Capping the rent increases at the rate of inflation, the increase in the cost of living, it’s pretty reasonable and I agree with it.”

Deslauriers said he does worry about increasing costs – including condo fees and insurance – but said right now he manages those with tax write-offs and awareness that he is building equity in a strong market.

“It’s not that dramatic,” he said of the current costs. “Of course, eventually, we might have to increase the rents to a certain extent, but the fact is that people are currently paying the mortgage for me and I’m building up equity. So it’s a fair deal.”

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