The head of the province’s apartment owners association said increases in property tax assessments will leave landlords worse off, despite a provincial property tax cut.
Meanwhile, a tenants’ rights activist says a one year rent cap doesn’t do much to help tenants, either.
In Tuesday’s budget, Finance Minister Ernie Steeves announced a 50 per cent cut in provincial property taxes for “non-owner-occupied residential properties” such as apartment buildings.
The cut would be phased in over equally over three years, at about 16 per cent a year and was paired with a one-year rent increase cap of 3.8 per cent.
The property tax cut would not impact municipal property taxes. While these are collected by the province, the tax rates are decided by individual municipalities.
In October 2021, the province announced its overall assessment base, the assessed value of all properties in the province, increased by 7.7 per cent.
That increase was, in part, because of a spike in real estate sales in the province, and could cause a hike in individual property assessments.
Depending on the assessed value of a property, and the municipal property tax rate, property owners could end up paying more this year in overall property tax, even with the provincial tax cut.
Willy Scholten, president of the New Brunswick Apartment Owners Association, told Information Morning Fredericton the increase in property tax assessments will eat away at any potential savings brought in by the tax cut and still leave landlords with a hefty bill.
10:10Budget – Landlord tax cuts
Scholten said that, in combination with the rent hike cap, could hurt many landlords.
“Landlords will now be struggling with their business,” said Scholten.
Tenants criticize tax cut
But it’s not just landlords who are unhappy with the province’s tax cut.
Julia Woodhall-Melnik, the Canada Research Chair in Resilient Communities based at the University of New Brunswick Saint John, said she has concerns the 50 per cent cut could attract more outside investors into the province to buy up housing stock and increase rents.
“So really what we’re doing by taking that tax out of the market, that the landlords would have previously paid, is we’re taking away money that could be offered to other social programs,” said Woodhall-Melnik, speaking to Information Morning Saint John.
Scholten said the tax cut hasn’t prompted any new talk about building more units.
We did a poll of our members and asked them if this has impacted their plans to develop, said Scholten.
“They told us that 4,500 units were now on hold.”
Scholten said some of the rental increases “aren’t acceptable” and admits some landlords in the province “aren’t respectful,” but he points to the tenant tribunal as a solution for these issues.
He said landlords are being painted with the same brush, even though most landlords do care about their tenants.
Information Morning – Saint John17:02New Brunswick’s housing crisis.
“For example, our company during the two and a half years of the pandemic, only increased rents for our tenants 2 per cent,” said Scholten.
“But we don’t hear those stories.”