The organization representing Nova Scotia Landlords is warning the government and the public that the financial situation for many property owners is becoming a crisis.
In a release late last week, the Investment Property Owners Association of Nova Scotia (IPOANS) said an increasing number of landlords either must sell their properties or face bankruptcy.
Kevin Russell, the director at IPOANS, says this financial situation is caused by the crushing tag team of 9 percent provincial inflation and Nova Scotia’s two percent rent cap.
“In Nova Scotia, it’s now 9.3 percent inflation and we’re only allowed a 2 percent rent increase,” said Russell. “It’s causing a lot of stress and anguish among rental housing providers.”
“Rental housing providers are in negative cash flow, which means they’re losing money. Landlords are increasingly contemplating leaving the industry, and some have. They’re having to make the choice of hanging in, with the chance of going into bankruptcy, or selling their asset.”
Russell said the best solution would be to lift the rent cap, but he knows the Houston government isn’t willing to do that, yet. So, he is hoping the province will be open to other ideas for landlord relief.
“Right now they could certainly lift the cap, but we don’t think that’s in the cards,” said Russell. “From a political point of view, it wouldn’t make sense for the Progressive Conservatives to remove the cap. It would provide much fodder for the opposition parties.”
One idea IPOANS put forth is for rental units to be included in the province’s Capped Assessment Program, which protects homeowners from getting massive tax increases due to higher assessment values. Right now, the program only works for private homeowners, not commercial property owners.
The program is not universally beloved, however. It has been criticized for creating two classes of taxpayers in Nova Scotia; current homeowners that have benefitted from years of capped assessments, and newer home buyers who are not, and therefore will pay much more.
“Municipal property taxation has become extremely inconsistent, with large variations in tax between homeowners living in similar homes,” a 2017 report by the Halifax Regional Municipality.
“It is common to see neighbours with identical or similar homes paying very different tax bills. As such, the credibility of the property tax system is at risk. The Assessment Cap has led to dramatic shifts in property taxes across the Region with almost 60 percent of single-family homes saving on taxes while other homes and apartments have higher taxes.”
“The cap is increasing property taxes on new homes and existing homes that sell or renovate. Some individuals are delaying home purchases due to the higher property taxes that are being shifted onto new homes and homes sold.”
Nonetheless, Russell is warning that, at the current pace, Nova Scotia will lose rental units, as they get sold to new owners who will use the properties as private homes – not as affordable rental units. He also notes that newer, better, apartments will be priced much higher on the market, to make up for units that are protected under the cap.
“The most affordable housing the province has right now is its existing rental stock. And for every rental provider that leaves the business, it puts at risk somebody going homeless.”
RELATED: N.S. Landlord Sells Buildings Because Of Rent Cap
Huddle has spoken to two landlords in Nova Scotia over the past year who have sold some of their rental buildings, citing the rent cap, combined with high inflation on operating costs, as the reason.
RELATED: Landlords Worried About Rising Costs
IPOANS is putting together a “solutions document,” which they will present to the provincial government. Russell is hoping that IPOANS can meet with the government in September to talk about these issues face-to-face.
Derek Montague is a Halifax-based reporter for Huddle, a digital business news publication owned by Acadia Broadcasting.
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