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Addressing housing affordability

The case for rent increase caps in Alberta

A golden key with a dollar sign handle inserted into a keyhole, symbolizing wealth access or financial security.

Canada is facing a housing supply and rental affordability problem nationally. Foreign nationals arriving in Alberta face added difficulty as tenants.

Individuals and families arriving in Canada often bring with them diverse customary practices and may not be fully aware of their rights as tenants. In many cases, residential tenancy agreements are drafted by landlords to align with their preferences and interests, often without proper consideration for tenant rights. To secure housing, tenants may agree to increased security deposits, unfavourable terms, or settle for properties in disrepair. As a result, disputes can arise due to a lack of understanding of the rental agreement, with tenants discovering that their rental agreement violates applicable legislation.

In Alberta, the Residential Tenancies Act (RTA) is the statutory law governing residential tenant and landlord agreements. RTA regulations also address issues such as late-payment fees, security deposits, and termination of tenancy. Similar legislation exists in other provinces, where disputes are typically handled by dispute resolution bodies rather than the courts. The province's Residential Tenancy Dispute Resolution Service (RTDRS) is a quasi-judicial tribunal that provides a forum for resolving disputes falling under the RTA.

The RTDRS provides tenants and landlords with an independent tribunal to enforce the RTA. However, newcomers may not fully grasp the importance of documenting complaints about unfit premises or unfair rental terms, leading to potential difficulties. This becomes especially problematic when tenants face disputes with corporate landlords who understand the regulations. Tenants might only report issues verbally, unaware of the necessity for formal documentation for RTDRS proceedings. This lack of understanding could result in tenants withholding rent, breaching agreements unknowingly, without realizing they can claim for rent reduction through the RTDRS process. While the RTDRS provides a platform for resolving issues, efforts should focus on preventing disputes from escalating to the point where RTDRS intervention is necessary.

To reduce RTDRS claims, implementing legislation regarding rent increases is crucial. A common tenant issue that has become increasingly problematic, exacerbated by supply issues, is the absence of rent control in Alberta. There's no cap on rent hikes, leading to significant annual increases. Landlords in Alberta can't raise rent under a fixed or periodic tenancy until a year has passed since the last increase. They must provide three months' notice in advance for a monthly periodic tenancy or 90 days for other types of periodic tenancy.

British Columbia and Ontario have rent increase guidelines in their residential tenancy legislation. As of the date of publication, the limits stand at 3.5% and 2.5%, respectively. The notice requirements for landlords to tenants are similar to Alberta's. Despite ongoing rental unit availability and affordability challenges in these provinces, limiting rent increases has additional benefits.

First, a rent cap benefits both tenants and landlords. Tenants gain certainty, knowing they won't face unexpected rent hikes that could price them out of their homes, which enables better life planning. The same goes for landlords. It offers financial predictability, allowing them to assess the viability of their rental properties, whether they're independent or corporate, especially when confronted with fluctuating market factors like interest rates.

Second, a tenant would be better insulated against rental market volatility, as they now bear the brunt of supply and demand imbalances. In cities like Calgary and Edmonton, where vacancy rates are at their lowest in over a decade (1.4% and 2.4%, respectively, according to CMHC), renters have few alternatives for housing. Landlords can easily pass their increased costs to tenants, such as rising interest rates, by raising rents. This only exacerbates the power imbalance. Currently, landlords can issue double-digit rent increase notices, leaving renters with limited options due to scarce supply. A rent cap would provide some protection for tenants who have secured housing in the short term.

Lastly, a rent cap can help prevent conflicts between landlords and tenants. Rent increases often trigger disputes, which may lead to tenants seeking resolution through the RTDRS. It is often a rent increase that will precede a dispute. When faced with a significant increase in monthly rent, the renter may then re-evaluate the adequacy of the premises and bring complaints to the landlord. It's reasonable to assume that implementing an annual limit on rent increases would reasonably reduce the number of landlord-tenant disputes.

The 1948 Universal Declaration of Human Rights and the 1966 International Covenant on Economic, Social and Cultural Rights recognize the right to adequate housing. Implementing an annual rent increase cap in Alberta would help newcomers and residents a great deal. It would offer existing tenants increased security, mitigate the impact of market-driven rent spikes, and reduce conflicts between landlords and tenants. While the current challenges with respect to housing are felt across Canada, this is one provincial adjustment that will benefit Albertans and help those new to the province.