For nearly the past 10 years, Halifax has been one of the fastest-growing cities in Canada. The demand for housing has exploded, rents have skyrocketed, and many renters feel trapped facing rent prices that seem out of control. If they leave their current apartment that's under the rent cap, they're almost certain to face huge increases in their monthly payments. But, is this the result of greedy landlords, or is it a symptom of a larger issue within our housing system?
Current Market Conditions
In the past few years, landlords have been receiving a ton of hate. While I understand the frustration towards the big bad landlord, as many renters have had terrible experiences with landlords, not all landlords are unfair. There are many everyday average Nova Scotians who are landlords, hoping their properties will become significant savings for their retirement.
Rent Increases Over the Years
To get a clear picture of what's happening, let's look at the progression of rents over the last 5 years. In 2019, according to CMHC, the average two-bedroom apartment was about $1,200 a month. Recent data shows this has increased to about $2,500 a month. A quick search on Kijiji within a 20km radius of Halifax reveals that the average price for two-bedroom apartments is $2,355. These are real-life values, and only four of the first 20 ads on Kijiji were under $2,000 a month.
The Effect of the Rent Cap
In November 2020, a rent cap was implemented in Nova Scotia, initially set at 2% and now at 5%. However, with rents doubling over a 5-year span, it is clear this is not working. Many people believe the rent cap does not favor the public in the long term. This regulation has caused landlords to refrain from investing in property maintenance, leading to perceptions of landlords becoming slumlords.
Supply and Demand Imbalance
Nova Scotia is experiencing a housing shortage, with a ratio of eight people added to the province for every one unit of housing being built. This imbalance is only second to Moncton. The costs of new construction are astronomical, due to labor and material shortages, high fees, and lengthy approval timelines. These factors contribute to the high cost of new rental units.
The Role of Government and Developers
The government and municipalities have not built any affordable housing units for 30 years, leaving developers and landlords to shoulder much of the blame for the lack of affordable housing. Many proposed developments were delayed or denied in the past, which exacerbated the current housing crisis.
Challenges Faced by Landlords
For many landlords, costs have risen immensely over the last 5 years. Mortgage payments, insurance, property taxes, utilities, and municipal fees have all increased. If landlords are stuck with pre-rent cap low rents, they struggle to cover expenses. The equity gained from property value increases doesn’t necessarily mean landlords should cash out, as they face capital gains and other financial considerations.
Are Halifax Landlords Being Fair?
Landlords need to pay for things like fixing broken stuff or paying bills. Some landlords might not be nice, but most want to ensure they have enough money to take care of their property. It's important for everyone to be fair and happy. Landlords are private people or companies investing to gain passive income for their future wealth. It is not their mandate to fix the housing crisis.
The Need for More Housing
We have a huge lack of housing in Halifax. The less appealing it is for developers and investors to build more properties, the worse the situation will become. We need the private sector to build quickly and in large quantities to address the housing crisis in Halifax. Blaming developers and landlords alone is incorrect; the real issue is a rapidly growing city with a huge lack of affordable housing.
What do you think? Are landlords in Halifax taking advantage of renters, or is this just the natural progression of the housing crisis in our city? Leave a comment below and let me know. For more insights on Halifax real estate and our rapidly growing city, check out my blog. Thank you for reading, and have a great day!
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