Rent prices in the province increased 4.2 per cent in the past year. — Photo courtesy of ThinkStock Images
The cost of rent in Newfoundland and Labrador is rising faster than anywhere else in Canada, but governments have yet to catch up to soaring rental prices.
Over the past year, rent increased almost three times more in Newfoundland than in Canada as a whole, according to the latest consumer price index.
Rent in the province increased 4.2 per cent from June 2011 to June of this year. Rent across the country increased only 1.5 per cent.
Nicole Wilson, who is researching homelessness in St. John’s, says higher rents have priced some people out of homes altogether.
“It’s getting worse and worse,” she says. ”More people are getting pushed out onto the street.”
Wilson says governments need to adapt rental laws to take into account the higher cost of living.
People on income assistance receive a maximum of $372 a month for rent or mortage, but the average rent in the city is now $808.
Other provinces have a maximum percentage that landlords can raise rent. In Ontario, rent can only increase 3.1 per cent a year.
So far, Newfoundland has no such law.
Shannie Duff, Deputy Mayor of St. John’s, says rent control has some downsides.
She says landlords are less likely to maintain rent-controlled buildings and may convert rental properties into privately owned properties in order to avoid legal limits on profits.
“We live in a free-market economy,” Duff says.
Duff says the best thing governments can do is help increase the amount of affordable housing on the market.
“So that the people who need it the most are not totally subject to spikes in the rent cycle,” she says.
The bulk of renters are younger than 25 and especially vulnerable to increases in rent.
Wilson says young people who are just starting their careers have a hard time paying rent as they continue to pay off student debt.
City, provincial and federal governments have pitched in to fund Home Share Newfoundland and Labrador. The service matches students with seniors who rent out a room in their house for an affordable, below-market rate.
In addition to Home Share NL, the city is building about 45 affordable housing units in the Pleasantville area. The funding comes from the city, the province and the federal government.
Chris Janes, a market analyst for the Canada Mortgage and Housing Corp., says higher rent is the high cost of an economic boom.
When people fight over limited rental space, rents go up.
“It’s supply and demand,” Janes says.
He’s noticed more and more basement units built into private homes as homeowners capitalize on the tight rental market.
Halifax company Killam Properties Inc. is building 71 units, also in Pleasantville. The building will be the first private apartment building built in the city in about 30 years.
But the units are hardly affordable, with rents estimated at $1,400.
Duff says government and private developments will help alleviate some of the strain on the market, but not enough to significantly drive down rental prices.
“All of these are kinds of … little approaches,” Duff says.
She says without more federal money, the city just can’t build enough affordable housing to keep up with the rising cost of rent.
Janes says we can expect rents to continue to rise.
“As long as people continue to move back to Newfoundland,” he says, “rents are going to continue to increase year over year.”