Feedback for Amendments to Residential Tenancy Act

Last Thursday MLA Brad Trivers released a forty-five-page report on amendments he would like to see to the Residential Tenancy Act (RTA) which in his opinion is heavily skewed to favor tenants to the detriment of landlords.

In his release statement he expressed his wish to gather feedback from everyone, but especially tenants, before he tables a bill in the next sitting of the legislature.

I am excited at the prospect of a healthy and vigorous debate in the following months to better understand how the issue of scarce housing in PEI can be better resolved and with that in mind I will provide feedback on what I believe are the biggest changes Trivers is presenting. The other changes are modest by comparison and I don’t want this article to get too long.

Governance and Dispute Resolution

The RTA is currently administered by IRAC and Trivers believes this sets up a conflict of interest as IRAC is in charge of adjudicating both the initial proceedings sand any subsequent appeals.

Also, he seems concerned by lack of specific access to legal advice due to overlapping responsibilities where IRAC is supposed to serve both tenants and landlords.

Trivers’ solution is to create a new Office of Residential Tenancy Services with an Office of the Tenant Advisor and an Office of the Landlord Advisor underneath.

I agree that this proposed set-up would clearly define the roles for bureaucrats working to adjudicate a dispute, but it also looks expensive. There are already too many people that work for the government, so I am not interested in any proposal that adds to the size of the civil service.

This proposal is a work around to a problem we are all aware of, and that is the issue of problem tenants that can destroy property and terrorize condominiums with their erratic criminal behaviour which often takes months to be resolved.

I am unconvinced that creating a new office will bring about speedier resolutions unless we gradually change the culture and demand that unacceptable conduct is just that, unacceptable.

Dismiss Appeals Without Merit

In Trivers’s words, IRAC lacks the ability to dismiss appeals that are “frivolous, vexatious, or outside its jurisdiction.” He is of the opinion that these appeals are clearly meant to delay enforcement and harass the opposing party by forcing more costs on them.

His solution is to allow IRAC to dismiss such appeals which would aid in bringing speedier resolutions.

This is a change I wholeheartedly endorse. Disputes between landlords and tenants cannot drag on for months. What is important to realize is that all tenants will ultimately bare the costs of appeals that are brought in bad faith. These appeals raise the risks for landlords and greater risk demands a greater rate of return which leads to higher rents for everyone.

Minimizing the Risk of Property Damage

The current RTA has no remedy for landlords in regards to wilful or negligent property damage in excess or regular wear and tear. Civil courts appear to be the only mechanism to seek compensation for any damages suffered beyond the security deposit.

The amendments propose making the tenant liable for any costs of repair the landlord has to incur and also allow for a fine to be imposed of upwards of $5,000 on tenants.

Overall I agree with the spirit of the amendment. People have a right to destroy their own personal property if they wish, but renting does not grant ownership and this fact should be respected.

Costs incurred by landlords are ultimately borne by tenants in the form of higher rents for everyone.

If serious penalties are put in place and enforced, this acts as a deterrent to the destruction of property and overall creates a safer environment where landlords feel safer putting their property on the market.  

Trivers also suggests granting IRAC the power to issue an order without a hearing for extreme cases where property damage is proved and threats of safety are present. This amendment is clearly in response to Thamara DeVries’s situation that played out on social media and is a great example of why this amendment is needed.  

Price Controls for Rent

PEI is the only jurisdiction in Canada where price controls are tied to a rental unit, not to an existing tenant. This means that even when a tenant decides to move out, a landlord cannot bring the price of the rental up to market rate.

This would not be an issue if allowable rent increases kept up with inflation, but the truth is that in the last 10 years they have not. The only way for some units to remain viable is to allow the rate to reset when a tenant leaves, but because this is denied by current legislation, many landlords are choosing to leave the business.

This rigidity in the pricing scheme has led many landlords to exit the rental market which overall hurts tenants as many low-cost units are taken out of the market.

Trivers does not really address this egregious issue, but rather proposes a new formula for rent increases that in his opinion more realistically capture the cost increases landlords face. This is a serious mistake in my opinion; it undermines the concept of property rights and cedes key ideological ground to socialists.

A rental unit does not belong to the government or society as a whole. Far left activists do not own these units. If they wish to provide below market rate rental units to the public then it is up to them to pool their resources and make it happen, but forcing landlords to do so is nothing more than theft disguised as good intentions. It cannot be allowed to stand in a free society.

Conclusion

The biggest problem I see when examining this issue is that it’s dominated by Marxist thinking. Housing activists and the media have successfully framed this issue as a class struggle between landlords and tenants. In true Marxist fashion, they have painted every landlord as a greedy conman ruthlessly exploiting tenants with no concern for their well being while tenants are cast as helpless victims.

The reality is that the concept of class does not capture the full complexity of each individual nor can it be used to understand each specific interaction between tenants and landlords. There can be good landlords and bad landlords and the same goes for tenants. Just because an individual is a tenant does not mean they can do no wrong.

But according to housing activists, the law should be made ever more restrictive and constantly favor the tenants because of a power imbalance. If a power imbalance exists, it’s because government regulations have driven sellers out of the market and the ones left have a better negotiating position.

One easy way to increase supply in housing would be to put a pause on immigration for five years. This would allow supply in housing to catch up which would ultimately lead to lower rents for everyone.

If the residents of PEI see that the government is making a serious effort to increase supply in housing, then these amendments and the restoration of a free-market have a much more realistic chance to succeed.