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Tax system will lead to ‘long-term problems’ with housing supply: apartment owners

Published Feb 28, 2025  •  Last updated 29 minutes ago  •  3 minute read

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Willy Scholten, president of the New Brunswick Apartment Owners Association, is still calling for temporary property tax relief this year to offset the impact of a new three-per-cent rent cap on landlords’ revenue. Photo by Barbara Simpson/Brunswick News

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A group of 60 developers is calling for immediate help from the provincial government to combat rising operating costs on multi-unit rental properties they operate in New Brunswick.

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In January, the group formally requested a meeting with government officials to discuss further provincial property tax relief to counter the looming impact of the province’s rent cap on their revenue, according to Willy Scholten, president of the New Brunswick Apartment Owners Association, which represents multi-unit rental operators who are often developers.

“We’re waiting to have that meeting with them,” Scholten told reporters Thursday following a summit of developers in Fredericton.

On Friday, Housing Minister David Hickey told Brunswick News he was aware of an upcoming meeting between Local Government Minister Aaron Kennedy and the New Brunswick Apartment Owners Association.

“Look, we’ve been clear from the start that we’re about balance,” said Hickey, who attended Thursday’s summit.

As of Feb. 1, New Brunswick has a three per cent residential rent cap in place, but landlords can seek approval with the Tenant and Landlord Relations Office for a larger rent increase, up to nine per cent, to cover “capital renovations.”

The New Brunswick government recently announced the feds had agreed to the province’s proposal to remove the 10 per cent provincial sales tax on eligible multi-unit builds.

That proposal was put forward by the new Holt Liberal government to take advantage of the existing five per cent federal tax break on new builds.

But some New Brunswick apartment owners have been skeptical the rebate will drive new development given rising operating costs on existing buildings.

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In December, Scholten made the case for additional property tax relief to a legislative committee tasked with hearing from landlords, tenants’ rights advocates and housing researchers on the Holt Liberal government’s rent cap bill.

Scholten said Thursday he didn’t have an idea of the financial impact to the provincial government if it temporarily reduced the already lowered non-owner occupied residential tax rate by one-third as requested by the association.

Property tax bills are set to be mailed out March 3.

In early February, the New Brunswick government projected a $400-million budget deficit – up $300 million in the last three months – for this current fiscal year. It’s also fielding more calls for further spending in health care and education ahead of the release of its 2025-26 operating budget on March 18.

“The problem for (apartment owners) is that competing priorities didn’t stop the province from going ahead with rent control,” Scholten said. “That’s fine – we’re prepared to support them on that and work with them on that – but in the meantime, if the government is creating this problem with extra costs with property taxation and then saying, ‘It’s got to be three per cent,’ they should be dealing with the other part of the equation. It’s got to be balanced.

“It’s just going to lead to long-term problems as far as housing that we need.”

But Hickey argued Friday that the new Liberal government has taken and will continue to take steps to strike that balance.

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“We’re putting in a rent cap to protect tenants that have seen rent increases above three per cent over the last six years, while at the same time finding that other balance,” he said. “That balance means for us is that’s 15 per cent cheaper right now to build in New Brunswick than the previous government, a 10 per cent rebate on electricity costs, and this being the last billing cycle that we’ll see without property tax reform.”

The Holt government has pledged an overhaul of the provincial property tax system in time for the 2026 taxation year.

“We’re not opposed to working with the government on rent controls,” Scholten said. “We want to work with them to make sure that it’s rent controls that do balance like (the minister is) talking about.”

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