CHARLOTTETOWN, PEI — Vincent Brazil took his landlord, one of the biggest property-owning companies in the country, before the province’s rental office and won.

His landlord, the Canadian Apartment Properties REIT (CAPREIT), recently dropped its application before the Island Regulatory and Appeals Commission (IRAC) to raise his rent, along with 55 other tenants at his apartment building on River Ridge Drive in Charlottetown, by 12 per cent.

Brazil, who works in IT support for a federal department, says his financial situation is likely more secure than many of his neighbors, many of whom are retirees. But he said CAPREIT’s increase would have hurt.

“For me, it’s just very frustrating. I finally got to a point where I was making money and starting to bank it,” Brazil said. “And now landlords want to take all the rest of my money that I’m making. Like, this increase would have taken probably two years’ worth of wage increases. That’s not acceptable, especially not at these times.”

SaltWire has spoken to other tenants in CAPREIT-owned buildings in Summerside who have also received notice that CAPREIT has abandoned its attempts to raise rents by as much as 20 per cent.

CAPREIT applied for the greater than allowable increase for more than 500 PEI tenants in April. IRAC has confirmed that a number of applications have been dropped but has not identified how many.

CAPREIT is one of the largest rental property owners in Canada. The company owns 66,000 housing units across Canada, including 637 in PEI

PEI tenancy laws allow landlords to apply for rent increases above rent control amounts, which were set at zero per cent for 2023, if they can prove that the increases are needed to prevent an operating loss. The laws say IRAC should consider whether the landlord can secure a “reasonable rate of return,” usually defined as between four and seven per cent.

Brazil disputes the accuracy of the operating expenses that CAPREIT’s representative, realtor Ian Walker, presented before an IRAC hearing.

As one example, Brazil noted that CAPREIT claimed payments on the principal of its mortgage as operating expenses. These cannot be claimed as operating expenses, according to the regulations of the PEI’s tenancy laws.

“They were bloating their numbers,” Brazil alleged.

CAPREIT dropped its application before the commission rendered its decision. But instead of celebrating the win, Brazil said he’s waiting for the other shoe to drop.

Rumors of sale

Brazil worries CAPREIT may sell the building he lives in, much like it sold four apartment buildings on Waterview Heights Lane in Charlottetown. The Waterview Heights apartments, which are still occupied, are being converted into condominiums.

Many of the tenants in the Waterview Heights buildings have also challenged large increases filed by CAPREIT. It is unclear what will happen to tenants who cannot afford to purchase their own units.

Brazil suspects a similar situation could occur at his current home.

“That’s what it looks like to me,” Brazil said. “It sold to the same guy who was trying to get the rent increase. He’s turning them into condos.”

Brazil is referring to Walker, a consultant whose name appeared on notices informing tenants that CAPREIT was seeking increased rent. Walker is also one of the owners of the new Waterview Heights properties after purchasing them from CAPREIT.

SaltWire heard from other CAPREIT tenants who shared the same suspicions.

Shelby Lees, a tenant who lives in a CAPREIT building in Summerside, also received notice last week that CAPREIT had dropped its bid to raise her rents by 12 per cent.

Like Brazil, Lees told SaltWire in a Facebook message that she was also worried.

“I have an awful feeling the only reason it was thrown out is due to them selling though. But, a win is a win for the time being,” Lees said.

SaltWire could find no evidence that other CAPREIT-owned buildings in PEI have been sold. No order in council has been signed by cabinet authorizing any sale other than the Waterview Heights buildings.

SaltWire asked CAPREIT if there were plans to sell any other properties aside from the Waterview Heights buildings. No response has been received since the request on July 5.

CAPREIT received tax break

Despite the applications for rent increases, CAPREIT took advantage of a property tax subsidy offered by the PEI government.

The province announced the rental unit property tax subsidy in January. The program provided a property tax break offered to landlords struggling with increasing costs in 2023. Landlords who have increased rent in 2023 are supposed to be ineligible to receive the property tax subsidy for these same units.

The province and IRAC have signed an information-sharing agreement about greater than allowable rent increase applications.

A representative of the Department of Finance confirmed to SaltWire in May that CAPREIT had received the subsidy for some of its units. However, the department did not clarify to SaltWire whether these units were the same ones that received notice for a greater than allowable rent increase.

In a July 5 email, Hillary MacDonald, a communications officer with the Department of Finance, said applicants for the subsidy had to certify on the application form they would not apply for a greater than allowable rent increase through IRAC.

“Through these certifications, it is our current understanding that there were no applicants who received the rental unit property tax subsidy and also received a greater than allowable increase from IRAC for the respective unit,” MacDonald said.

MacDonald said the department plans to confirm this with an audit but would not say whether details about specific landlords would be publicly released.

Liberal MLA Gord McNeilly, whose district includes the Waterview Heights buildings, said Islanders had a right to know whether CAPREIT was “double-dipping” with both rent-increasing applications and publicly-funded tax breaks.

“Taxpayers are basically paying for these subsidies. And the bottom line is they should know where their money is going to and how it’s being used and if the company is receiving these in good faith,” McNeilly said.

CAPREIT did not respond to questions about the rental unit property tax subsidy.

Stu Neatby is a political reporter with SaltWire in Prince Edward Island. He can be reached by email at [email protected] and followed on Twitter @stu_neatby.