Finance Minister Carol James released her first true budget update late last week, and while it was mostly good news, it was quickly overshadowed by some bad news about the kind of issue that helped propel her party into power.
While James held the usual full-on news conference and technical briefing to show off the financial books, the other news appeared much more quietly and with absolutely no fanfare.
That’s because the NDP really does not want to talk about it: a decision to allow rents to rise a maximum of 4.5 per cent next year – the biggest jump in 15 years. That hike follows the permissible raise this year of four per cent.
That works out to a total allowed rent hike of 8.5 per cent for the NDP’s first two years in power (this year’s rate hike was authorized by the NDP after it took power last summer).
During the B.C. Liberals’ last five years in power, the average annual rent increase was a maximum of three per cent, so already the NDP is allowing rents to be boosted well more than that, and the party is only two years into its mandate.
The problem is that a formula, set by government, has long determined the maximum increase. It establishes a base of two per cent, and then adds on the inflation rate that exists at the end of July each year (this year, inflation is running at 2.5 per cent).
Why this could become a major political problem for the NDP is that the latest increase pours oil on flames that have been burning out of control for some time.
Not only is there a dire shortage of rental housing in many areas, but existing rent levels are sky high, to the point of simply being unaffordable for many people.
When it comes to the issue of affordability – again, the very issue that the NDP made central to its election campaign – housing is right at the top of the list. And for most people it is not about buying a home, but is instead about simply finding an affordable place to live.
While a single digit increase does not sound like a lot, when it is applied to a high rent level, it can translate into a major financial hit.
Of course, not all property owners raise rents by the maximum (many do not raise them at all, especially if they like their tenants). So, many tenants will not be affected by the increases, but thousands will be. There is no getting around that, particularly for those who live in a large apartment building where the property company that operates it simply rubber stamps the maximum hike every year.
There is no easy fix here (an imposed rent freeze would exacerbate the problem, as the supply side of housing would dry up as there would be little incentive to build), but I note NDP MLA Spencer Chandra Herbert is heading up a government rental housing task force that will report back in the fall.
Don’t be surprised if Herbert and his colleagues come back with something that nips that latest allowed rent hike in the bud before it becomes reality.