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Charles MacDonald says he was not surprised.
The Charlottetown man received a notice on the door of his apartment unit on Waterview Heights Lane on June 26. The note stated his building, where he has lived for six years, would be divided into condominiums.
The building’s former owners, CAPREIT Apartments Inc., sold four apartment buildings, with 60 rental units in all, to a new owner, known as 102997 P.E.I. Inc. for $9.4 million in May.
The property is located on the picturesque edge of Ellen’s Creek off North River Road.
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“I know they’re dealing with zero rent increases,” MacDonald said. “Why would you buy the buildings when you know you’re not going to get a rent increase on them?”
The notice, sent to all tenants in the buildings, also hinted that a 2023 freeze on rent increases, passed in the P.E.I. legislature last fall, was a reason behind the sale.
“Due to regulatory changes in the P.E.I. rental market over the past year, we must sell off some of the units to individual buyers,” the note read.
The letter stated vacant units would be sold first and urged tenants to contact Ian Walker, one of the new owners, by June 30 if they were interested in buying their unit.
“We’re just waiting to see what’s going to happen,” said Jan Lund, another tenant at Waterview Heights, who received the notice.
Another tenant at Waterview Heights said she is “extremely unsettled” by the decision to sell the units as condos. This tenant asked not to be identified due to fears of retribution by the new owner.
“I’m not able to afford to purchase my apartment,” the tenant told SaltWire in an email.
“It’s horrible and unfair that landlords can stress and treat their tenants like this. They really don’t care about the effect it has on us. The government needs to step in. There really is nowhere to go.”
Ian Walker confirmed the sale was related to the province’s zero per cent rent freeze.
“Landlords can’t operate under those rules. And you’re going to see a whole lot of problems because of it,” Walker told SaltWire on June 29.
“The sooner the government realizes it and corrects it, the better off they’ll be.”
Walker, who declined to answer further questions, did not clarify what the next steps would be for tenants who did not purchase their units.
In April, Walker’s name appeared on the notice informing CAPREIT tenants of their rent increases.
Next steps unclear
It is unclear what will happen to current tenants.
Rowen Gallant, Renting P.E.I.’s program manager with Community Legal Information, confirmed P.E.I.’s Residential Tenancy Act says a rental tenant can be evicted with a notice of two months, if their unit is converted to a condominium and has been sold.
The tenant must be provided a sworn affidavit that the purchaser of the unit intends to move in before an eviction notice would be valid.
However, he said neither the Tenancy Act and the province’s Condominium Act provide many specifics about conversion of occupied rental units to condominiums.
Rent hike challenged
Last September, the Island Regulatory and Appeals Commission (IRAC), the province’s rental regulator, set allowable rent increases to 5.2 per cent for unheated apartments and 10.8 per cent for those heated with furnace oil.
The order was later quashed by a bill introduced in the legislature by the Progressive Conservatives, which also set rental increases for 2023 at zero per cent.
Landlords were still allowed the option to apply to IRAC to increase rents if they could demonstrate that they would sustain a loss.
In April, CAPREIT applied for greater than allowable rent increases ranging from 12-20 per cent for nearly 500 of its tenants. This included many of the 60 units at Waterview Heights.
Several of the tenants challenged the increases before IRAC.
After the Waterview Heights buildings were sold, tenants told SaltWire the applications for increases were dropped.
MacDonald said his unit would have received a five per cent rent increase under the original IRAC order. He said the sale of his home is a direct result of the province “tampering with IRAC’s decision last fall.”
“How do you expect people to invest in building rental properties if there’s no prospect of them making money?” MacDonald said.
During the recent sitting of the P.E.I. Legislature, Green MLA Karla Bernard brought up the sale of the Waterview Heights buildings and urged the P.E.I. government to consider purchases of similar buildings.
Bernard also introduced a motion calling on the province to implement a “first refusal” policy, which would ensure the province could make a first bid to purchase any apartment buildings put up for sale.
On June 14, Housing Minister Rob Lantz told SaltWire he did not see a need for a right of first refusal in the province and also said the province was “not on the lookout for buying apartment buildings from CAPREIT right now.”
However, in an email response to SaltWire questions on June 30, Alex Firth, a communications representative with Housing, Land and Communities said it was too early to say whether the department would consider buying these units as it “only recently became aware” of the conversion of the units to condos.
“The province is still looking into a right of first refusal policy,” Firth said in an email.