Two families living in a duplex in Hampton now have fewer than 30 days to get out, according to eviction notices stuck in their doors on March 31.
The previous day, they told their property manager they would not agree to rent increases that would take their rent from $700 per month to $900 for one unit and $1,000 for the other, starting Aug. 1.
Those increases would be well over the 3.8 per cent rent cap announced by the New Brunswick government on budget day on March 22.
Bill 96, an Act to Amend the Residential Tenancies Act, was tabled March 29 and is widely expected to be passed into law. When that happens, it will apply retroactively from Jan. 1 and be effective through December 2022.
Jennifer Taylor thought that meant she could safely refuse to pay an increase of nearly 30 per cent.
Instead, she got an eviction notice, informing her that her Hampton apartment is being converted into an Airbnb effective May 1.
“Now we have to start packing and looking for a place this affordable,” said Taylor, who lives with her two teenage children.
Michelle Cheslock, who lives on the other side of the duplex, told a similar story. After saying no to a rent change from $700 to $1,000, she’s getting evicted, too.
The building at 27-29 Acadia Cres. changed hands in December.
According to Service New Brunswick records, the purchasers are Kevin Hagerman and Isobelle Reid Marianne of Huntsville, Ont. They paid $325,000 for the property, which is assessed at $179,500.
Taylor said she got her first notice of a rent increase almost right away, seeking an increase to $1,000 per month effective April 1.
Then the province amended the Tenancies Act, requiring landlords to give six months’ notice for an increase.
Then, last month, the province promised further rent control, with the 3.8 per cent cap.
Taylor said the property manager tried to persuade her to ignore that cap and voluntarily pay more.
She said she got a phone call on March 30 from Karen Sharp, president of Leading Edge Property Solutions.
“She calls and says, ‘I’m sure that you’ve heard about the rent cap in the province. That will only allow us to increase rent by $25, but that is not going to work for the owner,'” said Taylor.
“So then she asks if I would be willing to pay $900 a month starting in August? I said, ‘No.'”
The very next day, an eviction notice was wedged into her door.
Sharp did not provide an interview. Instead, she referred CBC News to her business manager, Alex Urosevic, who said he had permission from Hagerman to speak about the situation.
Urosevic described Hagerman as an honourable man who was caught by surprise by a government decision that suddenly made his Hampton investment unsustainable.
“If this gentleman had bought his property after the law had passed, I would say, ‘Well, you’re on your own,'” said Urosevic. But that was not the case, he said, and with the cap, his client’s numbers suddenly didn’t work.
That’s why he decided to “change his business model,” said Urosevic.
“What he’s going to do is turn all the units into short-term rental units. These will be short-term units that people can rent whether they’re on vacation or in town for business. There will be no limit on whether they can stay for a week or a month or three months or if somebody needs to stay longer.”
Taylor said she still believes there’s something that can stop this.
She thinks it might come down to zoning.
Airbnbs are not explicitly listed in Hampton’s bylaw definitions.
Currently, 27-29 Acadia Cres. is zoned residential, according to the town’s building and development officer Arthur McCarthy.
Accommodations, which are defined as hotels, motels, bed and breakfasts and other lodging for travellers, are only allowed in Hampton’s commercial zones.
McCarthy said the owner could apply to council for a zoning amendment, which could take three to six months.
‘Everybody’s doing it’
Urosevic said the province was wrong to blindside purchasers with a rent cap that had been rejected before.
In May, a review of the province’s rental housing market ruled out caps on rent increases in all but the most extreme cases.
He said he knows purchasers who are backing out of deals because of the surprise.
He also knows of buyers who are acquiring property anyway, with “full intentions to evict the entire building and do so-called reno-victions.”
“Everybody is doing that,” he said. “I can tell you about 20 properties that are doing that because their hands are tied behind their backs [by this cap].”
Urosevic said Hagerman does intend to make significant upgrades to his property that could surpass $100,000. That includes spending $35,000 on a third unit to make it livable again. Urosevic said it was left in pretty rough shape.
He said three-bedroom units with a private yard, private parking and laundry facilities in that part of Hampton should be fetching $1,200 on the market.
Landlords can end tenancies for Airbnbs with proper notice
Cheslock and Taylor said this wasn’t the rent when they moved in and they were expecting the promised protection to apply.
Both have contacted the rentalsman seeking advice but as of Friday, Cheslock hadn’t heard back at all, and Taylor was waiting for answers.
CBC asked to speak to the province’s chief residential tenancies officer, Jennifer Bernier, but she was unavailable.
In an email to CBC, a department spokesperson wrote that Airbnbs don’t fall under the Residential Tenancy Tribunal Act because they’re not rented or leased as residences.
“Under the provisions of the act, landlords can end tenancies if they intend to convert the property to an Airbnb, provided proper notice is given to tenants,” the spokesperson wrote.
“For month-to-month leases, the landlord must provide one month’s written notice, and for year-to-year leases, the landlord must provide three months’ written notice.”