COMMENTARY: The myth of the free market is causing New Brunswick’s housing crisis

New Brunswick’s rent cap is set to end on December 31. The rent cap—which limited rent increases to 3.8 percent per year in 2022—temporarily limited landlords’ ability to extract exorbitant private profit from their tenants.

However, when the rent cap ends, a veritable tsunami of high rent increases-will flood the province, leaving New Brunswick’s most vulnerable populations unprotected.

Premier Blaine Higgs remains unconvinced. He currently expects “landlords to be fair and reasonable with their rents.”

Former Service New Brunswick Minister Mary Wilson agreed. “Most landlords in the province are wonderful,” she explained during a Zoom call. “The majority have been very good with their tenants.”

For Higgs and Wilson, landlords are good people. They keep the best interests of their tenants in mind. For both politicians, social issues arise in the rental market when bad people engage in nefarious behaviours, temporarily altering the innerworkings of an otherwise benevolent system. Conservative politicians assume that economic markets are fundamentally free, and that tenants and landlords have access to similar amounts of financial and legal power.

From this view, government bureaucrats position New Brunswick’s housing crisis is an issue of personal accountability.

However, Higgs and Wilson’s approaches are wholly detached from reality. To date, the Conservative Party remains unconcerned with the difficulties faced by the province’s working people.

Jael Duarte is a lawyer with LA Henry Law and the Tenants Advocate for New Brunswick. Duarte, a dual citizen of Colombia with Canada, has lived in Colombia, Switzerland, France, the U.S., Ontario, Quebec, and now New Brunswick.

When Duarte first moved to New Brunswick, she was shocked by the province’s lack of legal protections. “I couldn’t believe it,” she explained. “In many, many countries, there is always a rent cap attached to inflation.”

Permanent rent caps work.

According to a working paper published by The Barcelona Institute of Economics, “rent control policies can be effective in reducing rental prices and do not necessarily shrink the rental market.”

Tom Slater, a professor at the University of Edinburgh, writes, “Rent controls work best when they are paired with tenant security measures.” In this sense, “rent control is just one policy among many that can and should be implemented in order to reframe the debate around housing.”

Rent controls—in concert with robust housing laws cognizant of human rights—work by limiting the power of landlords and moving the concept of housing away from profit, finance, and speculation toward “community, family, home and shelter.”

According to Duarte, many of New Brunswick’s housing issues stem from fundamental power imbalances baked into the province’s legal system. “The Residential Tenancies Act was written before the Canadian Charter of Rights and Freedoms,” she explained. “It doesn’t have a framework for human rights.”

Duarte argues that the Residential Tenancies Act “sees the relationship between tenants and landlords as a contract. Normally, contracts are free.”

However, Duarte points out, landlords and tenants “are not truly free. There is a relationship of power there.”

In a very real sense, free markets do not exist with respect to housing. They never have. Instead, rental markets are built—from the ground up—using laws and regulations to protect landlords and incentive them to profit from renters.

The tenant’s relationship with their landlord is fundamentally unequal. Landlord holds all of the power: wealth, police, and even the courts.

“There are very few [legal] precedents in New Brunswick,” Duarte explained. “The few precedents that have been decided are in favour of the landlord.” In part, because landlords have direct access to capital and lawyers.

The interests of landlords are opposed to those of tenants. For landlords to turn a profit, at times, the security of tenants must be undermined.

“It is not a question of good and evil,” Duarte explained. “It’s how the system works.”

In this sense, the landlord’s financial interests sometimes seem to outweigh their commitment to civility, social responsibility, and human decency. Landlords are increasingly weaponizing housing—a human right—by using the threat of forceful evictions to coerce tenants into paying exorbitant rents.

In April 2022, over two dozen property owners met online to find “loopholes” in the province’s legal system. They discussed coercing their tenants into paying higher rents through forced renovation and associated price hikes.

According to CBC, since March 2022, the province has logged 69 evictions due to forced renovations.

Indeed, in New Brunswick and elsewhere, the housing and rental market is fundamentally tilted in favour of the interests of corporations and real estate companies.

Enacting a human-rights based legal framework capable of recognizing the imbalances of power inherent to the landlord-tenant relationship is a necessary precondition to facilitate the fight for humane, just, and universal housing.

A human rights framework would allow the judicial system and Residential Tenancies Tribunal to consider whether tenants are elderly, sick, disabled, the caretaker of a child, or otherwise vulnerable, while considering eviction claims and rent increases.

Implementing rent control policies would decrease the power of landlords by reorienting the issue of housing toward human need rather than private profit.

If the rent cap is not extended by December 31, and if the Higgs government places undue faith in the province’s free market and underdeveloped legal system, the province’s most vulnerable populations will be saddled with massive financial burdens and skyrocketing rents.

New Brunswick’s poor, sick, elderly, and disabled will be hit the hardest, while landlords will profit.

Mr. Higgs, whose side are you on?

Harrison Dressler is a master’s student in history at Queen’s University. He writes about Canadian history, labour, politics, and environmental activism.