New Brunswick pledges $14M in extra help for landlords, commercial properties
The New Brunswick government is spending $14 million to partially rebate 2022 property tax bills on apartment buildings and commercial properties that were hit with assessment increases above 10 per cent this year.
The decision reverses an earlier government position to provide relief only in the form of tax rate cuts this year and comes after weeks of intense pressure from landlords and other business property owners.
In some cases, when combined with municipal and provincial tax rate cuts already granted to business properties, it promises to reduce property tax bills on some current buildings to below what they paid last year.
“Our government has heard from individuals and the business community that there is a need to address the high tax burden in New Brunswick and the cost pressures they face,” said Finance and Treasury Board Minister Ernie Steeves in announcing the aid package.
The tax rebates will be large on some properties but have some restrictions.
They do not apply to rental properties with fewer than four apartments. They also do not cover property owners who triggered their own higher assessments and tax bills by buying rental or business properties at high prices in 2021 or by substantially renovating properties last year.
The rules mimic assessment “spike protection” that New Brunswick homeowners have had since 2013. Under those rules, substantial assessment increases on houses have to be implemented over two or more years by a maximum of 10 per cent per year.
For example a sudden 30 per cent assessment increase in one year takes three years to be fully applied to a property owner’s tax bill.
The program for rental and commercial properties will mostly refund municipal property taxes charged this year on buildings with high assessment increases. It is being paid for by the province because local governments set their budgets months ago
“This program will be fully funded by the provincial government and will not affect local government property tax revenues,” said a government news release.
Kit Hickey with the non profit group Housing Alternatives in Saint John welcomed the initiative.
“What that means is we can ensure those housing units remain affordable to the residents that currently live there,” said Hickey.
Housing Alternatives owns multiple rental properties, several that had large assessment increases this year. A 12 unit building it owns on Lauder Court that had a 20 per cent increase will be eligible for an $870 rebate under the new policy, or about $72 per apartment.
“As long as our costs don’t increase then we don’t increase rents.” said Hickey.
But the largest beneficiaries will be big rental companies like Halifax based Killam Real Estate Investment Trust, New Brunswick’s largest landlord.
In financial filings last month it said it receives “an average increase of 15 per cent” on assessments on its New Brunswick holdings, which includes 77 properties and 5,073 apartments.
It’s retail and apartment complex on Cameron Street in Moncton received a 20 per cent assessment increase and will qualify for a $15,000 property tax rebate alone under the new policy.
Combined with property tax rate cuts passed earlier in the year by both the province and the city of Moncton, that will lower Killam’s tax bill on the Cameron building to $166,000 for 2022, slightly below what it paid in 2021.
New Brunswick Premier Blaine Higgs said additional relief was required to encourage landlords to keep constructing apartment buildings, even though the rebates specifically are for existing properties and do not apply to newly-built units.
“It was another way to have apartment owners really stay focused on building new units,” said Higgs
“What we’ve proposed is just to deal with ‘Okay, how do we get people to invest so we can get more housing on the market’.”