Halifax real estate listings advertising fixed-term leases as financial asset for buyers

CBC

4 days ago

While the Nova Scotia government has no plans to regulate a type of lease that's been called a loophole in the province's rent cap legislation, some real estate listings are advertising fixed-term leases as a financial benefit for potential buyers.
A brief search by CBC News of multi-unit residential buildings for sale in Halifax in May showed a trend: at least 11 listings mentioned tenants on fixed-term leases.
Two listings stated, "Currently double digit returns with rent increases coming in September," with one also saying the property has "little maintenance, zero vacancy and increasing rents."
Others mentioned leases ending soon and boasted money-making potential in statements like "for the savvy investor the finances have upside as tenants turn over."
Tim Allenby, chair of the Dartmouth chapter of tenant group ACORN, said he's not surprised by this marketing tactic.
"It's the incentives of the system that currently exists," Allenby told CBC News in an interview. "They have it set up in such a way that landlords benefit from primarily relying on fixed-term leases, so of course that's going to end up being an investment benefit."
According to Nova Scotia's Residential Tenancies Act, a fixed-term lease is entered into for a fixed period of time, with a set end date. This means it doesn't automatically renew every year and landlords can decide whether or not to offer an existing tenant a new lease.
Although the province has a temporary five per cent rent cap for existing tenants, fixed-term leases have been criticized by housing advocates as a way around this legislation, allowing landlords to force tenants out and increase prices more than five per cent for new renters.
The Nova Scotia Association of Realtors declined to comment on why this type of lease is attractive for property buyers, and why it might be advertised as an asset of a property being listed for sale.
It referred CBC News to Rental Housing Providers Nova Scotia, a group that has defended the use of fixed-term leases as a way to mitigate risk when renting to tenants like students, newcomers or people with bad credit or no landlord references.
Kevin Russell, executive director of Rental Housing Providers Nova Scotia, said he can't comment on how Realtors market their product — "that's up to them and the owners" — but he said fixed-term leases play an important role in the rental market.
"It's difficult to rent when there's no credit history and no landlord references. So they're used to [mitigate] any risk."
Russell referenced research done by his organization in 2023 and 2024 that found 86.1 per cent of landlords who responded use fixed-term leases, with top reasons being risk management, limiting property damage and establishing landlord-tenant relationships.
The survey found 53.9 per cent of respondents would sell units if fixed-term leases were eliminated or altered.
"It will result in thousands of units being unavailable to rent as property owners sell their properties," Russell said. "And a lot of times when we're leasing on fixed-term leases, it's all done … with a partner, with one of the shelter organizations."
Russell said the surveys did not ask if landlords chose to use this type of lease to increase profit, recoup costs or circumvent the rent cap.
Province says marketing tactic is 'disappointing'
An interview request for Jill Balser, the minister in charge of residential tenancies, was declined.
"Fixed-term leases, in some situations, work for both tenants and landlords," a government spokesperson said in an emailed statement attributed to Balser. "It is disappointing to see them being used as a marketing tactic."
The statement said Balser "strongly suggests" tenants become informed about fixed-term leases before committing to sign one.
"I also want to remind tenants there are choices. Periodic leases are another option available," the statement said, before emphasizing the government is focusing on creating more housing to give tenants greater choice in where to live.
In mid-May, a provincial official acknowledged that some Nova Scotia landlords are abusing fixed-term leases, but Balser confirmed the following week there are no plans to do anything to help prevent the abuse.
"They're aware of the problem," Allenby said. "They have it as a result of a loophole that they created, and now they're telling the whole world they're not going to do anything about it. There is no incentive for a landlord to play by the rules."
The provincial government has said there is no data on the use of fixed-term leases. Tenant and landlord groups have been calling for the province to do its own research.
"If the Nova Scotia government wanted impartial data on how prevalent this problem is, they have the resources to go out and get it," Allenby said.