PEI Rent Increase is Fixed even after tenant leaves?!?

Question

I read an astounding article today regarding rent increases in Prince Edward Island.

https://ca.yahoo.com/news/forged-lease-document-leads-house-204956798.html

Essentially if a tenant leaves a unit and you rent to a new tenant.. you can only increase the rent by the % set by the province.   Can someone that owns RE in PEI confirm this?

Wendell Fong · Answer

Thanks for the detailed explanation. Guess I will not be buying in PEI.

Zach Denny · Answer

@Wendell Fong

Hi Wendell,

Yes, unfortunately that's accurate. Rent increases are locked to the unit, not the tenant. IRAC (the regulatory board) sets the allowable annual increases, which typically range from 1-3%. It can make finding the right deal difficult, because you have to be very sure that the numbers work at the current rents. Though it's definitely still possible to find cashflowing properties. There are two ways around it:

1. 'Renovictions'

2. Application to IRAC to increase more than the recommended.

In both cases you have to submit an application to IRAC which may be approved or denied, though I've never done this.

Aside from this, I still think PEI is a great place to invest. You can still find cashflowing deals, especially single family that were previously lived in by the owner, so you purchased

it, convert to a rental and set the rents. The homes are affordable and have lots of appreciation upside. I own one and am closing on another in January that will cashflow well.

Theresa Harris · Answer

That appears to be true looking at govt site.  It says the rent is tied to the unit, not the tenant.  Landlords can apply for larger increases..