Calgary: Landlords raise rents to recoup energy costs

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Thursday 22 March 2001 Landlords raise rents to recoup energy costs

Marty Hope

Beginning next month, thousands of Calgary tenants will face rent hikes of as much as $50 a month to offset landlords' increased operating costs -- led by soaring natural gas bills.

"We've seen landlord cost increases in many areas, but the most significant is the price they had to pay for natural gas," says Gerry Baxter, executive director of the Calgary Apartment Association.

"And the rent increases, that will range from $20 to $50 a month, are a direct result of operational cost increases in 2000."

Rent hikes begin April 1 for as many as 50,000 rental units in the city. Those affected have received written notification.

According to Canada Mortgage and Housing Corp., higher energy costs will help drive the average monthly rent for a two-bedroom suite in Calgary to almost $780, from $740.

"We've had to bump up our forecast by a minimum of five per cent -- and that could go up an additional five per cent depending on whether the provincial government decides to renew its rebate program," said Richard Corriveau, CMHC's Calgary senior market analyst.

If the provincial government decides not to extend its energy rebates to consumers after April, the average rent could jump to more than $810, he added.

In its 2001 outlook for rent increases, the federal housing agency had pegged the estimated rent hikes at three per cent.

Sue Jackson, president of the Alberta Residential Rental Association, said if the province's rebate program is halted, tenants should expect further rent hikes.

If that happens, rent increase notices will be going out as early as August to notify tenants of hikes to come in December. In February 2000, the price per gigajoule of natural gas was $2.92. As of Jan. 24, the price had jumped to $9.81. The province's rebate, though, effectively pushed the price back to $6 per gigajoule.

On the electricity side, the cost of power provided by Enmax prior to September 2000 was six cents per kilowatt-hour per month.

On Sept. 1, the price rose to eight cents and is currently at 17.5 cents before provincial rebates and federal GST.

However, rebates from the provincial government totalling $1,680 per two-adult household have helped absorb much of the soaring costs of energy.

"People should be thankful the rebates were there because they prevented even larger rent increases from occurring.

"But I don't know what's going to happen when the natural gas rebate program is supposed to end," said Baxter.

Jackson, who also owns Fireside Management Ltd., said for the most part tenants have accepted the fact rents are rising.

"I've had less than a handful of complaints, so far," she said, adding one of the larger landlords in the city has seen his gas bill go from $6,700 last year to more than $13,000 for this year.

Rob Geremia, vice-president and chief financial officer with the city's largest landlord, Boardwalk Equities, said the company has been able to hold its average rent increases to $22.

"We had to increase rents because of growing market pressures and increases in our operating costs -- with gas being the biggest piece of the equation," he said.

http://www.calgaryherald.com/news/stories/010322/5049061.html

-- Martin Thompson (mthom1927@aol.com), March 22, 2001


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