Assessing the Impact of a Property Tax Cut on Rental Affordability in New Brunswick

This report addresses how a proposed property tax cut on landlords would play out in New Brunswick, given the increased penetration of financial investors in the real estate market at the national scale. The report uses one apartment building as an example to show how typical properties in New Brunswick are undervalued compared to national comparators that institutional investors are using to evaluate the "market price" of real estate. As we point out, the property tax cut will increase cash flow for landlords, and make real estate ownership more profitable. Measures of cash flow in real estate investment are also important numbers that financial investors use to estimate the market price of a property. While real estate investment in New Brunswick has traditionally been considered quite a bit riskier than in larger centres, the entry of large corporate landlords into the real estate industry has led to long-term trends of property price appreciation across Canada. The report points out how a tax cut will make this situation worse, and that rather than decreasing or constraining rental inflation, it risks worsening the situation considerably. We suggest alternative measures for addressing the housing crisis in New Brunswick.