Can New Brunswick Landlords Pass Property Tax and Utility Costs to Tenants?

The Short Answer: Mandatory Fees Count as Rent

When New Brunswick's 3% rent cap limits what you can add to the monthly payment, the instinct is to recover rising costs through separate line items — a property tax surcharge, a heating fee, an "administrative" charge. The problem is that Residential Tenancies Officers treat mandatory fees imposed on tenants as rent components subject to the statutory cap.

Section 8(4) of the Residential Tenancies Act (R.S.N.B. 1975, c. R-10.2) restricts what amounts a landlord may require under a tenancy: rent, a security deposit, or a reasonable amount for a service provided in relation to the tenancy. You cannot introduce new mandatory charges that, combined with the rent increase, push the tenant's total obligation above the 3% ceiling.

Property Tax Increases

Municipal property taxes in New Brunswick can rise significantly year over year, and landlords renting out residential property also pay the annual Residential Tenancy Administration Fee under Section 8.2 of the Act. Neither of these costs can be separately invoiced to tenants as a line item outside the rent.

Your options are:

• Absorb the increase within your existing margin
• Apply the 3% rent increase to partially offset the cost
• Apply for an above-cap increase — but only if you have qualifying capital expenditures for renovations, not just rising operating costs

The above-cap route (above 3% and up to 9%) is restricted to documented capital expenditures for renovations. Ordinary operating costs such as property taxes, insurance premiums, or utility rates are not capital expenditures for renovations.

Utility and Heating Costs

If your lease includes utilities in the rent, you cannot separate them out and charge them independently to circumvent the cap. The baseline rent is defined as the total consideration paid for occupation plus all services, facilities, and utilities provided under the agreement.

Withdrawing a bundled utility service without a proportional rent reduction is treated as an indirect rent increase. If the monetary value of the withdrawn service exceeds 3% of the baseline rent, the effective increase is unlawful.

Where utilities are already metered and billed separately to the tenant (common in houses and some apartment buildings), those costs are not part of the rent and are not subject to the cap. But switching from included utilities to tenant-paid utilities during an existing tenancy is a withdrawal of service.

What About New Fees?

Some landlords try adding charges labelled as parking fees, laundry access fees, key replacement deposits, or building maintenance surcharges. If the fee is mandatory — the tenant cannot opt out — it is functionally rent. Regional online discussions among New Brunswick landlords confirm that Residential Tenancies Officers take this view when tenants challenge these charges.

Optional, genuinely voluntary services (a tenant who chooses to rent a parking space that is not part of the lease) are a different matter. But anything that is a condition of the tenancy falls under the rent umbrella.

The Practical Path for Cost Recovery

Rising operating costs are a real pressure on small landlords. Within the current 3% cap framework, the realistic strategies are:

1. Use the full 3% every year — compounding helps, and many landlords leave money on the table by not raising rent annually
2. Optimize at turnover — vacancy decontrol lets you reset rent to market when a tenant leaves
3. Track capital expenditures — if you are making significant renovations, document everything for a potential above-cap application
4. Review your lease structure — units with separately metered utilities give you more flexibility than all-inclusive leases

The Rent Increases in New Brunswick guide includes calculation worksheets and a compliance file index to help you execute annual increases correctly and build your evidence file for above-cap applications.

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