IRAC and the role it has for renting and/or buying on PEI
If you have spent any time on a PEI Facebook group, then you have probably seen the term IRAC. Whether it is someone complaining about the price of heating oil, the cost of gas, whether gas will be going up or down at the next price adjustment, unfair rental rules, who to talk to if you think a landlord is taking advantage of a renter, where to find rental regulations or forms, the list goes on. Islander’s routinely lament about what IRAC is doing and we often do it no matter what stand you take. Something is alway’s IRAC’s fault.
But what is IRAC and how do they “control” so many aspects of Island life?
What is IRAC?
IRAC stands for the “Island Regulatory & Appeals Commission”. It is a non-governmental agency that has been put in charge of regulating many aspects of Island life, including:
Petroleum
Electricity
Rentals
Lands Protection
Municipal
Water & Sewer
Auto Insurance and
Waste Management
With regards to relocating to PEI, there are 2 areas that IRAC would impact your relocation process - renting and land’s protection.
Renting on PEI & IRAC
If you are renting a property on PEI, it is now required that you sign a rental agreement and it should be a rental agreement on the forms provided by IRAC. If you have any disputes with your landlord, then the dispute would be heard by an IRAC commissioner and an order will be issued based on that hearing. Additionally, the responsibilities of both the tenant and the landlord are outlined by IRAC.
IRAC also sets the limit that a landlord can raise the rental rate. One important thing to note is that rental increases follow the calendar year, not your lease. So if a unit is able to raise their rent on October 1 but your lease runs from July 1-June 31, your rent can be raised in the middle of your lease. But there are standardized forms and requirements of notice that must be provided to you set out on the IRAC website.
There are so many in’s and out’s about renting that if you have any specific questions, you can always reach out to IRAC. They usually get back to you in 2-3 days of receiving your question.
Buying on PEI & IRAC
Many provinces have a rental regulation agency so it shouldn’t have come as any surprise that there is a rental regulation board here.
However, one additional role of IRAC is to enforce the PEI Lands Protection Act. And what is the LPA of PEI you ask?
The issues involving land ownership and land use in Prince Edward Island began in the early history of the province. The Island was initially divided into sixty-seven 20,000-acre lots or townships. These lots were allocated in advance of settlement to a relatively small elite group of absentee proprietors. Over time, the land was purchased from the absentee landlords and returned to local ownership.
Issues associated with absentee landlords resurfaced again in the 1960’s, as non-residents began investing in local real estate throughout the province. As a result, substantial amounts of land in the coastal areas fell out of the control of local residents. In 1972, Government introduced amendments to the Real Property Act to restrict the purchase of land by non-residents.
In 1981, an application by a non-resident corporation to acquire 6,000 acres prompted public concern over the perceived impacts of land ownership distribution and its implications for the future. Some viewed this as giving pre-eminent control of the province’s agricultural industry to one company. This led to the introduction of Bill 37 – the Lands Protection Act (the Act) in 1982.
So what does this mean for you, as someone who is looking to relocate to PEI?
If you are buying property on PEI and you are not yet a current resident (of PEI), certain properties will require an application to IRAC; when the property is larger than 5 acres and/or has in excess of 165 feet of shore frontage (Shore Frontage Regulations). This application is completed by a lawyer and submitted on your behalf. In addition to the extra legal fees of completing the IRAC application, there is a fee that is either $550 or 1% of the agreed upon purchase price.
If an application to IRAC is needed for the purchase of a property, an additional clause is written in to the Agreement of Purchase and Sale by the buyer’s REALTOR®️ . The conditional date of the clause often coincides with the hearing schedule, seen here. Often, if a property would not require an IRAC application and would be geared to off-island buyers, you will see a note about it in the property description.
The entire goal of the Lands Protection Act is to keep the land in Islander hands. So there are advertising guidelines that must be followed when listing a property for sale and bringing a non-resident buyer. Please note that this Act is in addition to the Foreign Buyer restrictions put in place by the Canadian federal government in January 2022 which has been extended until 2027. (More information on that here).
All in all, if you are planning a move to PEI and what to chat about what the process looks like for you, then please reach out. Even if you are concerned about whether or not a rental is a scam, I am happy to help - I did have am acquaintance reach out because she was concerned she was getting scammed on a rental and I was able to confirm for her that it was a scam, saving her the money that she would have lost. Navigating finding a rental from away can be very intimidating and there are some not so pleasant individuals out there looking for an easy buck and unfortunately, PEI right now is prime for these scams. The rental vacancy rate in Charlottetown is still extremely low. (See graph below). We are always wanting to help make a move as smooth as we can - it’s how Blue Door Properties PEI operates.
Historical vacancy rates in PEI for rentals. Based on Q2 numbers