Difference between revisions of "Rent Increase in Residential Tenancies (19:VI)"

Revision as of 21:04, 25 August 2022

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by the Law Students' Legal Advice Program on July 1, 2022.

NOTE: s. 12 of Bill 7 (Tenancy Statutes Amendment Act, 2021) came into effect March 25th, 2021, and added s. 43.1 to the RTA. Under this provision, all notices of rent increase which are received before September 30, 2021, and have an effective date after March 30, 2020 and before January 1, 2022, have no effect. Previously, section 6 of Ministerial Order 89 of 2020 and section 5 of Ministerial Order 195 of 2020 had implemented a freeze on rent increases beginning March 30th, 2020, and extending as long as the BC Provincial State of Emergency lasted.

A. Rent Increases and Notice

Landlords can raise rents by a set amount each year and can apply for rent increases above that amount (RTA, s 43(1)). A tenant may also agree to pay a greater increase than the percentage permitted; this agreement must be in writing. If the tenant does not agree then the landlord is required to go through the dispute resolution process (RTA s 43 (3)). The percentage for allowable rent increases is the inflation rate (Consumer Price Index, or “CPI”) plus 2 percent. The maximum allowable increase changes each year on January 1st. Check the webpage titled Rent Increases (http://bit.ly/1cWKrDB) on the RTB website to find the maximum rent increase allowed for the current year. The increase can occur every 12 months of the tenancy with the time period running from the date of the last rent increase for that tenant or the date the rental agreement was entered into (s 42(1)). A tenant may not apply for dispute resolution to dispute a rent increase that complies with s 43(1) (permitted increase or an Arbitrator ordered increase). If a landlord collects a rent increase that does not comply with the RTA, the tenant may deduct the entire increase from the rent. The tenant should communicate the reason for the deduction to the landlord before taking this form of action.

NOTE: As of this writing (June 2022), the Provincial Government was publicly considering an amendment to the rent increase formula as a response to rising inflation. Be sure to verify whether any such changes were made following the publication of this guide.

The landlord must give written notice of a rent increase at least three full months before the increase becomes effective (s 42(2)). If the notice of rent increase is not in writing in the approved form, it is invalid and of no effect. If the landlord gives notice of less than three months, or if the increase is to take effect less than 12 months from when the tenant moved in, or from when the tenant’s rent was last increased, the original notice will self-correct and will take effect on the earliest lawful date, provided it is otherwise correct. The tenant should notify the landlord about any self-correcting dates.

Section 43(3) of the RTA permits landlords to apply for an order allowing a rent increase greater than otherwise allowed under s 43(1). The circumstances under which these applications may be made are set out in ss 23-23.4 of the Regulations, and include:

the landlord, acting reasonably, has incurred a financial loss for the financing costs of purchasing the residential property if the financing costs could not have been foreseen under reasonable circumstances;
the landlord, as a tenant, has received an additional rent increase under this section for the same rental unit; or
the landlord, in the 18 months preceding the application, made a significant capital expenditure incurred for the purpose of installing, repairing, or replacing a major system of component of the rental property.

NOTE: The purpose of the expenditure must be necessary to a) comply with health and safety standards, b) repair or replace a malfunctioning or inoperative system or component, c) reduce energy usage or greenhouse gas emissions, or d) improve the security of the residential property.

NOTE: Applications shall not be granted where the need for the capital expenditure arose because of inadequate repair or maintenance on the part of the landlord, or where the landlord has been paid from another source. Capital expenditures may not be claimed again for at least 5 years.

The rent increase formula for Manufactured Home Parks is inflation plus the proportionate amount of the increases to regulated utilities and local government levies.

B. New Lease with Same Tenant and Location

In the case where a tenant is remaining in the same rental location, but circumstances require a new lease is signed, any change in rent is still controlled by RTA s 43 as if the new lease is an extension of the original lease.

This means that if there was a rent increase in the last 12 months, the landlord is prohibited from increasing the rent for the new lease. If there wasn’t a rent increase in the last 12 months, the landlord can only increase the rent to the maximum annual allowable amount and is prohibited from increasing it again in the next 12 months unless they obtain the director’s approval pursuant to RTA s 43 (3).

C. Hidden Rent Increases

The tenant can apply to an Arbitrator under s 27 of the RTA, if the landlord starts to charge the tenant for a service or facility previously included in the rent (e.g. for cable television or laundry that was previously free), or takes away a service or facility previously enjoyed by a tenant (e.g. stops providing cable television or laundry that was previously included in the rent, without decreasing the rent proportionately).

If the Arbitrator considers that the failure or reduction has resulted in a substantial reduction of the use and enjoyment of residential premises or of the service or facility, the Arbitrator can provide relief (e.g. allowing the tenant to pay less rent, or ordering the service or facility restored). See also RTB Policy Guideline 22: Termination or Restriction of a Service or Facility.

D. Subsidized Housing

Persons living in publicly subsidized housing paying rent on a scale geared to their income are excluded from the rent increase provisions. They are also excluded from s 34 of the RTA, which deals with assignment and subletting. Not all subsidized housing is directly operated by the B.C. Housing Corporation. For a list of subsidized housing options and to apply for subsidized housing, visit: https://www.bchousing.org/housing-assistance/rental-housing/subsidized-housing.

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+{{REVIEWED LSLAP | date= July 1, 2022}}
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 Landlords can raise rents by a set amount each year and can apply for rent increases above that amount (RTA, s 43(1)). A tenant may also agree to pay a greater increase than the percentage permitted; this agreement must be in writing. If the tenant does not agree then the landlord is required to go through the dispute resolution process (RTA s 43 (3)). The percentage for allowable rent increases is the inflation rate (Consumer Price Index, or “CPI”) plus 2 percent. '''The maximum allowable increase changes each year on January 1st.''' Check the webpage titled Rent Increases (http://bit.ly/1cWKrDB) on the RTB website to find the maximum rent increase allowed for the current year. The increase can occur every 12 months of the tenancy with the time period running from the date of the last rent increase for that tenant or the date the rental agreement was entered into (s 42(1)). A tenant may not apply for dispute resolution to dispute a rent increase that complies with s 43(1) (permitted increase or an Arbitrator ordered increase). If a landlord collects a rent increase that does not comply with the RTA, the tenant may deduct the entire increase from the rent. The tenant should communicate the reason for the deduction to the landlord before taking this form of action.
+:'''NOTE:'''	As of this writing (June 2022), the Provincial Government was publicly considering an amendment to the rent increase formula as a response to rising inflation. Be sure to verify whether any such changes were made following the publication of this guide.
 The landlord must give written notice of a rent increase at least three full months before the increase becomes effective (s 42(2)). If the notice of rent increase is not in writing in the approved form, it is invalid and of no effect. If the landlord gives notice of less than three months, or if the increase is to take effect less than 12 months from when the tenant moved in, or from when the tenant’s rent was last increased, the original notice will self-correct and will take effect on the earliest lawful date, provided it is otherwise correct. The tenant should notify the landlord about any self-correcting dates.
-A landlord may apply under s 43(3) of the ''RTA'' (additional rent increase) by making an application for a dispute resolution if one or more of the following conditions are met:
+Section 43(3) of the RTA permits landlords to apply for an order allowing a rent increase greater than otherwise allowed under s 43(1). The circumstances under which these applications may be made are set out in ss 23-23.4 of the Regulations, and include:
+*the landlord, acting reasonably, has incurred a financial loss for the financing costs of purchasing the residential property if the financing costs could not have been foreseen under reasonable circumstances;
+*the landlord, as a tenant, has received an additional rent increase under this section for the same rental unit; or
+*the landlord, in the 18 months preceding the application, made a significant capital expenditure incurred for the purpose of installing, repairing, or replacing a major system of component of the rental property.
+:'''NOTE:'''	The purpose of the expenditure must be necessary to a) comply with health and safety standards, b) repair or replace a malfunctioning or inoperative system or component, c) reduce energy usage or greenhouse gas emissions, or d) improve the security of the residential property.
-* the landlord has completed significant repairs or renovations that could not have been reasonably foreseen and will not recur within a reasonable period (s 23(1)(b) of the RTR);
+:'''NOTE:'''	Applications shall not be granted where the need for the capital expenditure arose because of inadequate repair or maintenance on the part of the landlord, or where the landlord has been paid from another source. Capital expenditures may not be claimed again for at least 5 years.
-* the landlord has incurred a financial loss from an extraordinary increase in the operating expenses of the residential property;
-* the landlord, acting reasonably, has incurred a financial loss for the financing costs of purchasing the residential property if the financing costs could not have been foreseen under reasonable circumstances; or
-* the landlord, as a tenant, has received an additional rent increase under this section for the same rental unit.
-The rent increase formula for Manufactured Home Parks is 2% plus inflation plus the proportionate amount of the increases to regulated utilities and local government levies.
+The rent increase formula for Manufactured Home Parks is inflation plus the proportionate amount of the increases to regulated utilities and local government levies.
 == '''B. New Lease with Same Tenant and Location''' ==