Making Cents of Rent Increases: When, How and How Much

When can landlords increase the rent? Is there a required format? How much notice is required to raise the rent? How much can the rent be raised? The answers to all these questions are important to know, whether you’re a landlord or a tenant.

WHEN can the rent be raised?

At the beginning of a tenancy, the rent is set at whatever amount a landlord and tenant agree to. Moving forward, a landlord can only raise the rent once every 12 months (according to section 42(1) of the Residential Tenancy Act). The maximum allowable rent increase percentage changes each year so both landlords and tenants should consult the Residential Tenancy Branch website when in doubt about the authorized amount. It is also worth noting that the limited timing of a rent increase applies even if the landlord changes during the tenancy or a new tenant is assigned the tenancy agreement.

HOW must a landlord increase the rent?

Landlords must serve tenants with the Residential Tenancy Branch’s approved “Notice of Rent Increase” form three full/clear months before a rent increase takes effect. This form can be found on the Government of British Columbia’s website. By way of example, if a landlord serves a Notice of Rent Increase form on a tenant on October 9th, the rent increase would take effect on February 1st of the following year (assuming rent is due on the first of the month). The full/clear three months’ notice in this case would consist of November, December and January.  In addition, landlords cannot retroactively apply a rent increase. In other words, landlords cannot apply a rent increase after forgoing the ability to do so the previous year in order to “catch up”.

HOW much can a landlord increase the rent?

The allowable rental increase rate for 2019 is 2.5%. The allowable rental increase rate for 2020 is 2.6%. When it comes to calculating the authorized increase, every penny counts. That is, a landlord cannot round up when calculating the allowable increase. For example, if the base rent is $1,500.00 and the maximum allowable increase is $37.50 the landlord can issue a Notice of Rent Increase for a new rent of up to $1,537.50, but not $1,538.00. Although the legislation affords landlords and tenants the ability to negotiate above this maximum amount, landlords should be careful to document such agreements and have good reason why a higher amount is asked (e.g. the landlord and the tenant agree to a rent increase to facilitate renovations or upgrades to the rental unit). When in doubt, landlords should stick with the legislated arithmetic instead.

Are there Exceptions?

The expression that there is “an exception to every rule” is no exception in this case. When it comes to allowable rent increase amounts and timing, the legislation affords some flexibility.

a. Additional occupants

If another tenant moves into the rental unit after the commencement of the tenancy, the landlord may be allowed to raise the rent for the additional occupant(s), but only if the tenancy agreement specifically allows for this. In addition, the tenancy agreement must stipulate how much the rent can be raised for each additional occupant.

b. Permissions from the Residential Tenancy Branch

A landlord can apply to the Residential Tenancy Branch for an additional rent increase above the allowable annual percentage. Arbitrators will only allow additional rent increases in exceptional circumstances. These exceptional circumstances are set out in section 23 of the Residential Tenancy Regulation. The application fee for landlords is $300.00, plus $10.00 for each rental unit, to a maximum of $600.00.

c. Non-profit housing

Some subsidized rental units where rent is related to income may be exempt from the rent increase rules in the Residential Tenancy Act. If a landlord is unsure as to whether or not their housing relationship qualifies for an exempted increase under the legislation, it would be best to obtain legal advice.

Are rent increases bringing you down? For further assistance with residential tenancy matters, contact: Andrea E. Fammartino

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