How Are Rent Increases Permitted Under B.C.’s Updated Residential Tenancy Act?
Our aim is to help provide an understanding surrounding the rules addressing rent increases permitted under the Residential Tenancy Act (the “Act”).
At the start of a tenancy, the landlord and tenant will set out an amount as part of the tenancy agreement. Following the agreement, pursuant to section 22 of the Residential Tenancy Regulation (the “Regulation”), the landlord can only increase the rent once in a 12-month period by an amount equal to inflation.
The Act permits a landlord to impose a rent increase up to the amount:
- Calculated in accordance with the regulations,
- Ordered by an arbitrator on application, or
- Agreed to by the tenant in writing.
The landlord may only increase the rent 12 months after the date that the existing rent was established with the tenant(s) or 12 months after the date of the last legal rent increase for the tenant(s). This applies even if there is a new landlord or a new tenant.
Notably, the tenant’s rent cannot be increased unless the tenant has been provided with sufficient notice in the approved form. Particularly, landlords must provide tenants with three full rental months’ notice of a rent increase.
Additional Rent Increase
The Act allows a landlord to apply to an arbitrator for approval of a rent increase that is greater than the maximum annual allowable amount. The Regulation exemplifies the limited grounds for such an application. A landlord may apply for an additional rent increase if one or more of the following apply:
- The landlord has completed significant repairs or renovations to the residential property in which the rental unit is located that could not have been foreseen under reasonable circumstances.
- 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.
- The landlord, as a tenant, has received an additional rent increase under this section for the same rental unit.
Significant Repairs or Renovations
Repairs and renovations is one of the grounds under which the landlord can apply for an additional rent increase. This is applicable if:
- the repair or renovation is significant;
- the repair or renovation could not have been foreseen under reasonable circumstances; and
- the repair or renovation will not reoccur within a time period that is reasonable for the repair or renovation.
A repair or renovation is considered “significant” when the expected benefit of the repair or renovation can reasonably be expected to extend for at least one year, and the repair or renovation is notable or conspicuous in effect or scope, or the expenditure incurred on the repair or renovation is of a noticeably or measurably large amount.