If you rent an apartment in Vancouver, you may dread annual rental increases.
While the province froze rental increases in 2021, landlords were able to issue them again starting on Jan.1, 2022. That said, they may only increase rent by a maximum of 1.5 per cent, based on inflation.
In previous years, landlords could issue much higher annual increases. In 2012, for example, the maximum allowable rent increase was 4.3 per cent.
But a higher allowable rent increase wasn't the only issue facing B.C. tenants in past years.
Vancouver rent: Know your rights
In December 2017, The New Democratic Party (NDP) did away with what can be described as a "geographic rent loophole." Back then, some tenants faced massive rental hikes, such as the renter in this dispute who faced an increase of over 30 per cent. The landlord argued that their rental price was significantly lower than similar rental units in the same geographical area. This was an acceptable reason to raise the rent above the maximum limit before the rule changed.
For some tenants, the costs were even higher.
“My neighbours and I were threatened with huge rent increases — up to 73 [per cent] for some of us,” said tenant Ross Waring in a news release. “No one should have to face that.”
In other words, if your landlord tries to tell you that rental prices in the area are all increasing when they give you a hefty increase, you can give them documents showing the allowable amount or apply for dispute resolution.
What to expect from a lawful rental increase
While some landlords may choose not to raise your rent, others may serve you with an annual increase. If they do issue one, they must do the following:
- provide a full three months' notice
- use the correct notice of rent increase form
- use the maximum amount for 2022: 1.5 per cent
- it must be at least 12 months since the last rent increase or when the rent was first established
- the landlord can't "round up." In other words, if the new rent works out to $1,115.40, they can't make it $1,116.00.
Find out more information about lawful rent increases with the Residential Tenancy Branch (RTB).
Are there any instances where a landlord may increase the rent above the maximum limit?
The short answer is: yes. A landlord may raise the rent above the maximum increase in some situations.
But a spokesperson for the Attorney General and Minister Responsible for Housing told Vancouver Is Awesome that this only happens in "exceptional circumstances."
There are three circumstances where a landlord may apply to the RTB to raise the rent above the maximum limit for expenses.
- 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 for the same rental unit.
There is "a very high bar set for landlords to prove a financial loss." This loss must be a "net operating loss," where their expenses exceed total revenue. The landlord must prove that an extraordinary increase in operating expenses led directly to a net loss, added the ministry in an email.
Any landlord's rent increase request is determined on a case-by-case basis but the onus is on them to prove they are operating at a loss.
Criteria for eligible capital expenditures
For more modest increases, including necessary repairs or improvements, a landlord may apply for a rent increase for capital improvements.
Capital expenditures are eligible if they are incurred for the installation, repair or replacement of a major system or major component for one of the following reasons:
- To maintain the residential property in a state of repair to comply with health, safety, and housing standards;
- That has failed, is malfunctioning, is inoperative, or at the end of its useful life; or
- That achieves a reduction in energy use or greenhouse gas emissions, or an improvement in the security of the residential property.
To be an eligible capital expenditure, the landlord must also establish the following:
- The capital expenditures must have been incurred within the 18-month period prior to applying to the Residential Tenancy Branch; and
- The capital expenditures are not expected to recur for at least 5 years.
Routine, ongoing, or annual maintenance, such as cleaning carpets, repairing a leaky faucet or pipe under a sink, or painting the walls of the rental property are not eligible for an increase. Costs that are the result of inadequate repair or maintenance by the landlord are not eligible, either.
The rent increases are capped at 3 per cent annually for these capital expenditures (plus the annual rent increase). However, they may be less depending on the formula in the RTA that factors the number of eligible capital expenditures and the number of dwelling units, spread over a 10-year period or 120 months.
In July, all B.C. landlords may apply for eligible capital expenditures through the RTB's online application portal. Find out more about the process online.