Rent Increase in Residential Tenancies (19:VII)
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 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.
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:
- 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);
- 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.
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.
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