Limit rent increases to rate of inflation, task force urges

Annual rent increases for tenants in B.C. should be limited to the cost of living, a provincial government task force is urging.

The recommendation by the B.C. Rental Housing Task Force would do away with the current calculation that allows landlords to charge their tenants annual inflationary increases, plus an additional two per cent top-up.

However, the idea needs government support before it could go into effect.

Spencer Chandra-Herbert, the head of the task force and NDP MLA for Vancouver-West End, said Monday the existing formula has made life unaffordable for renters who for years have seen annual increases that far outstrip wage increases.

To ensure landlords can afford to maintain their buildings, they will be able to apply for additional rent increases to cover the cost of work they have done, said Chandra-Herbert.

“We believe this strikes the balance between the need for affordability for renters and the need to maintain properties,” he said.

Earlier this month, the Residential Tenancy Branch set the maximum allowable rent increase for 2019 at 4.5 per cent, the largest jump since 2004. For 2018, it was four per cent, and in 2017 it was 3.7 per cent. Over the past 15 years, the lowest allowable rent increase was 2.2 per cent and the highest was 4.6 per cent.

The three-member task force has recommended the maximum rent increase formula be limited to the cost of inflation (2.5 per cent in 2019).

The task force has for several months held public consultations and reviewed existing B.C. laws as well as approaches in other jurisdictions. During that work, it found that Ontario and Manitoba have limited rent increases to the rate of inflation for more than a decade. The task force’s recommendation came earlier than its broader report, now expected in late November.

David Hutniak, the chief executive of Landlord B.C., said he was “quite concerned” about the idea. He said the existing formula is already inadequate in covering the costs of business.

“We’re extremely sensitive to the challenges renters are facing here. The homes we provide are built for local incomes. We don’t have the luxury of selling our units to wealthy investors. We are acutely aware of local incomes and the pressures that everybody’s facing here … but the harsh reality is, our expenses are increasing too,” Hutniak said.

The mechanism by which landlords could seek an above-guideline increase for proven maintenance expenses may sound attractive, but many landlords would not have the expertise or resources to go through a cumbersome application process for the top-up, Hutniak said.