If you operate a rental property in British Columbia, you will want to be regularly following the Provincial Government’s annual rental increase allowance rate.

For 2020, the rental increase allowance is 2.6%. 

As a landlord, rental increases are what allows you to make proper capital expenditures to maintain your property in a state of good repair. A failure to keep on top of these changes can result in less personal income. However, more importantly, it can also cause a decline in available revenue for the general operation of the property. As a business owner that will want to respond to the needs of your customer (the tenant), regular, appropriate, rate increases need to be factored into the property’s operating budget.

For Quick Reference

Download our Rent Increase Guide in PDF Form Here. 

Every year, in September, the Residential Tenancy Branch sets the increase allowance for the following year.
Last week, the RTB announced 2.6% for the year 2020, down somewhat from 2018’s 4.0% and 2017’s 3.7%. A list of historic annual rates is available here.They follow the instructions and formula provided in Section 22 of the Residential Tenancy Regulations. Which states:

Annual rent increase

  • 22 (1) In this section, “inflation rate” means the 12-month average percent change in the all-items Consumer Price Index for British Columbia ending in the July that is most recently available for the calendar year for which a rent increase takes effect.
  • (2) For the purposes of section 43 (1) (a) of the Act [amount of rent increase], a landlord may impose a rent increase that is no greater than the percentage amount calculated as follows: percentage amount = inflation rate

Applying a Rate Increase

Rental increases are limited to once every twelve-months and formal notice must be given three months before the raise takes effect. Landlords must use this form when advising tenants of a rate change. If possible, try to inform your tenant in person and hand-deliver the notice to ensure receipt. To guarantee everything goes smoothly, consider delivering the form in advance of the three-month window.

If you failed to implement a rental increase in a given year, you are not permitted to add it retroactively or cumulatively. For example, if you haven’t increased the rent for 36 months, you are only able to add the 2.6% allowable in 2020 to the current rental rate. And, of course, only after advising the tenant three-months in advance.

If you want to want to check the calculation, the BC Government has provided a convenient online calculator to help walk you through it.

If you have had to make an unexpected capital expenditure on your property, you can apply for an above-rate-increase. However, it’s important to remember that each above-rate case is arbitrated independently. Approval is often determined on whether the landlord has had to complete significant repairs or renovations to the property that could not have been foreseen under reasonable circumstances. Neglecting to increase the rate year-over-year is not considered grounds for such an increase. If you elect to petition for an above-rate-increase, the form can be downloaded here.

If you have further questions about applying rental rate increases, get in touch. Bolld Property Management has years of experience in the BC market and can assist you in navigating the intricacies of changing government policy.

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