B.C. rent increase capped lower than inflation
September 15, 2021
While property taxes, utilities and other input prices for residential landlords are increasing in British Columbia, the provincial government recently capped the allowable annual rental increase for 2022 at 1.5 per cent—well below the rate of inflation.
On September 8, the B.C. government lifted a freeze on rents that had been in place since the pandemic began in May 2020, and announced the new rent increase limits under provincial rent controls.
The 1.5 per cent rent increase next year is down from an expected 2 per cent added to the inflation rate.
Canada’s official inflation rate as of August 8, 2021 was 3.6 per cent, according to Statistics Canada.
Rent increases can't take effect until January 1, 2022, and landlords must provide three full months' notice of any impending rent increase. This means that landlords should send tenants a notice by October 1, 2021 for a January 1, 2022 rent increase.
"The 2022 maximum allowable rent increase is significantly less than what it would have been prior to changes made by the province in 2018 that limited rent increases to inflation," a government news release stated.
Mark Goodman, managing partner of Vancouver-based Goodman Commercial Inc. which deals exclusively in multi-family buildings, provided an actual example of the expense increases paid by the owner of a 20-unit rental apartment building in Vancouver between 2019 and 2020:
• Property taxes—up 24 per cent;
• Insurance costs—up 36 per cent;
• Hydro costs (heat/electricity)—up 16 per cent;
• Water and sewer costs—up 10 per cent; and
• Cleaning and sanitation—a 6 per cent increase.
The 1.5 per cent rental increase cap may be the last straw for some small landlords, such as homeowners who rent out a basement suite or individual condo investors, warned the CEO of the Landlord Credit Bureau in Vancouver, Zac Killam.
“All this will have the unintended consequences of reducing the amount of rental housing available,” said Killam, because many landlords offering the least expensive rentals “are bailing out of the rental business.” “The [government] has essentially taken the financial impact that tenants are facing and placed it on the back of small landlords,” Killam added.