I want to increase my tenant's rent by $500.00, what should I do?
Updated: Mar 23
Rent increases can be tricky business and we find that many landlords (and similarly many tenants) are uninformed about the correct process when advancing (or facing) a rent increase.
The first way is to increase rent is by giving a tenant a Notice of Rent Increase at least three months before the effective date of the increase. The maximum amount a landlord can increase rent by is pursuant to Part 4 of the Residential Tenancy Regulations and changes from year to year.
If the maximum rent increase is not enough, i.e. it can only be increased by 2% but a landlord wants to increase rent by 10%, or a landlord wants to increase the rent more than once in any given 12-month period, landlords can bring an application to the Residential Tenancy Branch seeking to increase the rent beyond the maximum.
The final way that rent can be increased is if a landlord and a tenant agree to a rent increase in writing. The underlined part is key, here. Any rent increase of this type is not bound by any maximum limit, and parties can theoretically agree to a rent increase for however much or little, and as many times as the parties see fit.
This post will focus on first and last scenario, as they tend to be the most common types of questions that we get asked.
The Notice of Rent Increase
Pursuant to section 42(1) of the RTA, landlords are permitted to impose a rent increase once every twelve (12) months, starting from the day that the parties enter into a tenancy agreement. The keyword here is "impose", because a tenant need not agree to a rent increase as long as their landlord provided proper notice in accordance with the RTA.
When a landlord decides to impose a rent increase, they need to issue their tenant a Notice of Rent Increase at least three months before the effective date of the increase. The better understand what that means, here is an example:
A landlord want to increase the rent for their unit by July 1st. In order for the rent increase to start on that date, the landlord will need to issue a Notice of Rent Increase on or before March 31st, otherwise the rent increase will not be valid.
So what happens if the landlord in our example issues their Notice of Rent Increase effective July 1st on April 1st? Well, then the earliest that the rent increase would be effective by is August 1st. If this happens, a tenant would also be entitled to not pay the increased portion of the rent until the effective date of the notice - we briefly touched on that in our post titled "My landlord didn't do _____, can I stop paying rent?" We encourage you to have a look at that post.
But what if the a Notice of Rent Increase effective July 1st is issued before March 31st? Nothing happens! Since the notice has to be issued at least three (3) months before the effective date of the rent increase, it would still be enforceable for July 1st (but not sooner!).
Agreeing to a Rent Increase
Another way to increase rent is if a landlord and tenant agree to the rent increase, and this is where things can get sticky. When it comes to agreeing to a rent increase, a landlord is not necessarily bound by the notice requirements or the maximum limits to increase rent for - as long as it's agreed to by the client. An example will demonstrate this point more clearly:
A tenant has lived at a rental unit for five (5) months and is paying rent at $1,000.00 per month on a month-to-month basis. The landlord informs the tenant that they would like to raise the rent by $300.00 starting the following month, but the tenant tells them they are only able to afford paying $200.00 more each month and agrees to pay the increase, starting the next month. The landlord puts this agreement in writing and the tenant signs it and pays $200.00 a month more in the next month.
If the tenant in the above example had obtained legal advice first, they would have been told the following:
a landlord can not issue a rent increase until 12 months have passed from the date on which the tenant's rent was first payable for the rental unit, so for another seven (7) months (unless the tenant agreed to increase the rent sooner);
if the landlord was allowed to issue a notice of rent increase, then the rent increase would be effective a full three months after the tenant was notified (unless the tenant agreed to it being sooner); and,
assuming this all took place in 2022, then the maximum amount that the rent could be raised by would be 1.5%, or in this case by $15.00 (again, unless the tenant agreed to a further increase).
Since everything in this example was agreed to by the tenant, it is nearly impossible for them to go back and challenge the agreement at a later time. In doing so, the tenant from the example is paying $185.00 per month more, or $2,220.00 per year more. That is two month's rent based on our example!
Therefore, if you are a landlord wanting to issue a rent increase, or a tenant that has received a Notice of Rent Increase, and you're not sure if the correct process was followed, please don't hesitate to get in touch with us!