A B.C. landlord tried to increase their tenant's rent by over $400 but was denied because of insufficient evidence.
The landlord applied for dispute resolution with the BC Residential Tenancy Branch (RTB) to have an additional rental increase above the allowable annual limit due to a sizable increase in operating expenses.
Under British Columbia law, landlords may increase rent above the allowable limit in some situations, including an extraordinary increase in operating expenses.
The tenancy commenced on Oct. 15, 2017, with a monthly rent of $1,600, according to RTB documentation. The landlord elected not to raise the rent above the allowable limit for many years because they were earning a profit. Over the past couple of years, operating expenses exceeded the amount received from rent, per the landlord. The rent also included utilities and those costs climbed significantly, according to the landlord.
On Jan. 7, 2024, the landlord served the tenant with a notification of a rental increase of $400 but the tenant refused to sign it. The renter would only agree to the 2 per cent approved rent increase by the province in 2023. The landlord's proposed increase was 20.2 per cent, plus the permissible 2 per cent increase, totalling 22.2 per cent.
The landlord explained that the 1,104-square-foot property consists of a building with a commercial business (restaurant) on the main floor and a rental unit on the second floor. In December 2022, the fire suppression sprinkler system for the building froze. When it thawed, it burst and caused water damage in the rental unit. After the pipes burst, the tenant did not live in the unit or pay rent while repairs were done.
B.C. landlord provides unaudited profit and loss statements
The landlord said his total rental income for the unit over the most recent three-year period has remained constant at $19,302.95. Over the same period, the year-over-year increase for the rental unit only (where indicated) as calculated by the landlord for:
- property taxes - $9,842.80
- electric expenses for the rental unit (separately metered) - $2,115.57
- insurance premiums (property and liability; pro-rated based on square footage) – decreased by $361.76
- water and sewer costs (one-half the meter for restaurant and rental unit) - $639.34
- gas and oil (the landlord’s automobile expense for travel to the property) - $1,428.57
According to the landlord's application, the net increase in operating expenses was $13,664.52.
The landlord said the 116 per cent property tax increase from 2022 to 2023 was "insurmountable" without a significant rent increase. They also included unaudited profit and loss statements from 2021 to 2022 highlighting increased costs for several expenses, including repairs and maintenance, telephone and internet, management fees, and more.
The landlord also pointed out that rental properties on the B.C. market that include utilities tend to cost in the range of the proposed increase. They provided an example of how a one-bedroom that included utilities was rented at $1,900 per month while another one-bedroom that did not include utilities was rented at $1,200.
The RTB said the landlord was required to submit an audited or certified financial statement. In this case, they only provided unaudited profit and loss statements.
The Residential Tenancy Act's Policy Guideline 37D also requires landlords to issue annual rental increases to capture "increasing operating costs that normally do rise from year to year" before they request an increase above the allowable limit.
Since the landlord failed to issue any annual rental increases or submit audited evidence, the RTB refused the application on March 24.
