A B.C. landlord's attempt to raise their tenant's rent several hundred dollars above the regular amount was denied, despite increasing mortgage and related property expenses.
The landlord applied for dispute resolution with the Residential Tenancy Branch (RTB) for an additional rent increase above the maximum allowable yearly limit on April 30, 2024. They said they incurred an extraordinary rise in the residence's operating expenses.
The tenant submitted a document in response to the landlord's application on June 19 but did not provide one to the landlord. For this reason, the RTB did not consider it in the hearing.
The tenancy commenced in August 2021 and continued on a month-to-month basis, with a monthly rent of $3,162. The landlord served the tenant with a notice of rent increase on Aug. 1, 2024, to $3,272.67.
On Sept. 13, the landlord informed the tenant they experienced a "dramatic rising mortgage" and other expenses. They attempted to reach a settlement for a rent increase with the tenant, but the tenant did not accept it. The landlord set out a total monthly additional expenses of "$1,127.11 based on increases in 'old' vs. 'new' mortgage payments, the increase in insurance of the rental unit property, and the increase in annual property tax."
The landlord's application showed an increase in operating expenses from July 2021 through June 2024.
- Property taxes: $438.58 -- shown in property tax notices for each year 2020 through to 2023, including a 2023 property tax assessment notice
- Insurance: -$248.85 – shown in insurance premium information for each year 2019 through to 2023
- Landscaping: -$22.75 – monthly landscaping maintenance costs invoiced to the landlord.
Over four years, the landlord claims their operating costs increased from $44,694.84 to $54,277.97 and their mortgage increased over three years by $9,701.88.
B.C. landlord denied rent raise request
The landlord did not provide information regarding interest rate changes and the impact on operating costs. In the hearing, the landlord referred to the new mortgage rate and the unforeseen first mortgage rate rise. They built the home 25 years ago and then started renting it, and said they had "no way to forecast new financing regulations and requirements."
The landlord requested a rent increase of $808.49, bringing the monthly rent to $3,970.49. This amount was in addition to the 3.5 per cent annual rent increase, plus the rent increase of 22.06 per cent, equalling a total rent increase of 22.56 per cent.
The landlord said they incurred a financial cost for purchasing the rental property and the financing costs could not have been foreseen under reasonable circumstances. However, the RTB said the financing costs associated with buying a property, such as mortgage payments, are not the same as operating costs.
The board said insurance and property taxes are considered operating expenses but the landlord did not represent an extraordinary increase in this amount.
To prove the landlord had incurred extraordinary financing fees, the landlord needed to show that the costs could not have been foreseen under reasonable circumstances.
In its ruling, the RTB denied the landlord's request to increase the rent because they did not provide enough evidence of the new financing costs and the resulting financial loss. It also did not see the operating costs as "extraordinary."
The landlord's application was refused in its entirety on Aug. 1.
