In a recent decision, the Residential Tenancy Branch (RTB) allowed a pair of B.C. landlords to raise rent by 23.5 per cent over two years — on top of the province’s annual allowable rent increase of 3.5 per cent for 2024.
The RTB says the landlords were able to prove their current financial situation was not sustainable after their mortgage interest rates rose.
“I find the world and economic events in reaction to the pandemic were not reasonably foreseeable and have impacted the landlords,” the RTB decision reads. “Significant increases in the mortgage interest rate occurred due to unforeseen events.”
The decision, made in May, allowed the landlords to increase the rent of four units by nearly seven times more than the annual limit set by the province in 2024.
The decision said the landlords proved their mortgage rates had risen to a point where the allowable rent increases would have meant they incurred significant financial losses.
The RTB did not include the names of the tenants and landlords to protect their identity.
$500 rent increase
According to the decision, the landlords bought a fourplex in October 2021, their first rental property. The units in the building are two-bedroom, one-bath suites, and utilities are included in the tenants’ rent.
Before the decision, the tenants were listed as paying between $1,282 to $1,550 per month.
In April 2023, the landlords asked the tenants of the four units if they would agree to a $500 per month rent increase — higher than the province’s limit of 3.5 per cent.
Their mortgage was owned by one of the big five banks. According to court documents, the landlords had a variable mortgage rate of 1.9 per cent, which stayed stable for months — until suddenly, it shot up. By July 2023, the mortgage interest rate had gone up to 6.65 per cent.
According to court documents, the financing costs for the home that year had shot up to about $80,000 — a big jump from the previous year’s financing costs of about $46,000.
The tenants did not agree to the $500 rent increase. Some offered the landlords a $50 increase, and the landlords did not respond to that request.
According to the RTB documents, some tenants argued the property was an investment, and asked how it could be classified as a loss “when the landlords are going to come away with a million dollar house.”
However, the branch ultimately found that the landlords had proven they would suffer a financial loss based on a balance of probabilities.
While they were seeking a total rent increase of 23.5 per cent over one year, the RTB found the increase “significant in one instalment”, and had them hike the rent over two years instead.