B.C. landlords propose retention of two percent base increase for annual rent hikes

Carlito Pablo, Georgia Straight
July 5th, 2018


Annual rent increases in B.C. have been computed with a formula since 2004. It’s a base increase of two percent over current rent, plus the cost of inflation.

Following this method, the maximum allowable rent increase for 2018 was set at four percent.

A number of landlords as well as tenants may not be happy with this formula, but unless the Residential Tenancy Act is changed, they all have to live with it.

With the provincial government is looking at possibly changing the law, landlords are saying it’s a good idea to keep the way rent increases are calculated.

Industry association LandlordBC has submitted a position paper to the Rental Housing Task Force led by Vancouver-West End MLA Spencer Chandra Herbert.

The group suggests keeping the current formula for annual rent increases, which is two percent plus cost of inflation.

LandlordBC is also proposing the retention of the current system provided by the Residential Tenancy Act, wherein rent controls be tied to the tenant, and not to the rental unit.

“Any reconfiguring of either of these existing provisions under the Act, in whole or in part, will cause irreparable long-term harm to both renters and landlords,” the group stated in the paper. “The economics of continuing to provide rental housing will unravel, as will the incentive and ability to invest in one’s property.”

“Further,” the association added, “it will be impossible to build any or any business case for the construction of new purpose-built rental housing. This in our view is the only way in which the private sector can address the critical shortcoming in supply.”

Al Kemp of A.G. Kemp & Associates Inc. echoes the same position as LandlordBC.

Kemp and company provides services to the rental industry, and he noted in a separate submission to rental housing task force that the two percent annual base increase serves an important purpose.

“Its purpose and intent are to guarantee that rental building owners can ensure they have ongoing sufficient funding – unrelated to inflation – to keep their properties well maintained, secure, and desirable,” Kemp wrote. “The 2% base is not intended to go toward major expenses; it is intended to provide the legislated ability to recover the costs of lesser renovations and repairs, such as replacing windows or flooring as units become vacant.”

Brent Wolverton, CEO of The Pacific Investment Corporation Limited, also made a submission to the task force.

In a swipe on politicians, Wolverton wrote: “At the same time that governments are acting to require property owners to freeze rents, they are not willing to ‘walk the walk’. As a landlord, one of the largest expenses we have is property taxes. If you compare the legislated allowable rent increase to the budget increases year over year at the City of Vancouver or the other surrounding municipalities, you will find a larger and larger gap.”

Wolverton continued: “Somehow landlords are required to make ends meet with 2%, but god forbid a mayor should have to stick to 2% as a year over year budget increase.”

Redbrick Properties, a family-owned company in New Westminster, made its own submission, noting the current formula is deficient.

“This rent control rate is woefully inadequate to compensate for the actual cost increases faced by landlords which are quite different than CPI inflation,” Aly and Abdul Jiwan of Redbrick Properties wrote. (CPI stands for Consumer Price Index.)

The Jiwans warned that additional “rent controls will stop new market rental housing from being developed”.

The rental task force will accept online comments until Friday (July 6).

David Goodman, Mark Goodman and Cynthia Jagger, the team behind the Goodman Report, a newsletter specializing on apartment buildings, are calling on their subscribers to make submissions to the task force.

“Our concern is that the Task Force isn’t truly interested in hearing from landlords,” they told their readers. “We anticipate that they’ll make sweeping changes to the Residential Tenancy Act that will deter owners from upgrading buildings and stop the construction of purpose-built rental housing moving forward.”

Mark Goodman indicated in an interview that the team believes that the task force may not give landlords a fair shake.

“We feel it’s going to be an imbalanced process,” Goodman told the Straight by phone.