BC’s landlord denied an $808 rent increase for mortgage and fees

A B.C. landlord’s attempt to raise his tenant’s rent several hundred dollars above the normal amount was rejected, despite rising mortgage and related real estate costs.

The landlord has submitted an application dispute resolution with the Residential Tenancy Branch (RTB) for an additional rent increase above the maximum allowable annual limit on April 30, 2024. They said they had incurred an extraordinary increase in the property’s operating costs.

In response to the landlord’s request, the tenant submitted a document on June 19, but did not provide it to the landlord. For this reason, the RTB did not comment on this during the hearing.

The lease began in August 2021 and continued month to month, with a monthly rent of $3,162. The landlord notified the tenant of a rent increase to $3,272.67 on August 1, 2024.

On September 13, the landlord informed the tenant that they were dealing with a “dramatically increasing mortgage” and other costs. They tried to reach an agreement with the tenant about a rent increase, but the tenant did not accept this. The landlord assessed a total monthly additional cost of “$1,127.11, based on increases in the ‘old’ versus ‘new’ mortgage payments, the increase in rental property insurance, and the increase in annual property taxes.”

The landlord’s application showed an increase in operating costs from July 2021 to June 2024.

• Property taxes: $438.58 – shown on property tax returns for each year 2020 through 2023, including a 2023 property tax bill
• Insurance: -$248.85 – shown in insurance premium information for each year 2019 through 2023
• Garden construction: -€ 22.75 – monthly maintenance costs for the garden, invoiced to the landlord.

The landlord claims that their operating costs increased from $44,694.84 to $54,277.97 in four years and their mortgage increased by $9,701.88 in three years.

BC’s landlord has rejected the request for a rent increase

The landlord has not provided information about interest rate changes and the impact on operating costs. During the hearing, the landlord referred to the new mortgage interest rate and the unforeseen first mortgage interest rate increase. They built the house 25 years ago and then began renting it out, saying they had “no way to predict new financing rules 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 annual rent increase of 3.5 percent, plus the rent increase of 22.06 percent, which amounts to a total rent increase of 22.56 percent.

The landlord states that they have incurred financial costs for the purchase of the rental property and that these 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 has not proposed an extraordinary increase in this amount.

To prove that the lessor had incurred extraordinary financing costs, the lessor had to show that the costs were unforeseeable under reasonable circumstances.

In its ruling, the RTB rejected the landlord’s request to increase the rent because they had not provided sufficient evidence of the new financing costs and the resulting financial loss. Operating costs were also not considered ‘extraordinary’.

The landlord’s application was rejected in its entirety on August 1.