Residential Tenancies Branch

Section 13 

Rent Regulation

Sub-Section 13.10

Setting Rent on New or Previously Exempt Rental Units

  Legislation

s. 116, 118(1), The Residential Tenancies Act
s. 1(3), 3, Residential Rent Regulation

  Definitions

Allowable rent:  the maximum amount a landlord can charge for a rental unit; this amount is based on:

• the guideline increases the landlord takes after giving a tenant three months’ written notice; or
• an Order the Branch issues, setting the rent.

Anniversary date: the date on which a landlord is entitled to increase the rent on a rental unit. In some residential complexes, all units have the same anniversary or rent increase date. In other complexes, the anniversary dates may be spaced throughout the year. A landlord can usually increase rent for a rental unit only once every 12 months. A landlord can change the anniversary date on a rental unit by waiting more than 12 months between rent increases. For example: The anniversary date on a particular unit was September 1, 2003. The landlord wanted to change the anniversary date to January 1 to coincide with the anniversary dates on the other units in the complex. To change the date, the landlord did not increase the rent on September 1, 2003 but waited for the increase until January 1, 2004.

Annual rent increase guideline: the percentage that a landlord can increase rent without applying to the Branch for approval. The Government sets the amount each year. The guideline takes effect on January 1. For an explanation of how the annual rent increase guideline is calculated, click here. A landlord can apply for a larger increase if they can show that a guideline increase will not cover their increases in expenses. The guideline applies to most rental units, including apartments, single rooms, houses, duplexes, mobile homes and mobile home lots. The Residential Tenancies Act does not apply to rent increases on land leases.

Exemption period: a period of time the annual rent increase guideline doesn’t apply to a rental unit or residential complex.

Exempt unit: a unit to which the annual rent guideline doesn’t apply. Some units are exempt for a specific period of time, for example: 5 or 15 years. Others may be exempt indefinitely, for example: a unit owned and managed by government or for government. There is a complete list of the types of units that are exempt in the Act and the regulations.

Notice to New Tenant: a form a landlord must give a new tenant at the beginning of a tenancy. The landlord must send the Branch a copy of the form within 14 days of giving it to the tenant. The notice tells the tenant about the services and facilities that are included in the rent. It also shows the previous and present rent for the rental unit and tells the tenant of any proposed rent increase. The Branch provides the form. A landlord may use their own form as long as it has all the information required by the Act.

Registry: a Branch computer system that records information on the rents charged for rental units

Rent: the amount of money paid by a tenant to a landlord for the right to occupy a rental unit and the use of common areas, services and facilities; rent includes any service/facility for which the tenant pays a separate charge (For example: parking, storage locker.)

Rent discount: a contractual agreement between a landlord and tenant allowing a tenant to pay less than the allowable rent on their rental unit. A rent discount must be set out in a  written agreement and can:

• be for a specific period of time (for example: one year);
• be a one-time, "bonus" offer (for example: one month’s free rent);
• have certain conditions attached to it (for example: in order to get the discount, rent must be paid on time).

Policy

New Construction

New buildings where the first occupancy permit was issued after April 9, 2001 or where the first tenant moved in after that date are exempt from the annual rent increase guideline for 15 years.

New buildings where the first occupancy permit was issued after March 7, 2005 or where the first tenant moved in after that date are exempt from the annual rent increase guideline for 20 years.

A landlord can set the amount of the rent for the first tenant of the unit and for any other tenants who move in during the 15 or 20 year period.  However, once the landlord sets the rent for a rental unit, they cannot increase the rent for 12 months.

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Additions to Existing Residential Complexes

When a landlord adds rental units to an existing residential complex, the Branch does not consider the new units to be a "new building". The landlord can set the rent for the first tenant of the unit. However, when the landlord sets the rent, it must be an actual rent, without any discount. The landlord must give the tenant a Notice to New Tenant and send a copy of the notice to the Branch. Once the landlord sets the rent for a rental unit, they cannot increase the rent for 12 months. When the landlord increases the rent on or after the anniversary date, the annual rent increase guideline applies.

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Existing Units That Are New to the Residential Rental Market

When a property owner decides to rent their home or other type of unit (e.g. commercial unit) as a residential rental unit, they can set the rent for the first tenant of the unit. This can also happen when a landlord rents a unit that was previously occupied only by a caretaker or other employee of the landlord. However, when the landlord sets the rent for a tenant, they cannot increase the rent for 12 months from the date the tenancy begins. The landlord must give the tenant a Notice to New Tenant and send a copy of the notice to the Branch. When the landlord increases the rent on or after the anniversary date, the annual rent increase guideline applies. (See also Rent Increase for New Tenant)

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Existing Units That Are Returning to the Residential Rental Market

Sometimes landlords remove rental units from the residential rental market for use as other types of accommodation (e.g. extended stay hotel unit, caretaker/employee unit). When the landlord returns the unit to the residential rental market, they cannot set the rent at an amount of their choosing. The landlord must give the tenant a Notice to New Tenant and send a copy of the notice to the Branch. The Branch’s practice is to refer to the last rent registered in our Registry and then apply the annual rent guideline(s) for the period the unit was "off the market" to establish the current rent. If the landlord applied for and received approval for an above guideline increase for other units in the complex during the period, the Branch will also apply that increase when establishing the current rent.

Units After the End of a SpecifiedExemption Period

If a landlord offers a rent discount during an exemption period, it may affect the amount of rent the landlord can charge after the exemption period ends.

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If a landlord didn’t offer a rent discount, they may charge the same rent they charged during the last tenancy agreement before the end of the exemption period. For example: The first occupancy permit for a building was issued on April 1, 1999. The building was exempt for five years, from April 1, 1999 to March 31, 2004. During the last tenancy agreement, from April 1, 2003 to March 31, 2004, the monthly rent was $550.00. If the landlord plans to increase the rent on April 1, 2004, they calculate the increase on $550.00.

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If a landlord did offer a rent discount, the landlord must use the formula in the Residential Rent Regulation to:

• calculate the value of the discount; and
• determine the allowable rent.

The formula to calculate the value of the discount is:

any rent actually paid during the exemption period
+ (plus)
an amount equal to the annual rent increase guideline for the remaining years in the same exemption period
- (minus)
the rent payable during the first year after the exemption period
= (equals)
the value of the discount

The landlord may choose the "start" year for the calculation. Generally a landlord will choose the year the actual rent paid was the highest. For example:

The building was exempt for five years, from April 1, 1999 to March 31, 2004. During the exemption period, tenants paid the following rent:

The actual rent paid was highest in 2000, $600.00. When the exemption period ends March 31, 2004, the maximum allowable rent is $627.00 [$600.00 rent paid in 2000, plus the 1.5% annual rent increase guideline in 2001, 2% in 2002 and 1% in 2003]. The value of the discount is $72.00 ($627.00 -$555.00).

On April 1, 2004, the allowable rent is $627.00. However, in this example, there is a tenancy agreement from October 1, 2003 to September 30, 2004 at a monthly rent of $555.00. The landlord can’t increase the rent until October 1, 2004. If the landlord increases the rent on October 1, 2004, the landlord calculates the increase on $627.00.

After  an  exemption  period  ends,  a  landlord  may  increase  the  rent  with three months’ written notice. The landlord may only increase the rent if:

• the previous increase was more than 12 months ago; and

• there isn’t a fixed term tenancy agreement preventing the increase.

Procedure

Overview   

This policy is included as information for landlords, tenants and officers. If there is a question about the allowable rent for a rental unit, a landlord or tenant can ask the Branch for help.

Steps ▼   

1.   If a landlord or tenant asks the Branch for help, the officer asks the       landlord for information on the rent history of the rental unit.

2.   The officer reviews the landlord’s information and the information in the       Branch’s Registry to ensure that the landlord is not planning to charge       more than the allowable rent increase. If necessary, the officer issues an       Order, setting the maximum amount of rent the landlord may charge.

Forms & Form Letters

X-Referencing

None

Policy Developed

March, 2004

Last Revision

August, 2015

Other Resources

None

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