BC government to consider capping allowable rent increase, given soaring inflation

As inflation rises to levels not seen in decades, the provincial government is considering capping the annual allowable rent increase.

It’s one part of a suite of policy options under consideration to ease the burden for tenants as the cost of living climbs higher.

Under the existing formula, landlords are allowed to raise rents in line with inflation.

The rent increase is pegged to the 12 month average percent change in the Consumer Price Index, which as of April stood at 4 per cent in British Columbia — and that figure could rise higher as the final calculation will be based on the CPI change as of July.

“We’re looking at, first of all, what the actual number is likely to be based on the Consumer Price Index, and what that impact is going to mean for renters,” David Eby, the minister responsible for housing told CityNews during an interview on Friday. “We’re looking at potentially having a rent increase less than the Consumer Price Index.”

Eby went on to say a cap is one of a number of policy options the province is considering to give renters a break.

“We’re also looking at our subsidy programs, our SAFER (Shelter Aid for Elderly Renters) program for seniors, and other vulnerable renters, if they need to be updated to respond to this as well,” Eby said. “We’re looking at making sure renters are able to afford their homes, because one of our strategies is to prevent homelessness, and we know that there are vulnerable seniors, especially, we’re seeing increasingly in our homeless numbers.

“Responding to ensure they’re not impacted by a dramatic increase in rents due to a one or two year increase in inflation is something that’s really important.”

The fact this is under consideration will not go down well with Landlord BC.

The organization’s chief executive David Hutniak points out his members have dealt with a rent freeze during the early part of the pandemic, and also highlighted the fact the NDP government had previously reduced the annual allowable increase by wiping out the additional 2 percent landlords were previously allowed to hike rents beyond inflation each year.

“We don’t see anybody saying, put price freezes on food, yet our sector seems to be a never ending target,” Hutniak told CityNews. “We provide a pretty important service, and we need to be able to do it on a sustainable basis. Landlords are leaving the business frankly, in droves. We’re seeing a lot of our smaller members exiting the sector, because they’re frustrated that it’s more challenging, and the returns aren’t there.

“The minister, who we have a great relationship with, and a lot of respect for — he’s very committed to ensuring that we grow the supply of rental housing. Developers, our organization, we’re trying to partner with him as much as possible to support his efforts in that regard.

“If he tempers this increase, at this particular time, what kind of message does that send to potential rental developers? Basically, it means that they can’t trust the government. That they’re making 50, 60 year decisions, huge amounts of money involved, now with interest rates rising, purpose built rental in particular is hugely challenged. So, they need to have confidence that the RTA formula is the RTA formula.”

Hutniak had previously suggested to CityNews that the NDP government should follow through on its promise to bring in a $400 renter rebate, instead of adjusting the allowable rent increase formula. When asked about that, Eby said the finance ministry is working on its implementation.