BC caps annual rent increases each year, but landlords can apply to the RTB for more. How the cap works — and the case where a landlord was granted a 23.5% increase.
In British Columbia, how much a landlord can raise the rent is set by the Residential Tenancy Act (the “Act”) and the Residential Tenancy Regulation (the “Regulation”). Each year the province sets a maximum allowable increase for existing tenancies: 2.3% in 2026 (down from 3.0% in 2025 and 3.5% in 2024). Use our BC rent increase calculator to work out the dollar amount on a given rent, and confirm the current figure on the BC government rent-increase page before serving notice.
A landlord normally cannot exceed that cap. But the Act has an exception — and a recent Residential Tenancy Branch (“RTB”) decision used it to grant a landlord an additional 23.5% increase. That ruling raises the question this post answers: when can a BC landlord increase rent above the annual cap?
Under Section 43(3) of the Act, landlords may apply for a rent increase greater than the regulated limit by submitting an application for dispute resolution.
The Residential Tenancy Policy Guideline #37D - Additional Rent Increase for Expenditures offers guidance on when landlords may be entitled to such increases. Specifically, it allows landlords to request an additional increase if they have reasonably incurred a financial loss due to financing costs—costs that could not have been foreseen under reasonable circumstances. Financing costs here refer to the interest or charges associated with borrowing money to purchase the property.
In this case, the landlords purchased a four-plex in October 2021, entering into a variable rate mortgage with an initial interest rate of 1.9%. However, by June 2023, that rate had spiked to 6.4%, and by July 2023, it reached 6.65%. These drastic increases led the landlords to incur financing costs of over $80,000 in the last fiscal year, compared to $45,000 in the prior year.
Faced with unsustainable costs, the landlords sought an additional rent increase, but the tenants were not willing to agree to it voluntarily.
The landlords argued that despite the requested rent increase, they still wouldn’t break even on the property. However, they needed relief from the financial strain to avoid selling. They determined the increase amount by calculating a $10,000 net income loss—an amount they felt they could manage to keep the property.
The RTB acknowledged that while the landlords had a financial cushion in place, the rapid and significant interest rate hikes made the situation unmanageable. The RTB found that the landlords had proven, on a balance of probabilities, all elements necessary to qualify for an additional rent increase due to financial loss from financing costs.
As a result, the RTB granted an additional rent increase of 23.5%, recognizing the financial strain caused by the unforeseeable interest rate hikes.
This case highlights that while rent increase limits exist, landlords facing significant financial challenges—particularly from rising financing costs—may be able to seek additional relief through the RTB. However, they must demonstrate that these costs were unforeseen and have made managing the property unsustainable.
For more information and insights into this decision, read the full RTB ruling.
If you are a landlord weighing an above-cap application — or a property owner dealing with a difficult tenancy — talk to our team. On the maintenance side, see our guide to a landlord who won’t maintain your rental.
Written by Lime Law Corporation. This article is general information about BC law as of October 24, 2024. It is not legal advice. If you have a specific matter, contact us — and please do not rely on a blog post in place of advice on your file.
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