Posted September 10, 2023 | by Keaton Bessey, Managing Broker
A quick google search would have you believe that the only increase you are able to obtain in 2024 (or going forward) is an increase set by the Provincial Government. In 2024, that rate is 3.5%.
However, this is not entirely true.
What many people fail to understand is these two simple facts:
1) The maximum rent increase (3.5% in 2024) is what a Landlord can legally force upon a Tenant in BC and the Tenant's options are
- Dispute it
- Pay it
- Move out
2) A Lease can be changed at anytime with a mutual agreement between Landlord and Tenant as long as it does not violate the Residential Tenancy Act (RTA)
If you have a tenanted property, you are getting beat up by increased interest rates, rises in strata fees, property taxes, repair costs, insurance, etc. and you are considering your financial options, you can try to increase rent above the 3.5%. We suggest the following steps (there are other options but this is the most sensible one)
A) Make contact with your tenant and inquire about renewing their lease for an extended period: another year or 2 is generally understood and acceptable
B) Determine what increase you are targeting and keep the following factors in mind:
- Current going rates: not posted rates online, but actual going rates. Contact a property management company for a reasonable market rate for your property, you can request one from us by clicking here.
- Income of the Tenant: Consider what the income of the Tenant was when the moved in, and what it may be now. Consider 2-3% average wage growth per year or if they've recently been promoted, got a better job, etc. you can factor in more.
- Income to Rent Ratio: You want to aim for a take home pay (after tax) income to rent ratio of 3 to 1.
- Example: A $2,000 per month apartment should have Tenants who have a monthly take home pay of $6,000 per month.
C) Once they've confirmed they would like to renew their lease for another period, and you are okay extending the lease, you can let them know that you are happy to provide them an extended lease in exchange for an increase in rent. If you have already issued an increase, you can still increase further with mutual agreement. More information on the government website by clicking here.
D) Once you've come to an agreement of the increase in rent (they may not respond to you or just say they want to stay month to month, they can do this), then you draft up the standard rent increase form (download here), attach the written agreement (a simple email thread will do) to the email, and deliver to them legally as required by the RTA (delivery requirements found by clicking here)
Always keep in mind that your tenant does not know your financial situation and you can either be entirely up front with them about it, or you can keep it guarded. We find that Landlords who share what is happening personally, and their story makes reasonable sense that they are getting pinched, they get a better response than trying to hide.
This is your personal choice. This is not an opportunity to profiteer.
Yes the government has dabbled way too aggresively in tenancy regulations, and they are also not building enough homes. That is for another conversation, but this is not a time to try and gouge someone to make an extra buck.
I did another post on LinkedIn about taking this on as part of the lease renewal which you can checkout by clicking here
If this article helped you or was missing something, we would love to hear your quick feedback on google: https://g.page/r/CY9STzAnxG_9EBM/review
Here are some links to other resources, information, and content I've put together:
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