The B.C. government has announced it is cutting next year’s annual allowable rent increase by two per cent, limiting it to inflation.
Effective Jan. 1, 2019, the annual allowable rent increase will be 2.5 per cent instead of 4.5 per cent.
“It’s simply not sustainable for renters, many of whom are on fixed incomes, to see their rent increase by more than inflation each and every year,” Premier John Horgan said Wednesday.
“We have to eliminate the risk of such huge increases for renters. Our new approach strikes a balance between giving relief to renters while encouraging people to maintain their rental properties.”
The recommendation to limit the rent increase to inflation was made by the Rental Housing Task Force.
The previous formula, set in 2004, allowed annual rent increases of two per cent plus inflation, and rates had been compounding for over a decade and a half. Under this formula, renters would have seen the largest allowable rent increase in 15 years.
So advocates are looking at this as, an albeit partial, win.
“It’s a small sense of relief. In no way is this going to make rent affordable or solve the housing crisis. It’s a minimum first step, but more needs to be done,” said Together Against Poverty’s legal advocate Emily Rogers.
Developers, on the other hand, are concerned.
“Our costs are increasing at a much greater rate, capping that at only inflation is going to put a greater squeeze on the profit margin and we’re going to really start looking at where that money is going to come from for maintenance and building for the future,” said Christina Winter who works with Langford developer company DB Services.
Developers too are now calling for relief, so they can keep building.
“It’s really important that we are able to keep building rental housing because there’s a huge need for it in our community,” said Winter.
“And that’s going to mean doing things like lobbying for reduced property taxes. That would really help developers to continue built purposed built rental housing to fix this rental crisis.”
It’s something the B.C. government is all too aware of. Selina Robinson also announced they would be looking to make the application process for developers quicker as well as reducing land costs.
The government said under the new formula people living in a $1,200 per month apartment (the average rent in B.C.) could save up to $288 in 2019. Many renters, especially in Vancouver, were facing hikes that would have added up to more than $400 over the course of the year.
“We recognize supply is key to bringing down rental costs in the long term, but renters have told us they are hurting and need help today,” Selina Robinson, minister of municipal affairs and housing said.
“That’s why we are taking careful steps to address the housing crisis and ease the pressure on renters, while also making sure that landlords have the tools they need to continue to invest in their rental properties.”
So anyone who has been served a 4.5% increase notice from their landlords for January, can ignore it.
But the provincial government is also accepting the task force’s second recommendation, which is to allow landlords to apply for additional rent hikes to reflect the costs of maintaining their rental properties, including basic repairs and building maintenance.
“Our Rental Housing Task Force members have heard time and again that renters are struggling to pay yearly maximum rent increases, while basic repairs and building maintenance are left undone,” said Spencer Chandra Herbert, Rental Housing Task Force chair and premier’s advisor on Residential Tenancy.
“Taken together, these changes will make rent more affordable for British Columbians, while also helping ensure needed repairs are completed to maintain and improve rental housing.”
Andrew Weaver, leader of the B.C. Green Party, welcome the change to the allowable rental increase formula.
“The lack of affordable rentals has wide-ranging impact in every corner of society, from seniors on fixed income to young people and students, to small businesses struggling to find employees,” Weaver said in a statement.
“I believe this policy strikes the right balance of encouraging affordable rents while giving landlords the ability to apply for justified higher increases. I look forward to releasing the rest of our recommendations soon so that we can continue to deliver on our shared promise to address the affordability crisis.”