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Changes in BC’s processes for additional rent increases and end of tenancy for renovations By David Gargaro

The BC government’s Residential Tenancy Branch released two new processes affecting landlords and tenants. The changes are a result of LandlordBC’s advocacy efforts and recommendations made by the 2018 Rental Housing Task Force. The new processes will help to address the increasing costs of necessary capital expenditures to rental properties and the lack of clarity around ending tenancy for repairs and renovations. Additional rent increase process In September 2018, the BC government announced the annual rent increase (ARI) formula would be changing, removing the additional two per cent added to inflation. It promised to address landlords’ costs for necessary capital expenditures with a transparent, easy-to-use ARI process. “LandlordBC led much of the conversation with the RTB with the aim to ensure the result would be a transparent and accessible process for both landlords and tenants,” said Hunter Boucher, Director of Operations, LandlordBC. The process, effective July 1, 2021 and open to applications through the RTB’s online portal, allows landlords to apply for an ARI to recoup the costs of necessary capital expenditures in the residential property. For a capital expenditure to be eligible, it must made for one of the following purposes: • Maintaining, repairing, or replacing a major system or component such as electrical, mechanical, or structural that is necessary • Reducing greenhouse gas emissions or energy use • Improving the security of the rental property Ineligible expenditures include repairs needed as a result of inadequate repair or maintenance by the landlord; expenditures expected to recur within five years; and expenditures where the landlord has recouped the cost from another source.

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Landlords with eligible expenditures will be able to apply through the RTB’s online portal for this ARI, which will result in a Dispute Resolution hearing where the parties can discuss the matter with an arbitrator. When making the application, landlords may include all capital expenditures made over the previous 18 months (from the date of application) and must include all units the landlord intends to increase on one application. The expenditure is incurred when the invoice is paid; where a large-scale project has costs separated into multiple invoices, the 18-month clock begins from the date the last invoice is paid. Increases will be calculated by taking the total eligible expenditures divided by the number of dwelling units, which is then divided by 120 months. The increases will be capped at three per cent but may be spread out over three years to a maximum of nine per cent over the three-year period (plus normal annual increases). Landlords can use an RTB calculator to determine their potential increase before applying. The first increase must be given within a year of the decision. The RTB is developing a new Notice of Rent Increase form to ensure landlords and tenants are clear on how increases will be implemented. “Increases through this process are in addition to the normal annual increase but must be given with that increase so landlords considering applying should consider the timing of their standard rent increases,” said Boucher.

The cost to apply for an ARI is $300 + $10 per unit. Payment must be made at the time of application and will not be included as an eligible expenditure.

Ending tenancy for repairs or renovations One provision in the RTA addresses landlords ending tenancy for repairs or renovations. The lack of clarity on its appropriate use has caused animosity within the rental housing ecosystem, with “renovictions” being a concern raised to the Rental Housing Taskforce. To address this issue, Bill 7 – 2021: Tenancy Statutes Amendment Act, which was passed in BC’s Legislative Assembly in March 2021, amends how landlords end tenancies to conduct repairs or renovations. This change reverses the process of having a landlord serve a notice followed by the tenant disputing the notice, putting the application for dispute resolution at the beginning. Landlords needing to end a tenancy to conduct repairs or renovations will need to apply to have an arbitrator review the work to determine if they have met the criteria to end the tenancy. If successful, the landlord will be issued an Order of Possession effective four months from the date it is received by the tenant. The landlord must intend in good faith to renovate or repair the rental unit and have the necessary

permits and approvals required to carry them out. The renovations must require the unit to be vacant and be needed to prolong or sustain the use of the rental unit or building in which the unit is located. The only reasonable way to achieve the vacancy would be to end the tenancy agreement. The landlord must have all permits and approvals in place and a detailed plan of work to be done. The application requires the landlord to apply for all affected units at the same time, so they have the same end of tenancy effective date. This new process ensures tenancies do not unnecessarily come to an end while preserving the right of landlords to end tenancy when necessary. As this process is a Dispute Resolution Hearing, the landlord and tenants may be present on the call and may present evidence. The cost to apply is $100, regardless of the number of affected rental units. “These changes are the result of a significant amount of work by the RTB’s policy team in collaboration with LandlordBC and we welcome these new tools,” said Boucher. “LandlordBC would like to hear from our members that have utilized this process to ensure we are able to continue to provide timely and relevant feedback to the RTB.”

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