In last month’s newsletter, we touched on the 4.5% allowable rent increase in 2019. Since then, the BC government has announced changes to the province’s annual allowable rent increase formula. The allowable rent increase beginning January 1, 2019, will be 2.5% instead of 4.5%.

The move comes after an outcry from renters across the province who says rents are rising far too quickly. Had the allowable rent increase percentage remained at 4.5%, people living in the average two-bedroom apartment in Vancouver would be paying up to $432 more in 2019.

On the other hand, it’s important to note, the BC government does not set market rents. The free market sets the rental value. In my personal opinion, limiting any rent increase incentivizes landlords to carry out renovictions, demovictions or cash out to a developer. It also decentivizes developers to build rental housing stock. For example, the 2% decrease in the annual allowable rent increase is seen as a 2% decrease in a builder’s profit. In fact, an array of rental housing projects that developers were moving forward with have been axed because it doesn’t make economic sense to proceed, especially now that rents can’t increase above the rate of inflation.

I see the BC governments move to keep the rent increase at the rate of inflation as counter-intuitive. What we’ll see now is an increase in gentrification. Instead of tenants receiving a rent increase notice, they will now see an eviction notice. Further, the post-renovation rental could be up to 20% more.

The government will try to work with landlords to help recoup costs associated with housing upgrades, but it likely won’t be enough to cover major renovations.