Challenging a Rent Increase
You got the news that your landlord will be increasing your rent. You may be wondering whether the rent increase is allowed or not.
Prince Edward Island has rent control. Rent control limits how often and by how much your landlord can increase your rent. It’s important to know that the rent increase is tied to the rental unit and not the tenant. Landlords must follow the rules about rent increases, even if a new tenant moves in.
It’s important to first find out the allowable increase for this year. This can change each year, so it’s important to stay informed. You can find out the allowable rent increase for this year by looking here.
In 2021, landlords on PEI can increase rent by 1.0% for all rental units.
You should be given proper notice of a rent increase. You must be given three months’ notice (or three weeks’ notice if you pay your rent weekly) for all rent increases. For an allowable rent increase, the rent will increase automatically after the notice period. For an increase beyond the allowable amount, a hearing must be held. The hearing is to decide whether the increase is allowed or not.
You should also be given proper notice on the proper form. You should be given a Form 10 – Notice of Increase in Rent of Residential Premises for both an allowable rent increase and an increase beyond the allowable amount. You should also be given a Form 12 - Application by Lessor for Approval of Rent Increase Exceeding Percentage Allowed by Regulation for an increase beyond the allowable amount. If you are not given one of these forms, the increase is not valid.
Your landlord can only increase the rent once per year. For example, if your landlord increases the rent in January 2021, they cannot increase the rent again until January 2022.
Challenging an Allowable Rent Increase
If your landlord decides to increase your rent within the allowable amount and you pay your rent monthly, they must give you at least three months’ notice using the proper form: Form 10 – Notice of Increase in Rent of Residential Premises. If you pay your rent weekly, they must give you at least three weeks’ notice using the same form.
If your landlord gives you notice that they will be increasing the rent, you can ask to have the increase reviewed by the Director of Residential Rental Property. You must file a Form 13 – Application by Lessee for Review of Proposed Rent Increase within 10 calendar days of receiving the notice from your landlord. A hearing will be scheduled by the Director once you file the form.
To prepare for a hearing, see Preparing for a Hearing.
Challenging a Rent Increase Beyond the Allowable Amount
If your landlord wants to increase the rent beyond the allowable amount, they must apply to the Director of Residential Rental Property. Your landlord must give you notice of their plan to apply for a rent increase beyond the allowable amount. They must serve you with a Form 10 – Notice of Increase in Rent of Residential Premises.
Your landlord must apply to the Director using Form 12 - Application by Lessor for Approval of Rent Increase Exceeding Percentage Allowed by Regulation. They must file this form within ten days of giving you the Form 10. Your landlord must also serve you with the Form 12.
Once your landlord files Form 12 at the Rental Office, a hearing will be scheduled. During the hearing, the Director will consider:
· If the rent increase is necessary for your landlord to not lose money
· Your landlord’s increased operating costs or large expenses
· Your landlord’s expectation to have a reasonable return on their investment
· Date and amount of last rent increase
Your landlord will be asked to fill out Form 15 – Lessor’s Statement of Income and Expenses. This form includes information about your landlord’s income and expenses for your rental unit. It includes information such as rental income, mortgage expenses, heat, water, sewage electrical expenses, and all maintenance and capital expenses for the property.
If your landlord claims capital expenditures, the Director will review Form 16 – Capital Expenditures Life Expectancy Chart.
The Director can approve the complete rent increase, approve part of the rent increase or deny the rent increase.
While your landlord is going through this process, they can’t increase your rent. You will continue to pay the same rent as before.
To prepare for a hearing, see Preparing for a Hearing.
Unlawful Rent Increases
If your landlord increases your rent beyond the allowable amount and does not apply to the Rental Office for the increase, or if they do not follow the rules about allowable increases, the increase is unlawful. If you have paid an unlawful rent increase, you can make an application to the Director of Residential Rental Property to have the extra rent you paid returned to you. File Form 2 – Application for Enforcement of Statutory or Other Conditions of Rental Agreement at the Rental Office.
Your landlord cannot increase the rent when a new tenant moves in unless they follow the rules about allowable increases, or they have made an application to the Rental Office. If you believe that your landlord increased the rent when a new tenant moved in unlawfully, you can apply to the Director to review your rent and potentially get an order to have rent returned. Use Form 2 – Application for Enforcement of Statutory or Other Conditions of Rental Agreement.
To prepare for a hearing, see Preparing for a Hearing.
Forms you may need:
Form 2 – Application for Enforcement of Statutory or Other Conditions of Rental Agreement
Form 10 – Notice of Increase in Rent of Residential Premises
Form 13 – Application by Lessee for Review of Proposed Rent Increase