You are a tenant and have received a notice of lease renewal accompanied by a rent increase. What should you do?
Landlord’s Rights
Under the law, a landlord may, if they choose, increase the rent for a rental unit when they deem the increase to be fair and reasonable.
There are many factors that can justify such an increase. Consider, for example, management fees, service charges, electricity, gas, and property taxes. These expenses are sometimes borne largely by the landlord, which will consequently affect the cost of rent. Furthermore, a landlord who undertakes major renovations will naturally tend to increase the rent as well. Conversely, if a landlord raises the rent without having performed substantial work, it will be difficult for them to justify a significant rent increase.
For example, if you live in an unrenovated, unheated 4½-room apartment and pay $700 per month in rent, the rent increase will be based on the percentages established by the Administrative Housing Tribunal.
Can your landlord raise the rent at any time?
For a rent increase to take effect, a landlord must provide written notice to any tenant affected by the increase. This notice must clearly state the changes proposed by the landlord, in this case, the rent amount. Additionally, this notice is subject to a statutory notice period.
Thus, for a residential lease with a term of 12 months or more, the written notice must be provided no later than six months, but no earlier than three months, before the end of the lease.
Example: If your lease begins on July 1, 2023, and ends on June 30, 2024, the notice must be provided between December 31, 2024, and March 31, 2024.
For a lease with a term of less than 12 months, the notice must be given no later than two months before the end of the lease, but at least one month before the end of the lease.
Example: If your lease begins on July 1, 2023, and ends on November 30, 2023, the notice must be given between August 31, 2023, and September 31, 2023.
As for open-ended leases, the notice must be given at least 1 month before the proposed change but may not be sent more than two months before that change.
Example: Your open-ended lease takes effect on July 1, 2023, and your landlord notifies you that they wish to increase the rent effective January 1, 2025. The notice must be sent between October 31, 2024, and November 30, 2024.
A landlord who fails to comply with the applicable deadline cannot exercise their right to increase the rent.
Also note that your landlord cannot adjust the rent during the term of the lease. The proposed changes will therefore take effect only upon renewal of the lease.
What should you do if you disagree with this rent increase?
Upon receiving a notice of rent adjustment, the law provides tenants with two options: either to object to the increase or to move out of the rental unit.
In either case, the decision must be made within one month of receiving the notice of rent adjustment. Within this timeframe, the tenant must notify the landlord of their refusal or inform the landlord that they wish to move out instead. A tenant is deemed to have consented to the adjustments proposed by the landlord if they do not object.
Once a notice of refusal is sent to the landlord, the landlord has one month from receipt of the notice to file a request for rent determination with the Administrative Housing Tribunal. If the landlord does not file the request within the allotted time, the proposed changes cannot take effect, and the lease will be automatically renewed under the previous terms.
Once the matter is brought before the court, the court will set the rent amount based on the Regulations on Rent-Setting Criteria. The court is not bound by the increase proposed by the landlord; therefore, the rent set may be higher or lower than what was previously proposed. In setting the rent, the court will consider, among other factors, operating costs, property and school taxes, insurance premiums, and any changes in rent that occurred during the 12 months preceding the end of the lease.
However, the law provides for an exception regarding rent disputes. Specifically, neither the landlord nor the tenant may have the rent set by the court when the lease is for a residential unit located in a newly constructed building (5 years old or less) or in a housing cooperative of which the tenant is a member. In such cases, the landlord may increase the rent without court intervention.
In conclusion, it’s true that it’s never pleasant to see your rent go up. Nevertheless, if you believe that your rent increase is unjustified or excessive, you may, subject to the provisions of the law, challenge the increase, particularly by consulting a housing law attorney, such as our attorneys at Boavista Legal Services.
