Charlottetown tenant awarded $7,800 in illegal rent increase case

The Island Regulatory and Appeals Commission recently awarded the largest return of rent to a tenant in approximately the past five years, and says it was because of the evidence the tenant was able provide.

Rules prevent larger than approved increases, even when tenants change

Natalia Goodwin · CBC · Posted: Jun 06, 2019 5:00 PM EDT | Last Updated: June 6, 2019

A for rent sign. — The Island Regulatory and Appeals commission says due to the rental shortage, more cases like this are coming forward. (David Donnelly/CBC)

The Island Regulatory and Appeals Commission recently awarded $7,800 to a tenant who was able to prove that her landlord was charging her nearly double the amount paid by a previous renter.

The tenant first took her complaint to IRAC on March 29, 2019, arguing that the increase was illegal. The tenant won her case and the landlord appealed.

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During the appeal, the commission heard that the tenant agreed to pay $1,500 per month unheated for the unit. The landlord told the hearing the unit was vacant when they purchased the duplex in 2016 and they felt $1,500 was an appropriate price, based on having spoken with some international students.

Previous rent was $800

The tenant testified she paid that amount for several months when she discovered what prior tenants had been paying. The tenant also found an online post that listed the unit for $800 per month unheated.

The landlord argued they had no idea what the rent was before they bought it. The landlord also took issue with the tenant for bringing up the previous rent — 11 months into the lease.

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The commission's decision explains that rent increases are controlled and limited by legislation. This applies whether a tenant changes or the unit remains vacant for a time, or if the building is sold.

Lack of knowledge not a defence

The commission wrote, "In Prince Edward Island, the Rental of Residential Property Act ... provides for a system of rent control whereby rent runs with the residential unit. When a lessee surrenders possession of that unit to the lessor, that rate of rent still remains fixed to that unit."

A landlord can only increase rent once every 12 months and that increase can only be the amount allowed by IRAC. Right now that's between 1.5 per cent and 2 per cent depending how the unit is heated.

The number of landlords applying to increase rent beyond the allowable increase has risen significantly because of the current rental crisis on the Island, a spokesperson for IRAC says. (CBC)

A landlord can apply for a rent increase beyond that, but would have to prove need. IRAC will consider factors such as increased operating costs or capital expenditures and return on investment.

The landlord in this case didn't have permission for the large increase and argued they weren't familiar with the Residential Property Act. The commission responded saying "lack of familiarity of the act does not in any way mitigate the requirements."

More cases coming forward

The appeal was denied on May 30, 2019. IRAC ordered that landlord has to refund $7,800 and that the monthly rent for the unit remain at $800 until a legal increase is allowed.

A spokesperson for IRAC told CBC News that due to the current rental crisis on the Island, the number of complaints from tenants about illegal rent increases and the number of landlords applying to increase rent beyond the allowable increase has risen significantly.