Landlords say 2% rent increase cap is too small. Renters say it's too big. Either way, no one seems thrilled

Rob McCullough says he doesn't wear a monocle or twirl a moustache: he and his wife are just small-time landlords.

But he says because the B.C. government is only allowing rent increases of up to two per cent next year, they're cashing out since they can't keep up with the rising costs of doing business.

He said the couple are planning to start selling off their four rental houses in Abbotsford and Merritt, B.C., which they rent out for up to $1,650 a month each.

"We've rented those houses for the past 10 years at well below market," McCullough said from his Delta, B.C., home. 

"Unfortunately, it seems that the current government wants to make affordability within reach of all British Columbians by doing it on the backs of landlords both large and small."

The province announced the rent cap Wednesday along with a host of measures aimed at tackling affordability concerns in a high-inflation environment.

Maximum allowable rent increases are set for each year by the province. In the past, it has been set to two per cent plus the rate of inflation. The NDP has previously capped the increase to inflation. For 2021, no increase was allowed due to the pandemic.

With the inflation rate breaking records in Canada, the 2023 increase was a source of speculation.

McCullough said now that it's been revealed, he's had enough.

"It just seems to be a constant picking away at us and at our business," he said, adding the couple plans to use the proceeds of selling their houses to invest in Alberta real estate.

'It's not a sustainable business model'

David Hutniak with LandlordBC said the McCulloughs aren't alone in their frustration.

He said landlords' expenses like mortgages, insurance and utilities have increased dramatically. Previous years of limited or no rent increases have made the situation worse, as has what he called the unpredictability of the NDP tinkering with the rent increase formula.

"We're basically in a negative cash flow situation and that is true particularly for small landlords who form the majority of landlords in British Columbia," Hutniak said. 

"It's not a sustainable business model on this basis."

Premier John Horgan and Finance Minister Selina Robinson said Wednesday that the province had to provide help to people most in need, with inflation a problem for so many.

In a statement, Housing Minister Murray Rankin said the government knows landlords are also dealing with inflation and is "committed to ensuring that landlords can make the necessary repairs and upgrades to their rental units so they can provide housing for years to come."

Rankin said by changing the rent increase formula, the government has saved renters thousands of dollars over recent years.

Increase 'out of touch' with renters

But at least one tenants' group said any increase at all is "out of touch" with working people, their income and the impact of inflation on their lives.

"They're giving us something that's still extremely painful and they're calling it a special, renter-friendly policy," said Ben Ger, an organizer with the Vancouver Tenants Union. 

"It's simply not."

He argues if the province wants to help renters, a rent freeze would be more in order.

He added there needs to be a more serious effort to building social housing and rents should be tied to a unit, not the tenant, so landlords can't jack up the price when one person leaves and another moves in.

"The more people are not able to keep up with their rents, the more they're going to end up on the street," Ger said.