The Government of PEI has amended the Rental of Residential Property Act regulations as it relates to Form 15- Landlord’s Statement of Income and Expenses. Pursuant to EC2023-159, effective March 4, 2023, landlords can no longer deduct mortgage principal as an expense on Line 6 and 7 of the Form 15, Landlord’s Statement of Income and Expenses.
What does this mean?
If your Application for a Greater Than Allowable Rent Increase (Form 12) was filed on or before 4:00PM on March 3, 2023, the new amendment does not apply to your application.
If you filed your Application after 4:00PM on March 3, 2023, the new regulation is in effect and you cannot include mortgage principal as an expense on the Form 15.
For more information, see EC2023-159.
Landlords wishing to increase rent above the allowable amount must apply to the Rental Office and receive a decision from the Director of Residential Rental Property approving the increase before it can be charged.
How does a landlord file for a greater than allowable rent increase?
Step 1 – the landlord serves a Notice of Rent Increase Form 10 to the tenants who will be paying the increased rent. The rent increase cannot be charged until at least three full months have passed from the date the landlord delivered the Rent Increase Notice. The landlord must have a decision from the Rental Office approving the rent increase before it can be charged.
Step 2 – the landlord must file an Application for Greater than Allowable Rent Increase Form 12 with the rental Office within 10 days of serving the Rent Increase Notice. The landlord must serve a copy of the filed Rent Increase Application on the affected tenants. After the application is filed, the Rental Office will send the landlord and tenant(s) a Notice of Hearing which states the hearing date and the deadline that evidence must be submitted to the Rental Office.
Evidence required for a hearing on greater than allowable rent increase
The information and documents below are required for a two-year period ending as close as possible to the date the rent increase is to begin:
- Landlord’s Financial Statement Form 15
- Rental income (rent ledger summarizing income from the property)
- Other income from the rental property – i.e. coin-operated laundry facilities
- Mortgage statements showing the periodic principal, interest, other costs paid, and the current amount of the mortgage.
- Heating costs
- Water and sewer costs
- Electricity costs
- Property tax costs. If the tax assessed value does not reflect the market value of the property then the landlord should consider submitting into evidence an appraisal, and/or the landlord’s building purchase documents.
- Management fees
- Maintenance costs
- Capital expenditures. Capital expenditures that are proposed but not completed may only lead to a rent increase effective at the time the work is completed and proof of completion has been approved by the Rental Office.
- Any other costs of the landlord not included in the above list.
All documents submitted into evidence with the Rental Office will be shared with the other party. Any redactions (blacking out or marking out) must be made by the landlord and tenant before the documents are sent to the Rental Office. The Rental Office is not responsible for making any redactions to the documents submitted into evidence.
The parties are responsible for maintaining the confidentiality of all documents submitted into evidence.
The Rental Officer will make a determination on the application for rent increase greater than the allowable amount based upon the following:
- Whether the increase in rent is necessary in order to prevent the landlord from sustaining a financial loss in the operation of the rental units;
- Increased operating costs or capital expenditures provided by the landlord;
- The expectation of the landlord to have a reasonable return on their capital investment; and
- The date and amount of the last rental increase.
The Rental Officer will issue a written decision to the parties after the hearing is completed. The landlord must have a decision from the Rental Office before a greater than allowable rent increase can be charged.