Rent Control - Overcharging Rents for Properties Under Rent Control can be CostlyArticle by Susan Thompson, Coldwell Banker Bermuda Realty
What is Rent Control?
The Rent Increases (Domestic Premises) Control Act 1978 often referred to as Rent Control, currently applies to a tenancy of any residential unit with an annual rental value (ARV) of $22,800 or less. There are some units exempted from Rent Control for that information click this link… Rent Control Exempted Rental Units | Government of Bermuda (www.gov.bm).
May the Landlord increase the rent?
How can I check my ARV?
You can check your current ARV by going to Bermuda Government - Land Valuation Department. If you have more than one unit at your property, each unit has a separate ARV, and some units may be under Rent Control and others may not. Please note that the ARV threshold for rent control property does change from time to time and it is your responsibility to know if your property falls under Rent Control or not. Prior to January 1, 2016, the ARV threshold for rent control was set at $27,000 or less.
Landlords may increase a tenant’s rent if the premises are under rent control if:
The landlord and tenant reach an agreement on the increase; complete and submit an RC2 form and meet the requirements for Rent Commissioner to sign off on it, or
The landlord applies to the Rent Commissioner for a rent increase via form RC7 or RC8
For new tenants, the maximum rent chargeable under the Act is the lawful rent granted by the Rent Commissioner in accordance with the provisions of the Act.
When a landlord has a prospective tenant, the landlord must show the prospective tenant the Rent Commissioner’s Certificate or the rc2-rent-increase-notice, properly signed by the Rent Commissioner. When premises are to be re-let to a new tenant, the landlord cannot advertise or offer the premises for letting at a rent that is above the maximum chargeable under the Act. For details on how to seek a rent increase and the forms required visit https://www.gov.bm/rent-increase-information-tenants-and-landlords
What is a registered rent and do all properties have this?
All Rent Control properties are required to have a lawfully registered rent. When you decide to rent out your property for the first time in the property’s history you can set the first rent. Once a lease is signed you must send a copy to Rent Commissioner as this will be the first established rent going forward. Subsequent to the first rent all rent increases are subject to application to the Rent Commissioner.
How do I go about registering a rent?
The Rent Commissioner has historical property files on Rent Control properties dating back to the Act’s Assent in 1970, these files provide a living document on the first rents charged and all increases granted by the Commissioner. If you are buying a property the lawyers and agents should tell you whether the property falls under Rent Control and what the lawfully registered rent is for each rental unit. If the previous owner is in contravention of the law by not registering the first rent with the Rent Commissioner that office will provide a historical date as to when it fell under rent control and the owner will need to provide evidence to the Rent Commissioner of what rent was charged back then as this will be the lawful rent going forward.
What happens if the landlord overcharges?
There are often apartments that have been in existence for decades and if the rent charged has been increased without compliance with the Act, the landlord is overcharging for rent and will be liable to the tenant for the overcharge. In extreme cases the rents go back to the 1970s and the initial rent charged may have been $100.00 or $200.00 and this would be the allowable rent for the apartment. Apartments often now rent for up to and in excess of $2,000.00 per month and that excess beyond the initial rent can be claimed by a tenant for up to two years of payments. Obviously, this can add up to a substantial claim against a landlord. If the landlord is trying to sell the property any overcharge matter would need to be sorted prior to the completion of the sale.
Are there penalties for overcharging?
Yes, failure by the landlord to comply with this provision may render them liable to a fine of $1,000 or imprisonment for six months, or both.
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