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The objectives of Bermuda's rent control regime are to
provide tenants with security of tenure so that a court order is
required to evict a tenant -- and also to prevent landlords from
arbitrarily and unfairly increasing a tenant's rent payments.
In this column, I will address the latter objective.
Currently, residential properties with an annual rental value
("ARV") threshold of $27,000 or less fall under the rent
control regime. Previous AVR thresholds have been set at $24,000 or
less, $16,200 or less and $9,900 or less.
A property can easily fall into or out of rent control, either
when the threshold itself is altered, or when the ARV of a property
is altered. The best way to check if a property is -- or has ever
been -- rent controlled, is to contact the Office of the Rent
Commissioner.
A property rented for the first time (e.g. a newly-constructed
unit), may be rented for any amount, even if the property falls
under rent control. Subsequent rent increases, whether to the same
or to a different tenant, are restricted. In those cases, rent
should not be higher than the rent charged to the first tenant of a
rent-controlled property (even if by a previous owner/landlord)
unless:
The landlord and tenant have agreed an increase, following
which the landlord has lodged notice with the Rent Commissioner,
and the landlord holds a copy of such notice, duly endorsed by the
Rent Commissioner, and
The landlord has received the Rent Commissioner's approval
for an increase.
If a landlord applies for an increase to a tenanted,
rent-controlled property, the Rent Commissioner consults with the
tenant. If there is no tenant, then the landlord simply makes
application to the Rent Commissioner, who makes the
determination.
If a landlord or a tenant is dissatisfied with the Rent
Commissioner's determination, either may lodge an application
for review by the Rent Commissioner. In such a case, the Rent
Commissioner shall consult the Rent Increases Advisory Panel and
then make his final determination.
A prospective tenant cannot agree a rent increase to a
rent-controlled property. In such a circumstance, a landlord should
lodge an application for increase with the Rent Commissioner.
Often a landlord does not know of the last authorised rent
because the landlord is a new owner, or has simply lost track (e.g.
with the property falling into and out of rent control over time).
In the former case, a new landlord must beware – if a
previous landlord unlawfully increased rent, the current landlord
may be penalised, even where he had no knowledge of the unlawful
increase.
Contravention of rent control can result in criminal
prosecution, or in a tenant's claim for up to two year's
rent paid in excess of the controlled rent.
A seller of rent-controlled property may have to make
concessions to a purchaser if the purchaser cannot be satisfied
that rent control has been observed.
Purchasers of tenanted, rent-controlled property, or who intend
to let rent-controlled property, are advised to contact the Rent
Commissioner, for details of the authorised rent prior to
purchase.
During this period of depressed rents, now may be a good time
for landlords to discover the controlled rent of a property, and to
rectify any infringement.
The Rent Commissioner's commendable and informative FAQs and
forms can be found on Government's website (
www.gov.bm) by searching for "Rent Commissioner".
Once an infringing position is rectified, a landlord should be
able to apply for an increase when the rental market for landlords
improves.
Article first published in The Royal Gazette, July
2012
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
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