Email this pageAbove Guideline Rent Increases (AGIs) - Capital
Rules for Calculating Capital AGIs
The legislation continues to permit landlords to apply for above guideline rent increases for capital work. The legislation and regulations tighten the rules for capital expenditures that can be passed through to tenants.
- Eligible capital expenditures for AGIs are reasonable expenditures for “extraordinary or significant” work, the expected life of which extends for at least five years.
- Maintenance work that is ineligible for an AGI includes routine or ordinary work, undertaken on a regular basis.
- Ineligible expenditures include projects that are mostly cosmetic, or that enhance the level of prestige or luxury.
- The 5% allowance for management and administration is no longer permitted.
- The minimum amortization period used to calculate the allowance for any capital item cannot be less than 10 years.
- The financing rate is the five-year mortgage interest rate.
The legislation states that when capital expenditures have been paid for, tenants who received an AGI for these expenses will have their rent reduced accordingly.
- After the capital items are paid for, rents will be reduced by the same percentage as they were increased on the anniversary date of the increase.
Capital Expenditure AGIs – Information for Tenants
When a capital expenditure AGI application has been filed, the legislation requires landlords to inform tenants that the application and supporting documents are available for viewing or a copy of the documents can be purchased.
The supporting documents must be made available to tenants on CD for a fee of $5. There can be agreements to provide the documents by other methods, if needed. Special rules apply to small buildings in rural or remote areas.
Landlords must provide a copy of the AGI application and supporting documents for tenants to view on site (applies to large buildings with an office only). They must provide two extra copies to the Board for viewing by tenants.