Numerous Bermuda properties have been subject to rent control for many years. Currently, residential accommodation with an annual rental value (“ARV”) of $22,800, or less, falls under rent control.

The main exceptions to rent control are:

  • accommodation with an ARV over $22,800;
  • employer-owned accommodation, provided under an employment contract;
  • licenced tourist accommodation;
  • accommodation normally occupied by a landlord, who is away from Bermuda, for less than 12 months;
  • boarding or lodging house accommodation; or
  • if the tenant is what is known as a “life tenant”.

Over time, with ARV revaluations and changing rent control thresholds, accommodation can easily fall into and out of rent control. Prior to 1 January 2016, the ARV threshold for rent control was set at $27,000 or less. On that date, the ARV threshold for rent control was lowered to the current level of $22,800. Consequently, additional accommodation escaped rent control from that day forward.

In particular, beware rent set by a previous landlord in breach of rent control. A past breach, even without the knowledge of a current landlord, may subject a current landlord to financial liabilities.

Rent control legislation not only restricts rent, but also provides security of tenure to rent-controlled tenants. This means a court order is required to evict a rent-controlled tenant; but take care as other kinds of tenant also require a court order, before eviction.

Additionally a deposit paid by a tenant, with respect to rent-controlled accommodation, should not exceed the higher of $100.00, or the equivalent of two weeks’ rent.

Contact the Rent Commissioner’s office by telephone or email, to ask if accommodation is, or has ever been rent-controlled.

Even if otherwise falling under rent control, accommodation not previously let (e.g. a newly-constructed unit), may first be rented at any level of rent. However, any subsequent rent increase, whether to the same or to a different tenant, is restricted.

Rent should not be higher than the rent charged to the first tenant of a rent-controlled property (even if by a previous landlord) unless:

  • the landlord and tenant have agreed an increase, following which (a) the landlord has lodged notice with the Rent Commissioner; and (b) the landlord is in possession of a copy of such notice, duly endorsed by the Rent Commissioner; or
  • the landlord has received the Rent Commissioner’s determination, approving an increase.

If a landlord applies to the Rent Commissioner for an increase, the Rent Commissioner firstly consults with the tenant. If there is no tenant, no such consultation is required. The Rent Commissioner then determines the rent.

If a landlord or a tenant is dissatisfied with a Rent Commissioner determination, either may apply for a review. The Rent Commissioner then consults the Rent Increases Advisory Panel, before final determination. After a final determination, there is a right of appeal to the Magistrates’ Court.

A prospective tenant cannot agree a rent increase to a rent-controlled property. Instead, a landlord should lodge an application for increase, with the Rent Commissioner.

Contravention of rent control can result in criminal prosecution and/or a tenant claim against the landlord, for up to two years of rent paid in excess of controlled rent (even if paid to a previous landlord of the accommodation in question). Additionally, a seller of rent-controlled property, may have to make concessions to a purchaser, if a purchaser cannot be satisfied rent control has been observed.

In summary, the status of investment accommodation should be investigated and once known and if appropriate, steps can be considered to correct, or mitigate potential disadvantage.

First published in the Royal Gazette, November 2017

Share
Twitter LinkedIn Email Save as PDF
More Publications
21 Feb 2024

Bermuda Privacy Law Compliance: Pitfalls to Avoid

Although members of the Chamber are aware that Bermuda’s Personal Information Protection Act, 2016...

19 Feb 2024

Bermuda: An Introduction to Dispute Resolution in 2024

International business is the primary area of economic activity in Bermuda, as a result of not just ...

15 Feb 2024

Preserving wealth in a Bermuda dynastic trust

The Vanderbilt family gained prominence through shipping and railroad empires and eventually various...

8 Feb 2024

Bermuda’s promising telecommunications future

Last year was a stellar one for Bermuda’s positioning in the global array of telecommunications se...

25 Jan 2024

Fund Finance Laws and Regulations 2024 – Bermuda

The Bermuda fund industry sees investment predominantly from North America and Europe, and therefore...

24 Jan 2024

Chambers Insurance & Reinsurance Guide 2024: Bermuda

This guide provides the latest information on sources of insurance and reinsurance law, overseas-bas...

23 Jan 2024

New Limitations on the Length of Stay for Visitors to Bermuda

In November 2022, The Minister of Economy and Labour, the Hon. Jason Hayward, JP, MP, announced that...

18 Jan 2024

Technology Experience a Must for Board Composition

Corporate governance is an enterprise-wide endeavour that addresses all aspects of an organisation. ...

11 Jan 2024

ILS Steps Up When Needed Most

After a robust 2023 for ILS, five experts in this space debated the changing role ILS is playing in ...

10 Jan 2024

The Global – your offshore corporate law questions answered

The Global is Appleby’s quarterly collection of expert insights and analysis on the latest develop...