Fair Rate of Return

Fair Rate of Return is a key term as landlords may petition for an upward adjustment to the rent, above the Annual General Adjustment (AGA), if they can show that the AGA does not give them a fair rate of return. CSFRA excludes many factors that can be considered in determining a fair rate of return, but the decison of how to calculate a fair rate of return was left to the Rental Housing Committee (RHC). Fair rate of return per the RHC uses the maintenance of net operating income (MNOI) methodology. This method identifies the net operating income (NOI) in the Base Year (i.e., 2015 gross income from the property, less 2015 operating expenses.) The second step adjusts the NOI based upon the CPI-Rent of Primary Residence.

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