Multi-unit rental income and PEI’s rental rules

The Residential Tenancy Act

Residential rental units on PEI fall under the Residential Tenancy Act, administered by the Residential Tenancy Office at IRAC. It covers rental agreements, deposits, rent increases, repairs, and how a tenancy can end. Existing tenancies generally carry on when a building is sold. Ask your lawyer how the Act applies to each unit before closing.

Rent increases

Rent can be increased only once every 12 months. For an increase within the annual allowable amount, the landlord must give at least three months’ written notice on an approved form. The Director of Residential Tenancy sets the allowable amount each year. For 2026 it is 2% on all rental units.

A landlord can apply to the Rental Office for more than the allowable amount, but under the Act an above-allowable increase cannot exceed 3%. Rent increases are attached to the unit, not the tenant, and rent cannot be automatically increased between tenants.

What that means for a purchase

You cannot assume a below-market unit will reach market rent soon after you buy. Model rents as they are, increasing within the allowed limits, and use the actual 2026 figure rather than an assumed one. Ask for each unit’s rent history, and compare it with the notices the seller gave. If a past increase was not allowed, a tenant can apply for a return of rent, and that risk comes with the building.

Repairs and ending tenancies

The Act sets out a landlord’s repair duties and the limited reasons a tenancy can be ended. Renovating units or ending tenancies to raise rents is not something to plan around without legal advice. Budget repairs as a landlord who will keep the tenants in place. Older buildings often need more than the seller’s figures show.

Costs and tax

Owners who do not qualify for PEI’s resident property tax credit may get a $0.20 per $100 credit on the multiple-dwelling part of a non-commercial property, from 2026. Rental income is reported to the CRA. Non-resident owners face withholding on gross rent unless they file to be taxed on net income. Ask an accountant.

Checklist

For each unit, ask for:

• The current rental agreement and any amendments
• Rent history, with dates and notices of increase
• Security deposit held, and how it will be transferred
• Any open applications or orders at the Rental Office
• Utilities included in rent
• Parking, storage, or other charges
• Known repair requests and their status

Worked example: income within the limits

Illustrative example only. The figures are made up to show the method. They are not PEI market data or averages.

A 10-unit building rents for $1,200 a unit, or $144,000 a year. A buyer believes market rent is $1,500. If the allowable increase stays at 2% a year and every tenant stays, rent per unit grows to about $1,224, then $1,248, then $1,273. That is far from $1,500.

Turnover does not fix this on its own. The Rental Office says rent cannot be automatically increased between tenants. Ask your lawyer how that applies before you count on any reset. A price that only works at $1,500 a unit is a price that depends on things the buyer does not control.

Sources

Checked October 2026. Rules change; confirm the current position before you rely on it.

• Residential Tenancy Act (princeedwardisland.ca)
• Rent Increases, Residential Tenancy Office (peirentaloffice.ca)
• SPEI 2026 c.21, An Act to Amend the Real Property Tax Act (canlii.org)
• T4036, Rental Income, CRA (canada.ca)
• T4144, Income Tax Guide for Electing Under Section 216, CRA (canada.ca)