The cost of living in rent-controlled properties is rising faster than for homes on the free market, Shadow Finance Minister Bob Richards told MPs on Friday.

He said Department of Statistics figures showed that over the past five years there had been a consistent pattern where rent-controlled homes exhibited a higher rate of inflation than free market properties.

"It doesn't mean rent-controlled properties are more expensive," he told the House of Assembly. "What I'm saying is they are increasing at a faster rate than free market properties."

He said over a 12-month period the Island's rent-controlled properties "actually went up eight and three-quarter times faster than the properties not under rent control". "It's not just a little bit we are talking about," he said. "It seems to be a big issue here."

Mr. Richards said there was definitely something wrong though he wasn't certain what was causing the rent to rise so fast.

"The whole point of rent control is to protect tenants from the ravages of inflation i.e. the increase of rent," he said.

"There are good intentions here but the effect is not happening the way they want it to happen."

The Opposition MP was speaking on the Rent Increases (Domestic Premises) Control Amendment Act 2009, which was approved by MPs.

The legislation raises the annual rental value (ARV) ceiling band for rent control purposes from $24,600 to $27,000.

It was presented by Cabinet Minister Michael Scott, who explained that if the ceiling wasn't raised, about 2,000 properties whose rental value had risen would fall out of rent control.

"What we're looking to do is stabilise the percentage of premises that are rent-controlled," he said.

He said tenants without the benefit of protection would be "exposed to landlord undesirable practices and abuse, such as speculative rent gouging, inordinate rent increases, rent profiteering and unjust eviction".

Rent control has been in place in Bermuda since the late 1970s and is enforced by the Rent Commission. About 16,800 premises on the Island fall under the $27,000 ceiling, making them potentially subject to rent control, Mr. Scott said.

Minister without Portfolio Zane DeSilva welcomed the bill and said anyone in a rent-controlled property who felt they were paying too much could go to the Rent Commission.

"If someone has been paying too much rent for an amount of time, they can get reimbursed," he said.

Shadow Works and Engineering Minister Patricia Gordon-Pamplin said that in 2000 the ceiling for rent control was an ARV of just $9,900.

"Here we are nine years later, putting into effect the upper level of ARV to $27,000 — nearly a 300 percent increase," she said. "If you can tell me which tenant out there has had the benefit of a 300 percent increase in salary during that time, then I can show you a tenant who doesn't have a problem."

The UBP politician asked Mr. Scott if he had taken into account that landlords might increase rent up to the new ceiling, but Mr. Scott responded that safeguards were already in place.

"That kind of increase is not anticipated and can't take place," he said. "Landlords will no doubt make applications, but they will do so at the behest of the Rent Commission."

Shadow Education Minister Grant Gibbons argued that Government should debate removing rent control altogether.

"If you're the landlord of a rent-controlled home, you're going to raise the rent whenever you get the chance," he said. "In a very counterintuitive way, rent control might have had a negative effect.

"It might be worth having a study done. It's not that we're opposed, it's just that given the economic climate, this might be a good time to take a look at the effects of rent control."

Government backbencher Terry Lister said rent control was still needed as it "helps to stabilise the market and that has to be a good thing".

Bermuda Democratic Alliance MP Shawn Crockwell said the intent of the amendment was laudable and was supported by his party.

"At the end of the day, Government, in this Honourable House, is charged to do its best to provide initiatives to assist the people of this Country."