The B.C. government has announced changes to the province's annual allowable rent increase formula that are expected to save many renters hundreds of dollars next year.

Premier John Horgan and Housing Minister Selina Robinson announced Wednesday that they're accepting the Rental Housing Task Force's recommendations and tying rent hikes to inflation alone, a change from the current formula of inflation plus two per cent.

As a result, the allowable rent increase beginning Jan. 1, 2019 will be 2.5 per cent instead of 4.5 per cent.

"People throughout British Columbia are struggling to make ends meet, and a 4.5 per cent increase after many years of increases is just too much," Robinson said.

"We recognize that supply is key to bringing down rental costs in the long term, but renters have told us that they're hurting and they need help today."

Under the new formula, renters paying $1,200 a month – the average rent in the province – will save up to $288 in 2019, according to the government.

The previously approved 4.5 per cent increase would have been the biggest allowed since 2004, and would have seen people living in the average two-bedroom apartment in Vancouver paying up to $432 more, the province said.

Horgan said B.C. is also accepting the task force's second recommendation, which is to allow landlords to apply for additional rent hikes if they can demonstrate they've been investing in their property.

It's unclear what kind of rent increases will be allowed under those exceptions, but Horgan said the province will be doing further consultations to make sure landlords' needs are met.

"Those who do need to make significant improvements in their properties can do so with the expectation that those costs can and will be recovered," the premier said.

Even with those exceptions, the Landlord BC professional association has expressed concerns that the changed formula will make developers less inclined to build rental properties.

President David Hutniak responded to the task force's recommendations this week by cautioning they would "absolutely" lead to a decline in new rentals.

"Building condos is less risky and generally more profitable, and that's why we've had more condos than purpose-built rental," Hutniak said Monday.

The provincial government acknowledged that supply is a major factor fueling B.C.'s housing crisis, but noted that many renters have been paying maximum annual rent increases for years and seeing little repair or maintenance work on their homes.

B.C.’s task force, which is made up of NDP MLAs Spencer Chandra Herbert and Ronna-Rae Leonard and Green MLA Adam Olsen, is still completing its report on improving landlord and tenancy laws, which is expected to be released in November.

Members said they felt compelled to release early recommendations on the rental formula this week so they could be implemented before next year’s steep hike took effect.