No response about who is right or wrong as you both are in your own minds for your own reasons - you do not have the same agendas in life. Your priorities regarding life in general and this property specifically are different than your landlords. You do not know his long range plans. He does not know yours.
In my area, municipal fees, any landlord paid utilities, real estate taxes, insurance, etc., go up annually and 5% won't cover the increases.
As to whether or not the property is market value, the landlord is the one who is going to weigh you paying on time against him getting someone else to pay on time and pay more.