Province to close loophole that circumvents rent controls

Municipal Affairs and Housing Minister Selina Robinson | Photo: Darren Stone, Times Colonist

An amendment to the Residential Tenancy Act that would close a loophole that anti-poverty advocates say has allowed landlords to get around rent controls and jack up rents could soon be reality.

B.C. Housing Minister Selina Robinson is expected to introduce the amendment in the legislature next week. It would eliminate “vacate clauses” from fixed-term lease agreements.

“It’s imminent,” Robinson told the Times Colonist last week.

“Next week is a good bet.”

A fixed-term tenancy, such as a one-year lease, has specified start and end dates, while month-to-month tenancies do not.

At the end of the fixed term, a landlord can require the tenant to move out or sign a new tenancy agreement. Because it’s a new agreement — even though it’s the same tenant — the landlord can set the rent at any rate.

In contrast, if a tenant stays on a month-to-month basis, the landlord can raise rent only by the allowable annual rate, which is established each year based on a formula of inflation plus two per cent.

The maximum allowable rent increase is 3.7 per cent in 2017 and 4.0 per cent in 2018.

Robinson has not specified what the changes will look like, but the Together Against Poverty Society will be watching closely, said Doug King, the group’s new executive director.

“We’re happy the government is addressing this issue,” King said. “That being said, we do believe there is a right way and a wrong way to fix this problem.”

The rules should tie rent values to the unit, rather than to the tenant, he said.

In other words, a landlord should only ever be allowed to raise the rent on a unit up to the maximum allowable increase — whether or not there’s a change in tenants.

If landlords can raise the rent by changing tenants, they have a financial incentive to do so, regardless of tenant behaviour.

“That creates less housing stability and puts anyone on a fixed-term lease at risk of eviction or having to compete with outside tenants,” King said.

LandlordBC CEO David Hutniak said the organization supports the removal of vacate clauses from the Residential Tenancy Act.

“This form of tenancy, it has some value,” Hutniak said.

“But the way it’s been utilized by a cohort of our industry is not the way it was intended to be used. So we’ve denounced the abuse, frankly.”

In some situations, landlords have effectively evicted good tenants, by telling them they can stay only if they pay an extra 30 per cent in rent.

“That’s contrary to current rent controls and allowable maximums,” Hutniak said. “So we’re supporting the minister in making some positive changes in that form of tenancy.”

On the whole, he said, the Residential Tenancy Act is a healthy piece of legislation that needs little change. But, Hutniak said, both tenants and landlords have experienced problems with the Residential Tenancy Branch, which enforces the act.

He described the branch as chronically underfunded and said he’s hopeful that new funding will create noticeable improvements for both tenants and landlords.

In its September budget update, the province committed $7 million over three years to the branch, which will go to reducing service wait times and establishing a new compliance unit.

Former Liberal housing minister Rich Coleman committed last September to closing the loophole. In March, he told reporters that after studying the issue, ministry staff were unable to find a way to adjust the act that wouldn’t be vulnerable to a court challenge.

Times Colonist