Fixed-term rent increases are already against the law: Landlord group
As the B.C. government looks to reign in the practise of using fixed-term agreements to circumvent rent increases, Landlord BC says changes aren’t needed
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The head of a landlord industry group says that tenants should be able to successfully fight landlords who are not using fixed-term tenancies correctly, and banning them outright could lead to problems for both tenants and landlords.
“We’ve been very blunt about this among the small cohort of our industry that’s not following the act on this issue,” said David Hutniak, CEO of Landlord BC. “We basically denounce that behaviour.”
With the most expensive rents and lowest rental vacancy rate of any Canadian city, Vancouver renters have been speaking out about encountering the tactic, where a landlord asks the tenant to sign a fixed-term tenancy agreement, usually for one year, with a vacate clause.
At the end of the term, some tenants say they’ve been told their rent will go up by as much as $375 a month, or 19 per cent, if they want to negotiate an entirely new lease and stay in their apartment, according to email correspondence shared with Metro by the former tenant of one Kitsilano apartment building.
Some of the city’s largest developers use the agreements: Aquilini uses back-to-back fixed-term agreements for its new West Tower rental building near Rogers arena, and Westbank has raised rents over the 2.9 per cent allowable rent increase rate by using fixed term agreements with a vacate clause, according to reports in Business in Vancouver and CBC.
Some landlords use back-to-back fixed term agreements in order to “get a track record with the tenant to ensure it is a mutually beneficial relationship,” Hutniak said. However, tenant advocacy groups say the agreements shift the balance of power to the landlord.
But even when tenants initial the vacate clause, Hutniak said, the tenancy does not end without certain other things happening: a proper notice of a rent increase, which is subject to the annual 2.9 per cent rent increase cap, or a final inspection, return of keys and changing of locks.
The practice has caught the attention of Rich Coleman, the B.C. minister responsible for housing, who told Metro that his ministry is in the process of looking at changes to fixed-term agreements because the way some landlords are using them is a “gaming of the system.”
But without a fixed-term agreement, a property owner, such as a university professor going on sabbatical, might choose to use a short-term rental service like Airbnb, Hutniak said.
Landlords might also be choosing fixed-term agreements because they plan to sell the building or are planning to renovate for resale or to increase their profit margins, Hutniak said.
“That’s a two or three year process of planning: getting the approvals from the city,” he said. “One part of it is having the certainty that when you’re ready to start gutting it…to know that you have a process by which you can vacate the premises.
“As the property owner, somewhere property rights have to come into this.”
Tenant advocates also say that renovictions are on the rise, while tenants who are evicted for a renovation say it’s extremely difficult to find a new apartment in the near-zero vacancy environment.
The owners of much of Vancouver’s existing rental stock — the three-storey wood frame buildings built in the 1960s and 70s — will be under pressure to do large renovation projects, Hutniak said.
“I guess if you’re living in a 60-year-old building, you probably need to think in terms of, there may be some inevitability,” he said.
The only real solution, he said, is to build more new rental buildings targeted to the “middle” of the market to ease the current supply constraints.
“I always talk about the baristas of the world, young kids who might have a university education but are only making $40,000-$50,000 a year,” he said.
“These kids in Vancouver in particular are forced to rent: they’re going to rent for the rest of their lives and there’s nothing wrong with that.”