News / Vancouver

Tenants would have a hard time fighting fixed-term rent loophole: lawyer

NDP leader urges province to hurry up on changes to B.C. rent laws as tenants struggle with high rents and low vacancy

Jennifer Gauthier/For Metro

Cass Sclauzero was dismayed when her landlord hiked her rent by $200 this September, from $1,600 to $1,800.

That’s a 12 per cent increase — far beyond the 2.9 per cent allowable by law. But it’s all perfectly legal because, in the quest to secure a hard-to-find apartment in Vancouver, Sclauzero had reluctantly signed a fixed-term tenancy agreement that included a vacate clause.

Sclauzero, who comments on rental issues through the Twitter account @dearyvrlandlord, is now on a fixed-term lease that will convert to a month-to-month lease in September 2017, when she anticipates her rent to increase by 3.7 per cent, the new rent cap set for 2017.

This week NDP leader John Horgan called for speedy legislation to fix what he called a loophole that allows landlords to hike rents beyond B.C.’s current yearly rent increase cap.

“If Christy Clark hadn’t cancelled the fall sitting of the legislature, we could have closed that loophole today,” Horgan said, adding the “loophole” was created when the BC Liberals changed the Residential Tenancy Act in 2002.

As Vancouver residents struggle with an extremely low vacancy rate, evictions, and rent rates that appear to have jumped around 20 per cent between 2015 and 2016, it’s the only part of the Residential Tenancy Act that B.C.’s minister responsible for housing is looking at changing.

In mid-September, Rich Coleman told Metro that his ministry is looking at revamping the legislation because it appears that some landlords are “gaming…the system” by using fixed-term with a vacate clause to increase rents beyond the rent increase cap.

David Hutniak, CEO of LandlordBC, countered that tenants should be able to successfully fight such a rent increase through the Residential Tenancy Board, because without a return of keys, final inspection and changing of locks, a tenancy doesn’t end.

But a fixed term agreement with a vacate clause does effectively end the tenancy — and the landlord has every legal right to raise the rent, said Lisa Mackie, a lawyer with Alexander Holburn Beaudoin and Lang who specializes in residential tenancy law.

“When you have a fixed-term tenancy agreement that requires a tenant to move out at the end of the term, the contract comes to an end at that point and the landlord is at liberty to present the tenant with a new contract with new terms,” Mackie said.

“Technically from day one the tenant is guaranteed occupancy for a fixed length of time, and is essentially delivered an eviction notice on day one in the form of, this is when you must leave the rental unit at the end of the fixed term.”

A tenant might be able to successfully argue the tenancy had become a month-to-month tenancy only if the landlord establishes a pattern of only changing the contract to raise the rent, and the tenant would likely need to show more than one instance of that behaviour, Mackie said.

“A tenant might have a greater shot at arguing they’re not in a fixed-term lease, they’re in a month-to-month lease, but it all depends on the facts and the evidence between the parties,” she said.

Correction: An earlier version of this story stated Cass Sclauzero was facing another unpredictable rent increase in September 2017. In fact, her fixed-term lease will convert to a month-to-month lease at that time and she anticipates her rent to rise by 3.7 per cent, the rent increase cap for 2017.

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