Provincial legislation allows protections, entitlements for the landlord and the tenant
Matt Robinson
The Vancouver Sun
Recent attempts by landlords to win massive rent hikes from tenants or take advantage of rental loopholes suggest there is a wide gulf between what some owners are earning from their buildings and what they believe they should be earning.
In markets with a near-zero vacancy rate like that of Vancouver, prospective renters fight with their wallets for acceptable places to live. This causes rents to rise so fast they can dwarf the going rates of just a year or two — much less decades — ago.
Some landlords are so keen to grab those rising rates that they — to borrow the words of provincial Housing Minister Rich Coleman — “circumvent the law” by using a loophole to sign fixed-term leases with tenants they in fact want to keep over the long term. It’s a way for landlords to charge their tenants higher-than-legal rent increases or force them to move out.
Before shedding a tear for the landlords who believe taking on long-term tenants means missing out on big returns, let’s clear up a few facts.
Tenants and landlords are bound by the Residential Tenancy Act. That’s not a negative thing for landlords, since the act sets out all sorts of responsibilities, entitlements and protections for both parties.
Among the entitlements is the right for a landlord to increase rents every year by the rate of inflation plus two per cent. That increase can be charged regardless of what’s happening with local wages, job prospects or economic conditions. Not bad.
This year, the maximum allowed increase is 3.7 per cent. For the sake of comparison, guaranteed income certificates — another safe way to put your cash to work — generally pay substantially less than two per cent a year in Canada.
Meanwhile, landlords can also hope for their property investments to grow in value. And they’ve certainly done well in Vancouver of late.
Of course, the industry is not all about rolling around in profit. There are headaches like broken water heaters, clogged sinks and leaky roofs. But no rational business person would fail to anticipate associated expenses and build them into the rents they charge.
Just for the sake of argument, say one failed to do so. The Tenancy Act has a fix for that. It allows for arbitrators to award additional rent increases to help landlords cover major, unforeseen repairs or renovations.
It also provides for landlords to kick out problem tenants if that happens to be the headache.
Now, if a landlord forgot or didn’t bother to increase rents for decades, then eventually realized their tenants were paying relatively little, that is a problem — especially if it means they’re having trouble paying for maintenance. It happens to be a problem they brought onto themselves, but a problem nonetheless.
No matter, the act has a fix for that, too. Arbitrators can award rent increases when a unit is earning significantly less than similar units nearby.
At least a couple landlords are trying that now. There’s a West End landlord seeking 16 to 43 per cent increases and a Fairview landlord looking for 35 per cent hikes, according to the CBC. They may, like others before them, have trouble proving their cases, but the remedy exists for extraordinary cases.
Any landlord who insists they need to use the fixed-term lease loophole to turn a profit in the rental industry needs to take a closer read of the act or speak to one of the countless landlords who do operate ethically and successfully.
Landlord B.C., a professional industry association that is against use of the loophole, is a good reference that helps landlords know their rights and responsibilities and save costs.
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