It is unconscionable that a loophole has been permitted to remain in the Residential Tenancy Act that undermines half the reason for having such an act in the first place – housing security.
But that is just what has happened for the duration of the B.C. Liberal party’s tenure. And the party is still not prepared to change a thing.
For years, unscrupulous landlords have been allowed to use a so-called fixed-term lease loophole to demand higher-than-legal rent increases from their long-term tenants. The only remedy for renters who enter the loophole is to move.
Last fall, under pressure from the B.C. NDP, Housing Minister Rich Coleman said he planned to close the loophole by this spring session.
But earlier this week, he said doing so was “a bit more complicated” than he’d expected.
It gets worse. It turns out B.C. has not yet even drafted policy options, according to Coleman’s office. Instead, after hearing differing opinions on the matter, Coleman has requested a discussion paper and stakeholder consultations.
Action on the matter is unlikely to happen before the May 9 election, Coleman told reporters Wednesday. And that’s if it comes at all.
Here’s how the fixed-term lease loophole tends to work:
A prospective renter finds a suitable home and agrees to sign a one-year lease agreement with their new landlord. Included on the form is a vacate clause, which states: “The tenant must move out on or before the last day of the tenancy.”
However, leading up to that day, the landlord offers their tenants the option to sign an entirely new one-year lease for the exact same unit. Under existing legislation, the rent requested by the landlord for that new lease need not be limited to the maximum annual increase allowed under B.C.’s tenancy act (3.7 per cent in 2017). If the tenants don’t want to pay the new rate, they leave as initially agreed.
Paper-thin vacancy rates – particularly in Metro Vancouver – has forced many renters to agree to such leases. And you know things are really bad when a guy like Andrew Sakamoto, the head of the Tenant Resource and Advisory Centre, counts himself among them. He should – and does – know better than to sign one, but it truly is that hard to find suitable housing in Metro Vancouver right now.
“It’s really disappointing to hear Coleman say that it’s a complicated matter. It’s really a case where the simple and the fair fix is to take out vacate clauses,” Sakamoto said.
As unsavoury as the loophole is, the Residential Tenancy Branch regularly rules in favour of landlords after hearing disputes on the matter. Even from TRAC’s perspective, the tactic runs counter to the spirit of the tenancy act, but is legal under existing legislation.
There were at least 139 calls to TRAC about the loophole over the past 12 months – more than twice the preceding year’s count. One of those callers was represented by TRAC at a dispute resolution earlier this year after their landlord demanded a 10 per cent rent hike. TRAC argued if a tenant remains in a rental unit, it should be illegal to sign a new contract with new terms.
“If no deposit is returned, no move out condition inspection report is completed, and the locks aren’t re-keyed, is one tenancy truly ending and another beginning?” Sakamoto asked.
“We lost the hearing.”
From TRAC’s perspective, vacate clauses need to be eliminated. Doing so would still allow landlords to evict tenants for a range of legitimate reasons, including to simply reclaim the unit for their own use.
Here’s what Coleman told reporters Wednesday about the delay in solving the problem: “it’s not about vacate clauses – it’s about contract law … If somebody enters into a commercial lease to rent an apartment, both parties signed the lease. What’s done is done.”
He said the province was now working up language that would stand up to a constitutional challenge. In a later written statement, Coleman said landlords and tenants remain subject to the existing process for fixed-term tenancy agreements and there was now no timeline “for potential changes” to the legislation.
Given that the B.C. Liberals have plastered voters with every popular pre-election announcement they could conjure up, the loophole may in fact be tougher to close than it appears.
But either way, Coleman and his colleagues are looking sluggish or reluctant to intervene in a situation that has landlords gleaning unrestrained returns from desperate renters.
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