Maximum allowable rent increases under review by B.C. task force

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Maximum allowable rent increases under review by B.C. task force

VANCOUVER—The chair of the province’s Rental Housing Task Force said it’s assessing the formula for the maximum allowable rent increase, after a 4.5-per-cent hike for 2019, announced on Friday, left many Vancouverites reeling.

Spencer Chandra Herbert, MLA for Vancouver-West End, said it’s been looking at the maximum rental increase formulas of other provinces and assessing their policies.

Spencer Chandra Herbert, a B.C. MLA and chair of the Rental Housing Task Force, said the formula used to calculate the maximum allowable rental increase was set by the previous Liberal government in 2004.
Spencer Chandra Herbert, a B.C. MLA and chair of the Rental Housing Task Force, said the formula used to calculate the maximum allowable rental increase was set by the previous Liberal government in 2004.  (Jennifer Gauthier / StarMetro)

“We’ve looked at Ontario’s model, which is just inflation. We’ve looked at Manitoba and Quebec. We’ve looked down at the States, and of course some provinces that don’t have rent control, like Alberta,” Herbert said. “We tried to look as far as we could to come up with the best recommendations.”

Currently, B.C.’s formula — put in place by the previous Liberal government in 2004 and set out in the Residential Tenancy Regulation — is calculated at 2 per cent plus inflation.

The formula was designed to cover inflation, in addition to property maintenance and upkeep. Some other provinces with rental caps use only inflation; Ontario, for instance, has a current 1.8 per cent allowable increase.

The Rental Housing Task Force, which was appointed in April, has been conducting a review of current laws and policies governing renting in British Columbia. It is expected to make recommendations to the premier and Minister of Municipal Affairs and Housing this fall.

Herbert said the task force is trying to find a way to balance competing needs in the housing market.

“We’re trying to find the balance to make sure people do maintain their properties … but we want to make sure people can live in their homes and not be priced out of housing,” he said.

In terms of how quickly changes could come into effect, he said, “legal changes take longer,” but policies can change much more quickly. However, “the premier would have to accept the report and agree with the changes.”

The rental increase for 2019, which is the highest since 2004, has caused frustration among renters, many of whom are already struggling in the province’s expensive housing market.

Trish Garner, a community organizer with the B.C. Poverty Reduction Coalition, said rent is already unaffordable for many tenants without the increase.

“Many are already paying over 30 per cent of their income on rent. Incomes are not raised to an equivalent level, income assistance is already low, wages are not going up. I have heard just a lot of anger and frustration,” she said.

Garner suggested the province start by looking at all options.

“We should stop rental increases to figure out what are options here. They could look at rental control on the units between tenancies, so that there was no opportunity for rent increases between tenants.”

New data from Canada Mortgage and Housing Corp. suggests that the maximum allowable rent increase may not have a significant impact on regulating the market at all.

In looking at data for Vancouver for the last 14 years, CMHC examined how maximum allowable rent hikes were related to the actual rent increases that were paid.

Keith Stewart, senior market analyst at CMHC, said while actual rent increases have been higher than the allowable rate for the past three years, it doesn’t seem as if the rental cap has a significant impact on controlling the market over time.

“In a very preliminary look, it appears there is no meaningful relationship between the two. While there will be a group of people that will see a rise in rent, some will get no increase or a smaller increase … it doesn’t seem to set the overall market rent.”

Stewart said that he thinks the rental average is “strongly related to interprovincial migration,” as well as the labour market driving people to B.C.

But David Hutniak, CEO of LandlordBC, said rent increases are a necessity for landlords to cover expenses.

“The reality is those annual allowable increases are basically covering the core business expenses associated with running a rental business,” he said. “The three major costs are utilities, property taxes and insurance costs — three huge items.”

Hutniak said he wants to challenge the idea that landlords are simply making a profit.

“There is a misconception the annual allowable increase is allowing landlords to sock away money for a rainy day. The cost of rental services is extremely expensive.”

Cherise Seucharan is a Vancouver-based reporter covering health and safety/youth. Follow her on Twitter: @CSeucharan