Province snips tenancy rule loopholes allowing double-digit rent increases

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WATCH HERE: The province has announced new measures to stop the huge rent hikes seen in markets where vacancy rates are near zero. Nadia Stewart has the full story.

The NDP says it has closed two loopholes that have allowed B.C. landlords to jack up rents over the current maximum annual increases outlined in residential tenancy regulations.

On Saturday, BC NDP MLA Spencer Chandra Herbert announced the elimination of the geographic rent increase clause in the Residential Tenancy Regulation and in the Manufactured Home Park Tenancy Regulation.

In B.C., landlords are only allowed to increase a tenant’s rent by two per cent plus inflation each year (in 2018, four per cent), but the clause allowed them to apply for an exception if they were currently charging rent significantly lower than for similar suites nearby.

READ MORE: B.C. tenants’ groups call for NDP to curb 4-per-cent rent hikes

That possibility caused an outcry in Vancouver’s West End last spring, where tenants of one apartment were facing potential increases of 43 per cent, or up to $500 per month.

“In many cases, tenants signed agreements allowing landlords to increase their rent so much higher than they could afford. And in other cases, renters just gave up, left the neighbourhood (and) moved out,” said Chandra Herbert.

The province says it is also bringing in financial penalties for landlords or tenants who repeatedly break the law.

Details of those administrative penalties were not available on Saturday.

WATCH: What needs to be done to ease Vancouver’s rental crisis?

The province will also change the way it regulates fixed-term leases with vacate clauses.

Critics have charged that under existing rules, unscrupulous landlords are signing tenants to one-year leases with a clause that forces them to either move out or negotiate a new lease at the end of one year.

READ MORE: Renovictions still a ‘huge problem’ for Vancouver renters, says MP

That has given landlords the power to re-sign tenants to new leases at rents far higher than the maximum allowable annual increase, they argued.

The province says under the new rules, landlords who sign a new lease with the same tenant will now be restricted to the same four per cent rent hike that month to month tenants or those on long-term leases face.

“It’s a retrospective change, which means that if you’d signed a fixed-term, it just now will move to a month-to-month like a regular lease,” said Chandra Herbert.

The changes take effect on Monday.

The organization representing B.C. landlords says it’s a shame that rule changes were needed because some landlords were using aggressive tactics to increase rates.

Landlord BC CEO David Hutniak said he doesn’t agree with those tactics, and that an eye needs to be kept on the rental market to see what effects the NDP’s changes will have.

“Let these things work their way through the system, see what impact they have,” he said.

“Although we need to keep landlords in business, we don’t want to scare people out of the system — the secondary market in particular. And so what we need to do here now is let these things work through the system and focus on supply.”

The changes wouldn’t have been necessary if rental vacancy rates were sitting around three or four per cent, Hutniak said.

The latest figures from the Canada Mortgage and Housing Corporation (CMHC) found Vancouver’s rental vacancy rate sitting at about 0.9 per cent, while in Abbotsford it sits at just 0.2 per cent.