The mad rush to cash in on Metro Vancouver’s white-hot residential real estate market is leading more landlords to sidestep the rules, according to a local tenant advocacy group.
Andrew Sakamoto, executive director of the non-profit Tenant Resource and Advisory Centre, said complaints about so-called bad-faith evictions — where a tenant suspects a landlord is evicting them under false pretences in order to move in a new tenant paying higher rent — have more than tripled in the past six months.
Between Jan. 25 and July 25 of this year, the tenant centre received 118 calls about bad-faith evictions compared to just 36 in the previous six months.
“There’s just so much money that can be made with turning over a property,” Sakamoto said.
Landlords are legally permitted to issue a two-month eviction notice either to allow the landlord himself or close family to move in, or to do renovations that require the tenants to move out — the latter known as a renovation eviction, or renoviction.
A tenant is generally protected from massive annual rent increases by residential tenancy rules, Sakamoto explained, which this year capped the annual hike at 2.9 per cent.
“(But) once a tenant leaves and a new tenant comes in, a landlord can set the prices whatever they want,” he said. “There’s an incentive for the landlord to have some turnover and get new people in and raise it to market rent.”
With Statistics Canada pegging rental vacancy rates at below one per cent in Metro Vancouver, Sakamoto said landlords have a hot commodity and they know it.
Some landlords have fostered bidding wars by setting a minimum rent and encouraging prospective tenants to give their best offer.
Particularly troubling, he said, is a massive spike in callers asking or complaining about affordability. There were just 16 of those calls between July 25, 2015 and Jan. 25, 2016, but 405 over the last six months, an increase of more than 2,400 per cent.
Fix is in for rent deals, group says
Landlords don’t appear to just be using bogus eviction notices to capitalize on rising rents, Sakamoto said.
The practice of signing tenants to fixed-term tenancies with vacate clauses, and specifically the surge in these types of deals, he said, has led the centre to speak more openly about the issue.
Landlords are using a loophole in the Residential Tenancy Act, he said, inking tenants to a series of one-year, fixed-term tenancies. These deals have a vacate clause that requires the tenant to move out at the end of the term.
In making these deals, landlords avoid rent controls that generally protect tenants from giant year-to-year rent hikes.
“So, at the end of that one year, they can either bring in a new tenant, and raise the rent as much as they want, or they can tell the existing tenant that they can stay but that they have to sign a brand new agreement with brand new terms including rent.”
The advocacy group kept quiet about the controversial practice in order to avoid alerting other landlords and potentially creating a more widespread problem.
“But it’s gotten to the point where we’re hearing about it enough that we do now feel that we have to speak out about it in the media,” Sakamoto said. “It’s just creating an unequal power dynamic between tenants and landlords.”
Legislative change needed
A lack of rental home supply is the biggest part of the problem in Metro Vancouver, Sakamoto said, but there’s not much the tenant centre can do.
The centre did launch in January an online course, Renting it Right, in an effort to better prepare would-be renters by helping them make a strong application package that includes a cover letter, a credit report, references and a certificate of completion of a final exam.
Aside from addressing supply and education, the most time-consuming and difficult way to deal with the fixed-term tenancy loophole is via legislative change, he said.
And there is good news on that front.
“We’re absolutely going to be pushing for change going forward and there seems to be an appetite around that table — tenant groups, landlord groups and also government — to make that happen.”