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Business in Vancouver

New rental tower in Canadian city uses controversial fixed-term tenancy agreements

Fixed-term agreements allow landlords to raise rents above provincial cap, evict tenants more easily

PUBLISHED : Saturday, 09 July, 2016, 5:51am
UPDATED : Monday, 11 July, 2016, 3:08pm

A new rental building that received millions in incentives from the City of Vancouver is using a legal but controversial form of tenancy agreement that allows for unlimited rent increases and makes it easier to evict tenants.

“We have one-year fixed terms,” a spokesman for Aquilini Developments said of its West Tower rental project, now open and one of three Aquilini will build next to BC Place Stadium in downtown Vancouver.

The development was exempted from paying C$54 (US$41) million in development cost levies. The City of Vancouver does not charge community amenity contributions, a separate fee, for new rental projects.

Fixed-term rental agreements have come under fire from tenant advocacy groups because they allow landlords to circumvent the annual cap on rent increases allowed under the BC Residential Tenancy Act. The act restricts increases to 2.9 per cent in 2016, but tenants under fixed-term agreements report rent increases of between 10 per cent and 30 per cent.

Evan Allegretto, director of development for Wesgroup, said his company has yet to decide what form of tenancy it will use for two rental buildings in South Vancouver that are scheduled to be completed in 2017. Wesgroup currently does not use fixed-term agreements in its rental projects, he said.

Cressey Development Group will use standard month-to-month agreements for a 110-unit purpose-built rental project recently approved for Commercial Drive.

All three developments were approved under the City of Vancouver’s Rental 100 incentive program.

Complaints about fixed-term agreements have been rising over the past few years, said Jane Mayfield, a manager at the Tenant Resource and Advisory Centre (TRAC), and are a problem across the province.

While some landlords use fixed-term agreements for the first year of a tenancy and then switch to a month-to-month agreement, others are asking tenants to sign a clause stating they will vacate the unit at the end of the term. Landlords then offer to renegotiate a new agreement, sometimes with large rent increases.

Aquilini Developments has chosen to adopt back-to-back fixed-term tenancy contracts. While the City of Vancouver imposed its own cap on Rental 100 building rents, after the first tenants leave that limit does not apply. 

The practice leaves tenants vulnerable when it comes to asserting their rights, said Mayfield.

“If they try to bring up any issues or try to enforce their rights or complain about a repair issue or a building manager’s behaviour, that puts them at risk of being told they have to leave,” Mayfield said. “With a vacate clause, the landlord doesn’t have to have a reason under the act to evict them.”

At the end of a one-year fixed-term, Michael Rattray was told he would have to pay 20 per cent, or C$350 (US$268) more per month, to stay in the two-bedroom Kitsilano apartment he and his wife had rented. Rattray has since moved.

After years of renting in Vancouver, Jennifer Sangster encountered her first back-to-back fixed-term tenancy agreement in December 2014. She signed a six-month agreement and was surprised when her landlord wanted her to sign another fixed-term agreement at the end of that period, which included a modest rent increase.

At the end of the second term, she expected to be able to enter into a month-to-month agreement. But the landlord again wanted her to sign another one-year, fixed-term agreement and raise the rent 5 per cent. She ended up moving to another apartment, where she pays more in rent but has peace of mind with a one-year lease that will roll into a month-to-month agreement.

David Hutniak, CEO of Landlords BC, said his organisation does not believe fixed-term tenancies are being widely used.

“If any landlords might be using this in a manner which is inappropriate, and we would certainly be very concerned that people are using it to put forward more aggressive increases at the end of the term, that would concern us and we would highly discourage that,” Hutniak said.

Problems with fixed-term tenancies are high on TRAC’s list of priorities, but Mayfield said the sense of urgency doesn’t seem to be shared by the provincial government. The advocacy group has been raising the issue with the Residential Tenancy Board for several years.

In early June, the Ministry of Natural Gas Development and Minister Responsible for Housing emailed BIV a response stating it was “working with stakeholders” on the issue.

Mayfield said TRAC has yet to be contacted by the ministry or the Residential Tenancy Board about that consultation work.

The City of Vancouver’s task force on affordable housing recommended the province take steps to ensure fixed-term tenancies are not being used to circumvent the rent-increase cap. But the city says it cannot prohibit the use of the agreements, which fall under provincial authority.