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Liberal MLA Rich Coleman arrives for a caucus meeting at the Legislature in Victoria, B.C. on April 27, 2016. (CHAD HIPOLITO For The Globe and Mail)
Liberal MLA Rich Coleman arrives for a caucus meeting at the Legislature in Victoria, B.C. on April 27, 2016. (CHAD HIPOLITO For The Globe and Mail)

B.C. Housing Minister says there’s no fix for rent-hike loophole yet Add to ...

After vowing to try to close the loophole before the provincial election this May, British Columbia’s Minister Responsible for Housing says it is too complicated to stop landlords from skirting rent-control rules by pushing tenants to sign fixed-term leases with vacate clauses.

Rich Coleman said Wednesday that his staff have been studying this issue since the fall, but have not been able to come up with a tweak to British Columbia’s Residential Tenancy Act that could stand up to a constitutional challenge.

“I’ve got some proposals in, working through, but the legislation won’t get done this session,” he told reporters during a scrum in the halls of the legislature.

Instead, Mr. Coleman, the cabinet minister in charge of the housing portfolio for the past 15 years, said he has asked for a discussion paper to be written by the provincial agency that protects tenants’ rights and settles disputes with landlords. This agency will consult widely with stakeholders in the rental housing industry and allow B.C. to develop policy options, but there is no timeline for this process, he added.

Last summer, during a Globe and Mail investigation into the rising cost of rental units in Canada’s largest cities, Vancouver tenants consistently pointed to the abuse of the vacate clause as a tactic that is damaging the affordability of the region.

This past October, Mr. Coleman said he was concerned about reports of this abuse, but warned solving the issue could be complicated by contract law.

On Wednesday, he maintained that position, referring to how renters voluntarily signed onto the various terms and conditions of their leases.

“The challenge is: If they’ve signed a contract, they’ve signed a contract,” he said.

With vacancy rates hovering near zero, renters complain they often have no choice but to agree to vacate a unit at the end of their lease – which is typically a year in length. When that time comes, the landlord asks them to leave or negotiate a whole new agreement at increases that bypass the province’s existing rent-control rules.

If renting to the same person, the law currently allows for one rent increase every 12 months, with a limit of 3.7 per cent this year. Angry tenants have reported their landlords using the vacate-clause loophole to hike their rents upwards of 30 per cent.

While bureaucrats continue studying the issue, renters will have to read the fine print carefully when signing any lease with a landlord, Mr. Coleman said.

Vancouver New Democrat MLA Spencer Chandra Herbert said that if the provincial Liberal government wanted to, it could easily fix this loophole.

“You could simply make a statement in law that if somebody is on a fixed-term tenancy and that fixed-term tenancy is renewed, the only allowable rent increase can be the yearly allowable rent increase,” said Mr. Chandra Herbert, whose West End constituents regularly complain about this technique.

He said his party, if elected in May, would overhaul tenancy laws to increase protections for renters, who number more than 520,000 across the province.

David Hutniak, chief executive officer of Landlord BC, which represents the rental-housing industry, said his association strongly opposes use of the vacate-clause loophole and believes it should be interpreted as illegal under current rules.

If no inspection of the unit was conducted and the existing tenant’s deposit wasn’t returned between the end of a fixed-term lease and the beginning of a new agreement, then the landlord has no right, under the current laws, to increase rents above the prescribed limit, Mr. Hutniak said.

Norman Ruff, an associate professor emeritus at the University of Victoria who has studied B.C. politics since 1968, said the Liberal government has created policies in the past year aimed at making life more affordable for home owners, which came after it reacted slowly to a housing crisis that was unfolding over the previous year.

However, he said, the government has not provided much help for renters, who make up more than half of those living in Vancouver. This could be because the party sees renters as a lower-income constituency not part of its voter base, he said.

“That [assumption] could be mistaken, particularly in the context of living conditions in Vancouver,” he said.

With files from Justine Hunter

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