Housing minister eyes possible cut to annual rent increases
NDP MLAs Selina Robinson talks at a press conference outside Terraces on 7th, which is evicting about 20 seniors from subsidized assisted-living suites Vancouver March 29 2017. (Gerry Kahrmann / PNG staff photo)
VICTORIA — B.C.’s housing minister is exploring lessening the annual rent hikes landlords are allowed to apply to tenants in the province.
Selina Robinson said the current formula, which caps annual allowable rent increases to two per cent plus the rate of inflation, will be under review within her ministry as she tries to find ways to make life more affordable for renters.
“I'm very curious about those numbers and how they were achieved,” she said in an interview.
Due to inflation, the current maximum rent increase is four per cent in 2018.
“I also feel as a new minister I need to understand what all the pieces are, and I’m very curious where this formula came from and what is the rationale,” said Robinson.
Under the law, landlords may only increase rent once every 12 months, up to the maximum allowable rate, and provide three months notice to tenants.
The average rent for a one-bedroom apartment in Vancouver is $1,950 a month, which means the maximum rental increase is $78 this year.
According to the Canadian Rental Housing Index there are 517,430 renter households in B.C. - that’s 29 per cent of all households. In Greater Vancouver 34 per cent of all households are renting.
B.C.’s Tenant Resource and Advisory Centre wants the province to lower the increase to just the rate of inflation, said Andrew Sakamoto, executive director. That would mean the maximum rental increase would be two per cent this year, or $39 on a $1,950 monthly apartment in Vancouver.
“Given our current rental crisis tenants are facing, I think it would be more realistic to be simply inflation,” said Sakamoto.
Robinson said she’s worried about rental affordability, something her party campaigned upon in the May provincial election. The NDP promised to build 114,000 rental and co-op homes, and give renters an annual rental home credit of $400.
"I'm looking for things we can deliver ASAP, because I know it’s a crisis," she said.
The NDP's platform also pledged to end the "“fixed term lease” loophole, where landlords force tenants into one-year leases that allow them to raise rents at higher-than-allowed rates every year because they are technically entering a new lease contract with the same tenant.
Robinson said legislation to fix that loophole is coming this fall, after former Liberal housing minister Rich Coleman spent months complaining it was a complex legislative change that would take a great deal of time. “It wasn’t so complicated,” said Robinson.
Liberal critic Sam Sullivan said he’s concerned to hear Robinson might be changing the maximum rent rate because the NDP did not campaign upon such a promise in the election.
“My understanding of these kinds of things is you have to be very careful, economists on both the right and left are pretty much unanimous that rent controls can have a very negative impact on rental properties (and) the availability of rental properties,” he said.
“It’s a very popular short-term thing to do. But the long-term result can often be quite negative.”
The real answer is to increase supply, because the government can’t legislate its way out of a supply and demand issue, said Sullivan, a former mayor of Vancouver.
The association representing landlords in the province said it’s supportive of Robinson closing the fixed term lease loophole, but that lowering the maximum rent increase rate will simply be another disincentive to property developers considering building rental buildings, who may then decide to build condos instead.
“The three biggest cost drivers for our industry, our taxes, utilities, and insurance, all our cost are going up by a percentage far greater than the four per cent maximum,” said David Hutniak, CEO of Landlord B.C.
“We’re obviously not insensitive about the current dilemma of the housing and rental housing crisis, but the frustrating part is we’ve been talking about the need for supply for 20-25 years and nobody listened to us. And we were predicting the challenges we’re seeing today. And this would be the wrong time to target that specific item.”