B.C. announces legislation to close fixed-term rental loophole

UPDATE: As of Nov. 30, 2017, the legislation in this story has received royal assent and has becomelaw.

B.C.'s provincial government has announced legislation to close what has been dubbed a major loophole affecting renters in the province.

Critics say the loophole allows landlords to bypass rent controlsby having residents sign a fixed-term lease with move-out clauses. At the end of each term, tenants must either move outor sign a new lease at a reassessed market rental rate.

In places like Vancouver where the rental market is especially tight, that new market rental rate can be hundreds of dollars higher, exceeding what would be allowable under the Residential Tenancy Act for the same tenant.

• READ MORE: Lease loophole lets owners jack up rent in West End rental tower, tenants say

B.C. Housing Minister Selina Robinson said the new legislation would protect the rights of renters who have been left open to "unfair and unjustified rent increases."

"By closing this loophole, renters will know they'll be able to stay in their homes without the threat of skyrocketing rents," Robinson said.

If passed, the legislation would restrict a landlord's ability to use a vacate clause in fixed-term tenancy agreements and limit rent increases between fixed-term tenancy agreements for the same tenant to the maximum annual allowable amount (currently two per cent plus inflation).

Liberal MLA Todd Stone said while the measures may improve housing affordablity, putting more restrictions on landlords could affect rental supply.

"We want to just make sure that the measures being proposed here, and how they are implemented, ensures a continued balance between renters and tenants," Stone said.

LandlordBC CEODavid Hutniakapplauded the loophole's closure, saying his organization had raised concerns about a "growing cohort" of unscrupulous landlords abusing it for over two years.

"We were very concerned about it. It was damaging the industry, we felt," Hutniaktold On The Coast guest host Gloria Macarenko. "Really, we felt it was unfair to responsible, professional landlords, which are the majority."

But Emily Rogers, a tenant advocate with the Victoria chapter of advocacy group Together Against Poverty Society said the measures might not go far enough.

She expressed concerns landlords would use other provisions to increase the rent further than the allowable increase.

"I would like to see rent tied to the unit rather than the tenant," she said. "It would ensure that rent increases do not exceed the annual allowable rent increase every year."

The province says the new rules will apply to both new and existing tenancy agreements.

With files from Megan Thomas and CBC Radio One's On The Coast