A ruling issued this week by Justice Karen F. Douglas found that the city, under the Vancouver Charter, does not have the authority to determine how a property owner changes the rent for what is also known as SRO — housing in a room – when a tenant moves out, due to conflicts with the provincial Residential Tenancy Act. Vancouver’s new rental rules were enacted late last year and were intended to keep rents low for housing designed to provide affordable housing for people who have very low incomes and face significant barriers. As of 2019, there were approximately 6,680 open SRA rooms in 157 SRA buildings in the city center core. In January, two property owners independently filed lawsuits against the city, claiming the city overreached. The two petitions were discussed together in April. “I agree with the petitioners that the City is prohibited from legislating, using its business licensing power, to regulate persons already subject to regulation by the Province, with the same overriding purpose in mind, even if it is possible for them to comply with both statutory shapes,” Douglas wrote. Councilor Jean Swanson brought the original proposal to council and said the measures were intended to prevent landlords from doubling or even tripling prices for three-by-three-metre rooms with no kitchen and shared bathroom. Vancouver councilor Jean Swanson is pictured outside her home in Burnaby, British Columbia on Monday, December 30, 2019. (Ben Nelms/CBC) For rooms renting for more than $500 per month, the rent could only increase to rental turnover at the current rate of inflation for Vancouver, while for rooms renting for more than $375 and less than $500 per month, the rent it could only increase on rental turnover at current inflation plus 5 percent. On Friday, Swanson said she was disappointed and surprised that the court found the new regulations illegal. “I think it’s devastating and I think homelessness is going to increase,” he said. This movement of his —@seanorr In a statement, the city said it was “disappointed with this decision” and was considering an appeal. Both petitioners declined to comment on the ruling.
Rents are rising without keeping pace with rising costs
One of the property owners suing the city, Pender Lodge Holdings Ltd, owns an SRO building in East Vancouver. It has 30 units, which rent for an average price of $563 per month. Pender Lodge told the court it had not raised rents for any tenants since 2017, but did raise the rent between tenancies. The cumulative average of those rent increases is about 2.5 percent annually, but those increases have not covered the building’s fixed costs, which the suit says have risen nearly 35 percent over the past five years.
Maintenance and upgrades
A numbered company with the name 0733603 BC Ltd. filed the other petition. It has an SRA building in Gastown, which has 60 micro-suites. They are small, high-end, self-contained living spaces, each with a separate toilet, shower and kitchen, and rent for between $800 and $1,200 a month. The company told the court that leases are usually relatively short and tenants are often students, young professionals and temporary workers. He also stated that the property is close to 60 years old and requires significant maintenance and upgrading.
Ultra vires
The crux of their legal arguments regarding the rent-increase-setting regulations was that the city did not reasonably interpret its legislative power in areas already regulated by the province. The province’s Residential Tenancies Act (RTA) regulates rent increases during tenancies, but is “silent about rent increases between tenancies,” according to the decision. In 2018, a rental housing task force determined that unit-linked rent control would have the unintended consequence of reducing affordable rental inventory or reducing investment in needed repairs. Ultimately, Douglas ruled that Vancouver’s rent control regulations were ultra vires—or beyond the city’s authority—and ordered them rescinded. It also ordered the city to destroy any information and documentation it has collected in connection with the regulations and awarded costs to the two petitioners.
