Tenant advocates are urging the BC government to reconsider a policy that allows landlords to cover the cost of repairs and improvements to their properties using additional rent hikes.
That of the province additional rent increase (ARI), which was launched last summer, gives landlords the option of raising rent above the allowed annual rate linked to the Consumer Price Index – but only if they incur capital, paying for everything from windows to security systems.
The increases, which can reach up to 3% of the existing rent, remain in place permanently, even after the projects have been fully reimbursed.
“Tenants who don’t own property are being asked to pay for improvements to buildings owned by big, massive corporations and investment firms,” said Robert Patterson, a lawyer for the Tenant Resource and Advice Center. “The current model we use is incredibly inequitable.”
Some tenants who have had to deal with an additional rent hike say they feel some of the burden associated with owning a condo, even though they hold no real value in the property. They also have no say in the decision-making process, unlike co-owners who participate in a co-ownership council.
“It makes my stomach hurt to be taken advantage of,” said Rob Pont, a senior living in Vancouver’s West End.
In March, Pont and her neighbors received notice that Hollyburn Properties Ltd. was asking for an additional rent increase for the 14-story building on Pendrell Street where he has lived since 2008.
The projects cited are “engineering/architect”, at a cost of $54,435; “removal of hazardous materials”, at a cost of $6,431; “electric”, at a cost of $5,200; and the most expensive expense, a $202,238 parking lot restoration.
Hollyburn is a property management and real estate investment company that operates more than 70 rental apartment buildings across the country, representing several thousand units. The building where Pont lives is valued at $55.3 million, according to the latest appraisal.
Pont said the idea of such a large corporation asking him to fund building upgrades that will ultimately increase the value of one of his many investments is offensive.
“Don’t come crying to me,” he said. “That’s crazy. How can I be responsible when your building needs fixing?”
CTV News has contacted Hollywood Properties Ltd. for comments. This article will be updated if a response is received.
RENT HIKES ENSURE SAFETY, OWNERS SAY
Although the ARI process may seem unfair to some tenants, landlords argue that there is a need to help landlords afford to keep buildings well-maintained, especially since the NDP government changed the formula for annual increase in authorized rents in 2018.
Under BC’s previous Liberal government, landlords had the right to increase rent by 2% plus the CPI rate. The NDP estimates the average renter has saved more than $1,000 a year since the province removed the extra 2% from the formula.
In a report, OwnerBCwhose members include property managers, investment property owners and landlords who have mortgage relief suites, told CTV News that landlords need additional rent increases to cover the costs of “substantial investments that landlords are urged to make to improve the health, safety, energy efficiency and resilience of our aging rental stock.”
The Pendrell Street property where Pont lives is around 50 years old and is just one of many buildings in the neighborhood showing its age.
“It should be noted that inflationary pressures are crippling the sector,” LandlordBC CEO David Hutniak said in an email, pointing to rising costs for labor and building materials. “We understand that renters, like all British Columbians, face challenges these days, but safe and healthy rental housing comes at a cost.
LandlordBC worked with the province to create the ARI process and described the system as “transparent and highly prescriptive, with eligible expenses defined.”
Tenants also have the option of denying an ARI claim by challenging the eligibility of capital expenditures through the Residential Tenancies Branch — something Pont and some of its neighbors are preparing to do this fall.
According to the province, there have been 122 requests for additional rent increases since the system launched in July 2021. Only 31 requests were processed by the Residential Tenancies Branch, and six of those were ultimately denied.
LAWYERS ARGUE THE SYSTEM AGAINST TENANTS
Patterson told CTV News the dispute resolution process can be frustrating for tenants, who in some cases must try to prove a repair could have been made for less if a landlord hadn’t postponed it — a a difficult feat even for those with resources and time to devote to combat.
He also argued that the wording of the regulations regarding what counts as a qualifying capital expenditure is “incredibly vague”.
According to regulationsowners can only apply for an ARI when installing, repairing or replacing a “major system” or “major component”, the former being defined as “an electrical system, mechanical system, a structural system or similar system that is an integral part of the residential property or to provide services to tenants and occupants.
Patterson said he saw a landlord apply for ARI to cover the cost of building additional bike storage, which some tenants might consider an amenity – and which would be of little use to a non-cyclist. .
“There’s also some very weird wording in the policy that seems to imply that you can’t get a rent increase if you’re only doing cosmetic work, but if you’re doing cosmetic work at the same time, that can be included. “, added Patterson. .
Moreover, there are complicated situations that do not seem to have been foreseen by the legislators. In recent decisionan arbitrator determined that a gate repair could be funded by a rent increase, even though the gate is apparently also used by the landlord and other non-tenants.
“In response to tenants’ statements that more than tenants use the main door, I note that this is not a factor taken into account (under legislation regarding additional rent increases) and I decline to consider it as a factor,” the decision reads. .
Patterson said he understands the benefits of incentivizing homeowners to keep their properties safe and well-maintained, but noted it can also be achieved through grants and tax breaks. He suggested the province reconsider ARI policy, at least to limit the scope of allowable expenses and ensure that additional rent increases are time-limited rather than permanent.
“We’re not asking those who have the least to subsidize those who have the most,” he said. “We have to take a break. We have to go back to the drawing board.