A British Columbia Supreme Court ruling struck down bylaws introduced by the City of Vancouver in December to limit how much property owners can increase single room occupancy (SRA) rents between tenancies.
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 modifies the rent for what are also known as SROs — single-room occupancy units — when a tenant evicted due to conflict with the provincial Tenancy Act.
Vancouver’s new rent rules were introduced late last year and were intended to keep rents low for housing designed to provide affordable housing for people with very low incomes and facing significant barriers. As of 2019, there were approximately 6,680 open SRA rooms in 157 SRA buildings in the city centre.
In January, two property owners independently filed lawsuits against the city, alleging the city had overreached. The two petitions were heard jointly in April.
“I agree with the petitioners that the city is prohibited from legislating by using its business licensing power to regulate persons already subject to provincial regulation aimed at the same dominant objective, even if it is possible to both legislative schemes are followed,” Douglas wrote.
Councilor Jean Swanson brought the original proposal to the council and said the measures were intended to stop landlords from doubling or even tripling prices for what were mostly three-by-three-metre rooms without kitchens and shared bathrooms.
Vancouver City Councilor Gene Swanson is pictured outside his home in Burnaby, British Columbia on Monday, December 30, 2019. (Ben Nelms/CBC)
For rooms that rent at or above $500 per month, the rent can only be increased upon tenant turnover by the current rate of inflation for Vancouver, while for rooms that rent at or above $375 and less than $500 per month, the rent can be increased only at the turnover of the tenants with the current inflation plus 5 percent.
On Friday, Swanson said she was disappointed and surprised that the court found the new statute illegal.
“I think it’s devastating and I think homelessness is going to increase,” she said.
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In a statement, the city said it was “disappointed in this decision” and was considering an appeal.
Both petitioners declined to comment on the ruling.
The rent increase has not kept pace with rising costs
One of the property owners who brought the case against the city, Pender Lodge Holdings Ltd, owns an SRO building in East Vancouver. It has 30 units that rent at an average rate of $563 per month.
Pender Lodge told the court it had not raised rents for any tenant since 2017, but had increased the rent between tenancies.
The cumulative average of those rent increases is roughly 2.5 percent per year, but those increases have not covered the building’s fixed costs, which the suit says have increased nearly 35 percent over the past five years.
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Company number 0733603 BC Ltd. filed the other petition. It owns an SRA building in Gastown that has 60 micro-apartments.
They are small, self-contained, high-end living quarters, each with a separate toilet, shower and kitchen, and rent for between $800 and $1,200 a month.
The company said in court that leases are typically relatively short and tenants are often students, young professionals and temporary workers.
The property is also said to be nearly 60 years old and in need of significant maintenance and renovation.
Ultra vires
The crux of their legal arguments regarding the rent increase bylaws was that the city was not reasonably interpreting its legislative authority over areas already regulated by the province.
The province’s Residential Tenancies Act (RTA) regulates rent increases during a tenancy, but is “silent on rent increases between tenancies,” according to the decision.
In 2018, a rental housing task force found that unit-related rent controls would have the unintended consequence of reducing the affordable rental stock or reducing investment in needed repairs.
Ultimately, Douglas ruled that Vancouver’s rent control bylaws were ultra vires — or beyond the city’s authority — and ordered them repealed.
She also ordered the city to destroy any information and documentation it had collected related to the bylaw and awarded costs to both petitioners.
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