B.C. Supreme Court quashes Vancouver bylaws limiting rent increase between single occupancy housing tenancies

A ruling from the Supreme Court of B.C. has quashed bylaws put in place by the City of Vancouver in December to limit how much property owners could increase the rents of single room accommodation (SRA) in between tenancies.

A ruling issued this week by Justice Karen F. Douglas found that the city, under its Vancouver Charter, does not have the authority to set how a property owner changes rent for what are also known as SROs — single room occupancy housing — when a tenant moves out, because of conflicts with the provincial Residential Tenancy Act.

The new rent rules from Vancouver were enacted late last year, and were meant to keep rents low for housing designed to provide affordable accommodation for people who have very low incomes and face significant barriers. As of 2019, there were approximately 6,680 open SRA rooms across 157 SRA buildings in the downtown core.

In January, two property owners independently brought lawsuits against the city, arguing that the city over reached its authority. 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 who are already subject to regulation by the Province, directed at the same dominant purpose, even if it is possible to comply with both legislative schemes," wrote Douglas.

Councillor Jean Swanson brought the original motion to council and said the measures were meant to stop landlords from doubling or even tripling prices for what are mostly three-by-three-metre rooms with no kitchen and shared bathrooms.

For rooms renting at or above $500 per month, rent could only be increased at tenancy turnover by the current inflation rate for Vancouver, while for rooms renting above $375 and less than $500 per month, rent could only be increased at tenancy turnover by the current inflation rate plus 5 per cent.

On Friday, Swanson said she was disappointed and surprised the court had found the new bylaws unlawful.

"I think it's devastating and I think homelessness is going to increase," she said.

In a statement, the city said it is "disappointed with this decision," and is considering an appeal.

Both petitioners declined to comment on the ruling.

Rent increases not keeping up with rising costs

One of the property owners which brought the lawsuit against the city, Pender Lodge Holdings Ltd, owns an SRO building in East Vancouver. It has 30 units, which are rented at an average rate of $563 per month. 

Pender Lodge told the court it had not raised rents for any tenant since 2017 but has increased rent between tenancies.

The cumulative average of these rental increases is approximately 2.5 per cent per year, but those increases have not covered the building's fixed costs, which according to the lawsuit, increased by nearly 35 per cent over the last five years.

Maintenance and upgrades

A numbered company called 0733603 B.C. Ltd. brought the other petition. It owns an SRA building in Gastown, which has 60 micro-suites.

They are small, high-end, self-contained living spaces, each with a separate washroom, shower, and kitchen and rent for between $800 and $1,200 a month.

The company said in court that tenancies are typically relatively short and renters are often students, young professionals and temporary workers.

It also said that the property is close to 60 years old and requires significant maintenance and upgrading.

Ultra vires

The crux of their legal arguments about the rent increase-fixing bylaws was that the city did not reasonably interpret its legislative authority to areas already regulated by the province.

The provincial Residential Tenancy Act (RTA) regulates rent increases during tenancies, but "is silent regarding rent increases between tenancies," according to the ruling.

In 2018, a rental housing task force determined that rent control tied to the unit would have the unintended consequence of reducing affordable rental stock or reducing investment in needed repairs.

Ultimately, Douglas ruled that the Vancouver rent control bylaws were ultra vires — or beyond the power — of the city, and ordered them to be quashed.

She also ordered the city to destroy any information and documentation it has collected in relation to the bylaws and awarded costs to the two petitioners.