British Columbia

Landlord's attempt to bypass provincial rent cap struck down

A clause added to the end of a rental agreement said tenants could be charged seven per cent over the annual allowable rent increase set by the province.

Residential Tenancy Branch says landlord can't charge an additional 7% to the annual allowable rent increase

A landlord who added a clause to rental agreements in an attempt to bypass provincial rent controls has been told the practice is illegal. (Paul Sakuma/Associated Press)

A North Vancouver landlord who attempted to circumvent B.C.'s rent control cap has been forced to change his ways.

The landlord, who reportedly operates a number of Metro Vancouver properties, simply added a clause to the end of his rental agreements stating rents could be raised annually by the provincial maximum plus an additional seven per cent.

The 2019 provincial cap is 2.5 per cent, meaning he could have raised rents by over nine per cent this year — had the clause not been challenged.

The matter was brought to the office of North Vancouver-Lonsdale MLA Bowinn Ma by a constituent trying to navigate the region's tight rental market. It was then forwarded to the Ministry of Municipal Affairs. 

"We asked about ... the consequences of having that in a residential tenancy agreement, because if every landlord started to use a [similar] clause, it would basically render rent controls pointless," said Ma.

The matter ended up with the Residential Tenancy Branch.

Scott McGregor, director of the RTB compliance and enforcement unit, said that when his office contacted the landlord, he explained the extra seven per cent would only be charged in the event he needed to recoup the cost of something major — like a roof that needed replacing.

For Rent sign outside property in Vancouver's West End. (David Horemans/CBC)

"We said we understand, but you can't do that. It's not permitted under the law," said McGregor.

The landlord agreed to drop the clause from the rental contract and from a number of contracts that had already been signed by other tenants.

McGregor say his office has investigated other cases where landlords get renters to sign mutual agreements to bypass the Residential Tenancy Act.

In one case, a landlord convinced tenants to agree to a large rent increase because of plans to do major upgrades. The renovations never happened.

In another case, a large property management company was collecting security deposits from prospective tenants at the time of application — money they kept even if the tenant changed their mind or found another place to live. 

"This company was keeping the deposit, which, in some cases, could be quite significant," said McGregor. "If the rent is $1,600  a month and they've provided an $800 security deposit, that's a fair chunk of money to walk away from."

The company was told to stop the practice and it did.

McGregor says most of the cases his office investigates don't involve unscrupulous people, but rather those who may not fully understand the laws.

Ma says there is a clause in the Residential Tenancy Act that allows renters and landlords to agree on rent increases above those set by the government.

"But usually those are on a case-by-case, one time basis," she said.

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