Vacancy controls for private SROs could slow property speculators and declining affordability: report
A report from city staff says vacancy controls would help maintain the affordability of low income housing
Property speculation and loss of affordability are in the crosshairs of a report going to Vancouver city council next week that seeks to address problems driving Vancouver's housing crisis as it relates to some of the city's most vulnerable citizens living in private single room accommodation (SRA).
The proposed new SRA "vacancy control" policy would tie rent costs to the unit, not to the renter, effectively preventing landlords from hiking up rents beyond a set limit when one occupant leaves and another moves in.
Currently, there is no constraint on rent increases between occupancies for SRAs.
The report says the proposed regulations will put a drag on speculators, renovictions and renter displacement, while addressing "the ongoing erosion of affordability."
"Vacancy control would decrease the attractiveness of SRA-designated properties to speculative investment, as its model is based on significantly increasing rents between tenancies over a short period of time," reads the report.
"It could also increase tenant stability as there is less incentive from the landlord's perspective to end a tenancy as the next tenant's starting rent is regulated."
One of the vacancy control options discussed would allow an increase of five per cent on units that rented for more than $500 per month during a change of tenants.
Units that rent for less than $500 per month would be allowed a 10 per cent increase.
According to the report, rapid rent increases often follow the sale of a private, single room occupancy building (SRO) to new investors.
The reports says in the case of 39 private SROs that sold between 2010 and 2019, rents in those buildings increased at an average annual rate of 12 per cent.
That compares to the two per cent average annual increase seen in SROs that did not change hands.
According to the report, the average monthly cost of an SRA unit in 2019 was $561, well above the monthly shelter rate of $375, and the equivalent of 79 per cent of the monthly income of a person on assistance.
Only 77 units, or approximately one per cent of Vancouver's SRA rented for $375 per month in 2019.
"The reduction in affordability in the SRA stock has had significant impacts on those with very low incomes and few other choices in the private rental market and presents a significant challenge for government needing to respond to homelessness and its associated impacts," says the report.
Because many SROs are older and in need of upgrading, the proposal explores a rent relaxation mechanism that would allow landlords to charge limited rent increases to existing tenants in the event of significant capital investments or extraordinary operating expenses.
The report will be presented at city council on Nov. 17.