It made sense at the time, Nathan Illerbrun says.
The father of two had heard horror stories about landlords not being able to evict tenants who were destroying their property. Illerbrun assumed the fixed-term rental, which held a clause to vacate the house after a year, would fall to a month-to-month agreement once he and his family of four proved that they were good renters.
That was in 2012. The market was on the side of renters. After viewing 20 places, Illerbrun decided the 1970s house in Valleycliffe was the best fit. This year, with the rental vacancy rate at zero per cent in Squamish and neighbouring houses selling for $600,000 or more, Illerbrun’s landlord forewarned him to expect a rent increase.
“I was thinking 100 or 200 bucks,” Illerbrun says. “You know, something you can budget for. It was 25 per cent.”
Illerbrun phoned the provincial Residential Tenancy Branch looking for answers. The reply was not good news for him and his family. In month-to-month or periodic tenancies, landlords are allowed to raise the rent once every 12 months by an amount set out by the Residential Tenancy Regulation. This year that rate, which is calculated by adding inflation to 2 per cent, is 2.5 per cent.
But a fixed-term, often referred to as a lease, doesn’t necessarily offer the same kind of protection for renters. While the agreement can transition to a periodic tenancy, it’s more typical that it doesn’t. The fixed-term tenancy states that a tenant must move out at the end of a term, but it allows for the tenant to stay if they sign a new agreement.
“I was screwed. I looked around for other rentals. I have to stay in Squamish,” says Illerbrun, who works in town. He had already bought a house for his family outside of town and was paying a mortgage.
Illerbrun’s story is one of thousands such cases that led Russ Godfrey to quit his full-time job at the Tenant Resource and Advisory Centre (TRAC).
“I was too demoralized,” says Godfrey, who now does legal education on Vancouver Island and is TRAC’s media spokesperson. “I can’t tell another family, ‘I am sorry, but you’re going to have to leave your house, and I don’t know where you can go.’”
Godfrey has practised law in the housing arena for 24 years. Fixed-term rental agreements have always been around, but B.C.’s hot real estate market has boosted the agreements popularity with landlords, pushing the issue to the surface, he says.
“They’re everywhere. That is why the rent is going so high.”
The fixed-term agreement circumnavigates what B.C.’s Residential Tenancy Act sets out to do, which is balance rights between tenants and landlords, Godfrey says. Currently the scale is completely out of line, he says, with landlords holding all the power.
“Right now they can do whatever they want.”
The only thing that can correct the inbalance is a legislative change addressing the popular fixed-term agreements, Godfrey notes, but he adds that he isn’t hopeful. For years TRAC has been knocking on the doors of the Ministry of Natural Gas Development and Ministry Responsible for Housing, a ministry helmed by Liberal MLA Rich Coleman. The efforts have fallen on deaf ears, Godfrey says.
“That says it all, ‘ministry responsible for housing.’ In a time in which we have such a huge housing crunch, we don’t even have a ministry dedicated to housing,” Godfrey says.
Fixed-term tenancy agreements are a form of tenancy that balances the needs of landlords and tenants, providing security of tenure for renters and guaranteed income for landlords, the ministry responsible for housing replied in an email to The Squamish Chief. The agreement set out a specific period of time that cannot be ended earlier than the date fixed except as outlined by the relevant legislation.
“Fixed-term tenancy agreements must determine what happens at the end of the fixed term,” the ministry’s response stated. “A ‘move out’ clause could be included requiring the tenant to move out on the date the agreement ends, the tenancy could continue on a month-to-month basis or the tenant and landlord could enter into a new tenancy agreement.”
The ministry did not respond to The Squamish Chief’s questions regarding Coleman’s views on the issue. However, the email did state that the ministry is not anticipating changes to the Residential Tenancy Act at this time.
Fixed-term rentals do hold benefits, says Michael Roblin, the owner of Dynamic Property Management. With ‘sold’ signs being placed in front of Squamish’s houses on a daily basis, rental leases ensure tenants cannot be asked to vacate the property until the end of the rental term if a house sells.
“We certainly recommend to our clients that they do a one-year lease,” Roblin says.
The popularity of the different rental agreements changes with market conditions, he notes. In Squamish, from 2009 to 2011, landlords were at the mercy of what tenants preferred.
The tables have turned. This week, Roblin only has one vacant rental, a unit with one bedroom and a den. What was renting for $1,400 a year ago could fetch a couple of hundred dollars more today, he notes.
Roblin says he knows of cases in which existing residents are being forced to leave town after houses they were renting have been sold. People wanting to move to Squamish are also having trouble finding a place to stay.
Until more inventory comes onto the market, Roblin says he doesn’t see that changing.
“Unfortunately it is not a good time to be a tenant in Squamish.”
