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To Fund Repairs, BC Landlords Can Raise the Rent

‘It really amounts to… a transfer of wealth from tenants to landlords,’ says one tenant advocate.

Jen St. Denis 15 Jul 2022TheTyee.ca

Jen St. Denis is The Tyee’s Downtown Eastside reporter. Find her on Twitter @JenStDen.

Tenants in a West End apartment building say they were caught off-guard when their property manager told them their landlord was applying for as much as a three per cent rent increase to pay for repairs to their building’s parkade.

Joani Bisson and Cameron LeBlanc are two of eight tenants in their building, 1460 Barclay St., fighting the increase. They say it’s not fair for tenants to have to pay for maintenance when they have no ownership in the building or any say in what work gets done.

In 2018, the BC NDP lowered the annual allowable rent increase from two per cent plus inflation to just inflation. As a trade-off to landlords, the government introduced a new way for B.C. landlords to cover the cost of major repairs: property owners can apply to the Residential Tenancy Branch for a rent increase allowance for capital expenditures. The permanent rent increase can be as much as three per cent, in addition to the annual allowable rent increase.

“Reading through this new capital expenditure thing, it really is designed to help prevent renoviction by giving landlords who are financially struggling something to help them recoup the cost of operation,” said LeBlanc.

“It’s designed for that, but there’s nothing in there to prevent all landlords from taking advantage from this new law.”

LeBlanc said one reason he’s so alarmed is that the rent increase is permanent. Once a landlord successfully applies for the increase, the new cost of rent will never go down, even after the repair is paid off.

“Effectively, the repair can become profitable,” said Robert Patterson, a tenant advocate at B.C.’s Tenant Resource and Advisory Centre. “It’s not just a matter of covering your cost.”

‘A transfer of wealth’

Many of B.C.’s rental apartment buildings are now 40 to 60-years-old and are in dire need of repairs. Landlords have complained that lowering the annual allowable rent increase has made it more difficult to run buildings.

But the problem with the capital expenditure allowance is that it puts the burden on tenants to prove the repairs weren’t done, weren’t needed or don’t fall into the categories allowed, said Patterson. Tenants can apply for something called a summons of evidence at the Residential Tenancy Branch to get more information from their landlords. But in Patterson’s experience, RTB arbitrators rarely exercise that provision.

“What it really amounts to is a transfer of wealth from tenants to landlords,” Patterson said. “Ultimately, who gains the benefit of those upgrades? Sure, the tenants can enjoy them, but it's the landlord's equity that increases as a result.”

B.C. landlords who want to apply for the increase have to apply to the RTB, and tenants must be informed and are able to dispute the increase at a series of hearings.

To be eligible, the capital expenditures have to fall into one of three categories:

Bisson and LeBlanc have been told that the rent increase will cover repairs to the parkade in their building. But when they asked for proof, they were given several invoices they say didn’t provide much information or context.

“One of the things that’s not eligible is repairs due to lack of maintenance,” LeBlanc said, adding it’s going to be difficult for the tenants to try to figure out whether or not the parkade had to be repaired because regular maintenance wasn’t being done.

LeBlanc and Bisson’s property manager did not respond to questions sent by The Tyee.

There are other concerning loopholes, Patterson said. Under the “improving security” category, landlords don’t need to prove that there was a security problem before the repair was done. “Replacing lights in the parking garage” — something the landlord should be doing as part of regular maintenance — is included as an example of the kind of repair that is eligible under the security category.

“There's also this weird line that says, ‘you can't do these for cosmetic upgrades, but if a cosmetic upgrade happens in the course of it, that cosmetic upgrade can then become eligible,’” Patterson said. That can push up the cost of the eligible repair, and the rent increase.

For renters, fewer protections

Bisson, who moved into the building in 2011 and pays $1,500 a month for a one-bedroom apartment, said there’s also no assurance that her landlord won’t apply again for another similar rent increase in another few years. LeBlanc moved into the building in 2006, and pays $1,280 per month.

In strata condos or housing co-operatives, there are governance rules that allow for owners or residents to discuss and understand repairs that are needed, and the options for funding them. Stratas are required to file depreciation reports with information about the state of the building, while co-ops must have detailed plans to anticipate upcoming maintenance needs.

There are pros and cons to those models: when it works, residents feel a sense of ownership in their buildings and understand the challenges coming up in the future. But it can backfire when strata councils or co-op boards delay needed repairs, leading to worsening problems and higher maintenance costs in the future.

Renters don’t have the same ability to get information about the repairs that are needed, or ask whether problems are happening now because maintenance was delayed in the past.

Patterson said that problem could be solved by putting the entire burden of proof on landlords to provide evidence about the work being done. And instead of turning to rent increases to fund repairs, policies like offering tax breaks or other incentives to landlords who keep their buildings in good repair could be a fairer way to make sure rental buildings are maintained properly.

“Stratas and co-ops are built on democratic principles: if you live somewhere, if you have a stake in that housing, you should have to say,” Patterson said.

“Why are tenants any different? Why do we value those principles in some kinds of housing and not others?”

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We hope you continue to follow along with our column!

Remember, if you’ve got housing stories of your own — whether it’s market hijinks, tenancy horrors or survival tips — you can email us at housing@thetyee.ca. We’d love to hear from you.  [Tyee]

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