Important News for Landlords and Property Investors
Changes to tenancy laws, including amendments that limit the use of vacate clauses in fixed-term tenancy agreements and that limit rent increases between agreements with the same tenant take effect December 11, 2017
The Provincial NDP Government has just announced
changes to the Residential Tenancy Act – important news for property investors and landlords. As a landlord this means:1. Fix term tenancies/leases – new rules now apply providing tenants with more protection and limiting a landlords options for termination of tenancy and the raising of rents2. The only way to end a tenancy is for unpaid rent or utilities or if a family member or yourself intends to occupy the rental unit.3. These changes are retroactive and apply to all tenancy agreement in the Province of BC as of December 11th, 2017. These changes supersede any previous agreements you have in place (where the previous agreement may contravene the updated Act).This link will take you the Residential Tenancy Office website FAQ section. Familiarize yourself with the new rules so you don’t run into any issues.
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What changes have been made to B.C.’s tenancy laws?
Changes to the legislation include limiting the use of vacate clauses in new and existing fixed-term tenancy agreements, limiting rent increases between fixed term tenancy agreements with the same tenant, and strengthening the ability of the Residential Tenancy Branch to investigate and levy administrative penalties for serious repeat and deliberate non-compliance with tenancy laws or orders.
What are the changes related to Fixed-Term Tenancies?
A vacate clause requires a tenant to move out on the date the agreement ends. Landlords will no longer be able to include a “vacate” clause in a fixed-term tenancy agreement except in certain circumstances. These new rules will apply to both new and existing tenancy agreements.
Unless the landlord and tenant agree to another fixed term, the tenancy will automatically continue as a month-to-month tenancy under the same terms as the original agreement. This type of tenancy continues until one party serves notice or they both agree to end the tenancy.
In what kind of circumstances will a landlord still be able to use a vacate clause?
Effective December 11, 2017, fixed term tenancy agreements can no longer include a vacate clause requiring a tenant to move out at the end of the term unless:• The tenancy agreement is a sublease agreement; or• The tenancy is a fixed term tenancy in circumstances prescribed in section 13.1 of the Residential Tenancy Regulation. This Regulation specifies situations where a landlord or landlord’s close family member plans in good faith to occupy the rental unit
The ministry will monitor the use of these provisions, continue to consult with key stakeholders and may add new circumstances as necessary.
What are the changes related to rent increases?
A rent increase for a tenant remaining in a rental unit is limited to the maximum annual allowable amount and can only be increased once every 12 months. Rent can no longer be increased above that amount between tenancy agreements with the same tenant. Landlords must provide tenants with three full rental months’ notice of a rent increase and use the approved form.
Landlords are no longer able to apply for an additional rent increase on the basis that the rent is significantly lower than other similar rental units in the same geographic area.
I have an existing fixed-term tenancy agreement with a vacancy clause. What should I do?
You may want to have a discussion with your tenant or landlord regarding the intended use of the rental unit at the end of the fixed-term.
If you are a tenant, you will not be required to move out at the end of the term unless you are in a sublease agreement, or the landlord meets the specific circumstances identified in the Residential Tenancy Regulation. This Regulation specifies a situation where a landlord or a landlord’s close family member plans in good faith to occupy the rental unit (for example, if the landlord has rented out their home during an extended absence for work, school or travel but has firm plans to return on a particular date.
A tenant who wants to move out on the date originally agreed to in the tenancy agreement will need to provide one month written notice to the landlord. The tenant and landlord may also agree to end the tenancy on the date originally identified as the end of the term. A mutual agreement to end a tenancy (PDF) must be in writing and agreed to by both parties.
If you are a landlord and you intend to enforce the vacate clause under the specific circumstances identified in the Act or Regulation, you should advise your tenant. If the tenant doesn’t agree in writing to mutually end the tenancy and move out at the end of the term, you will need to apply for an order of possession through the Residential Tenancy Branch. At the hearing, the onus will be on you to clearly demonstrate to the arbitrator how you meet the allowable circumstances for a vacate clause.
Are there any other situations where a vacate clause in an existing tenancy agreement can still be enforced?
There are two additional situations involving existing fixed-term tenancy agreements where a vacate clause can still be enforced. If, before the day the legislative amendments were introduced (October 26, 2017):
- A landlord, expecting their tenant to move out at the end of the term, had already entered into a tenancy agreement with a new tenant; or
- A landlord was granted an order of possession requiring a tenant to vacate the unit, but the possession order takes effect after December 11, 2017.
What about landlords who have been relying on fixed-term tenancy agreements to protect against bad tenants?
The Residential Tenancy Act is intended to protect both landlord and tenants. There are options available through the Residential Tenancy Branch to help landlords deal with problem tenants. It is important that both landlords and tenants know their rights and obligations under the Act.
How can a tenancy end without the vacate clause?
Aside from removing the option to use a vacate clause, the rules around ending a tenancy have not changed. For example, a tenant can end a tenancy by providing the landlord with at least one rental month written notice. A Residential Tenancy Branch arbitrator can order the end of a tenancy for a breach of a tenancy agreement by either party. Landlords and tenants can mutually agree to end a tenancy, which must be documented in writing. A mutual agreement to end a tenancy(PDF) is recommended. Landlords can also end a tenancy by serving the tenant one of the following notices to end tenancy:
- 10 Day Notice to End Tenancy for unpaid rent or utilities
- One Month Notice to End Tenancy for cause or when the tenant’s employment has ended with the landlord (this applies when the rental unit is provided as a condition of employment).
- Two Month Notice to End Tenancy for landlord’s use or when the tenant no longer qualifies for the subsidized rental unit.
Why are you making these changes?
The B.C. government is committed to doing more to protect renters in B.C. It is important that tenants have the sense of security they deserve when signing a fixed-term rental lease. By closing the so-called fixed-term lease loophole, landlords will no longer be able to bypass rent control.
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