Landlords 'gaming the system' with fixed-term leases could face crackdown

B.C.'s housing minister says he's looking at new legislation to stop landlords from "gaming the system" with fixed-term leases.

"I don't like this flipping over of leases just for the purpose of raising the rent on people, said Housing Minister Rich Coleman this week.

"There appears to be a gaming of the system, and we want to stop this," he said.

Fixed-term tenancies allow both tenants and landlords to set a specific length of time for a lease, after which the lease ends, and the tenant must either move out or negotiate a new lease.

But rental advocates and the NDP have argued some landlords are using them as a loophole to skirt the law restricting rent increases to limits fixed annually by the province.

That's because unlike month-to-month tenancies, there are no restrictions on how much the rent can be raised between leases, even if the same tenant signs the lease and remains in the suite. 

Tenants unwittingly sign the fixed-terms leases when they move in, because they are desperate to secure any housing in the province's extremely tight rental market.

But at the end of the lease, if they want to remain in the rental, they have to sign another lease with no protection from a rent increase.

Landlords have rights too

But Coleman also said it remains important to balance the rights of landlords as well, who often use fixed-term tenancies for legitimate reasons.

He notes fixed-term leases are legal contracts that provide security of tenure for tenants and guaranteed income for landlords.

And he notes, while these days the focus is on rising rents and tenant evictions, times can change, and landlords need legal protection sometimes too.

"The reverse can happen too. In the 80s people were walking away from leases, and landlords were having to chase them down," he said.

Earlier this year, Coleman also indicated he was working on other changes to update the Residential Tenancy Act, including bringing in larger financial penalties for those who break the rules.

Terms fixed in the act

According to the Residential Tenancy Act:

• A fixed-term tenancy agreement cannot be ended earlier than the date fixed unless both parties agree in writing or are ordered by an arbitrator, except in special circumstances.
• If the agreement contains a "move out" clause that was agreed to by the tenant and landlord, the tenancy will end at the conclusion of the fixed term.
• If parties choose to enter into a new contract, then a new tenancy begins with whatever terms they have agreed upon.
• Rent increases between tenancies are not limited by the current legislative provisions.

Read the Residential Tenancy Act

Download a residential lease (pdf)