VANCOUVER — Adam Saint had planned to stay in his West End apartment for years. It was in a funky heritage building with renovated interiors, just off Davie Street and a few blocks from the beach.

But as the end of his first year approached, the building’s owner Gordon Nelson Inc. told him that the rent for his one-bedroom suite would jump from $1,550 to $1,850 a month if he wanted to stay — an increase of close to 20 per cent.

“It was a real disappointment,” Saint said.

It was especially frustrating because it’s completely legal. That’s because management at Gordon Nelson insisted he sign a fixed-term lease for the apartment at 1209 Jervis St., taking advantage of what some describe as a troubling loophole in the Residential Tenancy Act.

In B.C., landlords who use month-to-month rental agreements must abide by annual caps on rent increases — this year, it was 2.5 per cent. Landlords who uses fixed-term leases that include “move out” clauses, on the other hand, can raise rents by whatever amount they chooses once the term is up.

Saint and his girlfriend considered signing on for a second year, until they learned that their next lease would be fixed-term as well — leaving them open to another massive increase in a year.

“That was the breaking point,” Saint said.

He decided to move out at the end of August. He and his girlfriend bought a place in the West End, but he worries about fellow tenants who may not have that option.

The fixed-term lease has been an issue for tenants since the Residential Tenancy Act came into effect in 2003, according to Tenant Resource and Advisory Centre advocate Russ Godfrey.

“It’s just disgusting. There’s nothing illegal about it but it’s one of the reasons why the rents in the Lower Mainland are just skyrocketing,” he said.

“Quite frankly, it is the way landlords circumvent rent control.”

Godfrey believes the problem could be solved with an order in council that would require landlords to adhere to rent control limits even when they’re using fixed-term leases.

“The government has been completely silent on this,” he said.

Spencer Chandra Herbert, the NDP MLA for Vancouver West End, said another option would be requiring landlords to switch over to a month-to-month lease after the fixed term is up.

“It just seems like using a loophole to try to gouge money out of people, and that’s not how the law is supposed to work,” he said.

The problem isn’t a new one, but the complaints seem to come in waves, he added. This is the first he’s heard in at least six months: “All it takes is one landlord who tries to game the system.”

Rich Coleman, the minister responsible for housing, was unavailable to comment Thursday.

Instead, a government spokeswoman responded with an email, attributed to the RTB’s executive director Greg Steves, which explained how fixed-term tenancy agreements work. The email said these leases, “balance the needs and interests of landlords and tenants, providing security of tenure for tenants and guaranteed income for landlords.”

When asked if the province has any plans to close the loophole, Steves wrote: “It is not a loophole, the tenancy ends at the end of the agreed-upon term.”

Saint said he joins a long line of tenants who have left the building after just one year.

When they first moved into the building, Saint and his girlfriend made friends with several of their neighbours and they all brought their dogs to play together in Nelson Park. That doesn’t happen anymore.

“In the end, it just wasn’t really sustainable because everybody left,” he said.

When first asked about the nearly 20-per-cent surge in Saint’s rent, Gordon Nelson co-owner Chris Nelson said, “That seems extremely high … I don’t think that’s right.”

But he later confirmed the increase, and said it was justified because of the high demand for one-bedroom suites in the building.

“I was surprised by that number. The range is more like 0-10 per cent on average,” Nelson said.

Gordon Nelson has been using fixed-term leases for three of its four buildings for the last 12 or 18 months.

Those three buildings are all in the West End, where a new community plan has opened up the possibility of redevelopment on sites where low-rise buildings now stand. The original intention of using a fixed-term leases, Nelson claimed, was to avoid “hard feelings” if he decided to redevelop the buildings.

But there was an unintended benefit as well. The fixed-term leases allow the landlord to get rid of tenants who hold the occasional loud party or pay their rent late every few months — lower-level problems that may not meet the legal standard for eviction.

Nelson acknowledged that fixed-term agreements also allow for large rent increases, but said sometimes his company has chosen not to raise rents at all.

Saint’s story is a good example for others to learn from, Nelson added.

“We do think it’s a good education opportunity, to make sure that tenants know that, when they’re signing a fixed-term tenancy, that these are the circumstances,” he said.

This isn’t the first time Gordon Nelson has come under fire for unusually large rent increases.

The management company was the subject of a series of legal challenges beginning in 2008 when it tried to jack up rents by 73 per cent on another West End apartment building. Residents of the Seafield Apartments at 1436 Pendrell St. challenged the spike with the Residential Tenancy Branch, which lowered the increase to 38 per cent.

After the B.C. Supreme Court said that even that was too much — and the RTB opted to throw out the increase entirely — Gordon Nelson tried to evict the tenants. That earned the company a strongly worded reprimand from the RTB, which overturned the eviction notices.



Read more: West End tenants cry foul over high rent hikes

The meltdown in China's stock markets, which experienced the biggest one-day dive since 2007, likely won't have much of a ripple effect in Vancouver's red hot real estate market.

Dubbed "Black Monday" by Chinese state media, stocks in Shanghai's main index closed down eight-and-a-half percent.

But according to some experts, even with markets plummeting, Vancouver real estate remains a safe and secure place to park money.

China stock market crisis could lead to more real estate investment in B.C.
Tung Chan, former TD Bank vice president, says history has shown that market meltdowns in China have little effect in slowing Asian investment in Vancouver real estate.

"The trickle down effect to Vancouver would be minimal," said Chan, in a phone interview. "We expect to see a slowdown, but not of people selling and liquidating assets (in Vancouver)."

Chan added that the overriding influence is the perception that Vancouver real estate remains a safe place to invest, regardless of stock market conditions.

"If the economy in China is bad, people send their nest egg here because it's a safer place. If the China stock market is booming, they send their extra money here."

Chan added the current exchange rate is working to increase the appeal of Vancouver real estate to Asian investors.

"The Canadian dollar has depreciated quite bit vis à vis the RMB. That makes it more favourable," he said. "I've heard people bidding up real estate because their money goes further because of the exchange."