Affordability. The real estate boom. Housing costs. Economic growth. Developer opportunity. In British Columbia, these political issues dominated the recent provincial election.
In the City of Vancouver, housing issues are even closer to the heart of current politics. Hot-button real estate issues facing Mayor Robertson’s council have caused the City to attempt to manage and regulate the lucrative, booming development industry. To this end, the City has taken a variety of steps to address rental housing issues, including implementing community plans to manage development. One relatively recent City Hall initiative developers now face is Vancouver’s Tenant Relocation and Protection Policy (TRPP).
Established in December 2015 and amended in February 2016, the policy imposes strict tenant relocation requirements on developers seeking development permits for occupied rental buildings in Vancouver. As development permits are required for major renovations and all redevelopment, including redevelopment into condo projects, any developer in the current real estate market seeking to capitalize on newly acquired properties or those they already own must comply.
The tenant relocation policy is an additional set of regulations over and above B.C.’s Residential Tenancy Act, which requires a landlord ending a tenancy to redevelop a property to give two months’ notice and one month free rent. The policy imposes a variety of obligations on landlords, including:
- complying strictly with all TRPP requirements, both substantive and administrative, in pre-permitting, permitting, construction and occupancy stages of a redevelopment or renovation project;
- advising tenants of redevelopment plans well in advance of applying for permits, much less starting work;
- paying compensation depending on length of tenancy, up to 6 months of total rent compensation;
- paying moving costs up to $1,000 for each rental unit;
- in certain zoning areas, offering a right of first refusal in the redeveloped building at 20% less than market rate once construction is finished and an occupancy permit has been issued; and
- working closely with tenants, especially those identified as “vulnerable tenants,” to assist them in finding similar suitable housing at average Vancouver rental rates established by Canada Mortgage and Housing Corporation (CMHC) for the applicable neighbourhood.
The problem? In most neighbourhoods, CMHC average Vancouver rents simply aren’t available for new tenancies. For this reason and others, complying with the TRPP can be a difficult and costly process for landlords. Dedicated internal staff and external consultants can be necessary in order to manage the process in a timely manner.
Other challenges also exist. Because the City of Vancouver has no power to assist a landlord in terminating a tenancy, even when the stringent requirements of the relocation policy have been met, landlords can be forced to resort to Residential Tenancy Branch (RTB) processes to effectively terminate the tenancy of a difficult tenant.
As many of us know, RTB processes can take months, if not years, which can create massive and costly problems for a construction schedule. For example, a developer could have all necessary TRPP, demolition and development permits in place, offer a tenant a compensation package well over and above the legal requirements, and still face construction delays if the tenant refuses to move.
Further, the RTB can be difficult to predict, and has in the past refused to grant eviction orders even where extensive renovations have been planned. But developers do have legal options at both the Residential Tenancy Branch and in court in the event a dispute is going sour.
The best advice is to establish communication channels with the City early; comply with all recommendations and requirements of the tenant relocation policy from a very early stage; and ensure renovation plans are consistent with the legal requirements for a terminating a tenancy. Negotiating strategically with tenants is also important.
Seeking legal assistance from someone familiar with both the RTB and the TRPP requirements at an early stage can help avoid serious difficulties both with the City and individual tenants, and help assist landlords in managing disputes to favourable resolutions.