A total of 13 owners of single-room-occupancy (SRO) buildings in Strathcona, Chinatown and adjacent neighbourhoods are taking legal action against the City of Vancouver over its successful request earlier this year of the provincial government to authorize vacancy control.
That authorization, which was announced by the provincial government in May, states an owner of an SRO — or single-room-accommodation building — in the Downtown Eastside area must keep rent at the same price for a new tenant as the previous tenant.
The civil claims filed Nov. 15 in B.C. Supreme Court argue that owners “have suffered and will suffer harm as a result of the city’s conduct” in pursuing vacancy control, despite previous court rulings that quashed Vancouver’s attempt in 2021 at controlling rents.
The loss of rent, a decline in property value, increased maintenance costs as a result of lost income and the inability to finance and insure their properties were among complaints filed by the owners.
“The city’s conduct constitutes a de facto expropriation of the property, and the plaintiffs are entitled to damages based on the loss of value of the property,” said one of the claims, which are almost identical in scope and filed by the law firm of Lawson Lundell LLP. None of the plaintiffs' claims have been proven in court.
Among the plaintiffs are owners of the Woodbine Hotel at 786 East Hastings St., Keefer Apartments at 727 Keefer St., Pender Lodge at 431 East Pender St. and Danny’s Inn at 317 Cambie St.
Some of the other properties are located at 116 West Hastings St., 425 Campbell St. and 832 East Pender St., according to the claims, which indicate the plaintiffs seek to have their legal action certified as a class-action civil suit.
Peter Thanas, owner of the Pender Lodge, said in an email Tuesday that he expects more claims from owners “in the near future,” noting some owners supportive of the legal action are “apprehensive to participate out of fear of city reprisals.”
Thanas is the same person who filed a petition in court in 2021 in an attempt to quash a series of vacancy control bylaws adopted by the previous city council led by then-mayor Kennedy Stewart.
Court rulings
In an August 2022 ruling, Supreme Court Justice Karen F. Douglas concluded that owners cannot be regulated twice — once by annual allowable rent increases and second by a city-driven bylaw to impose vacancy control.
“I agree with the petitioners that the city is prohibited from legislating, by using its business licensing power, to regulate persons who are already subject to regulation by the province, directed at the same dominant purpose, even if it is possible to comply with both legislative schemes,” Douglas wrote.
The Appeal Court’s three judges agreed in a February 2024 ruling, with Justice Joyce DeWitt-Van Oosten writing:
“I agree with the judge that there is only one reasonable interpretation of [the Vancouver Charter] and the city does not have legislative authority to regulate rent increases between tenancies for residential units. As well‑intentioned as the bylaws may have been, they were not intra vires the city’s legislative jurisdiction and the decision to adopt them was therefore unreasonable. The judge had no option but to quash the bylaws.”
But that was not the end of vacancy control, as Thanas knew it.
Housing Minister Ravi Kahlon announced in May of this year that government had introduced amendments to the Municipalities Enabling and Validating Act (MEVA) at the request of the City of Vancouver “to enable the city to regulate SRO vacancy control to protect rent affordability for tenants that include some of the city’s most vulnerable residents.”
The government’s rationale, which it stated in a news release, was to protect tenants from “some bad actors who are using pressure tactics on tenants to leave their rental units so they can hike the rent, leaving them with nowhere else to live.”
The government estimated the new law would prevent up to 1,000 people from losing their homes, although names of buildings and tenant populations weren’t disclosed in the release.
Loss of private SRO stock
The city’s push for vacancy control is rooted in data highlighted by staff in reports showing private SRO stock in Vancouver decreased from 7,830 rooms in 1994 to 3,305 rooms in 2023.
The Downtown Eastside had the highest rate of loss, although some of those rooms were acquired by governments and non-profits.
The downtown core low-income housing report of 2023 said the average rent in privately owned SROs in Vancouver was $681 — an increase of 21 per cent, or $120 over what it was in 2019.
The report said when a calculation of average rent was done without including what tenants paid at Chinese benevolent society-run SROs or private hotels operated by non-profits, the cost was actually $736 per month.
The city based the calculation on rent data collected from 62 privately owned and operated SROs, five private hotels operated by a non-profit and seven buildings owned and operated by Chinese benevolent societies.
“Although a large portion of the private SRO stock continues to be more affordable than average rents in a new market rental studio in the same neighbourhood, the term ‘low-income housing’ for SROs is becoming increasingly inaccurate as average rents escalate far beyond the reach of low-income residents,” the report said.
Thanas said the city recognizes his buildings and others as “market housing” but have now used legislation “to force us to operate these buildings as ‘housing of last resort’ [their wording] at rents that are fixed in perpetuity.”
“This is effectively impossible in the long term if rents can’t go up and will inevitably cause disinvestment,” said Thanas, who outlined similar arguments in a recent Glacier Media article about his SRO in Strathcona. “These are old buildings and some of them desperately need upgrades, for safety and operations.”
Added Thanas: “The owners aren’t specially trained people — lots of them are just families who bought these buildings years ago. Now, they are being forced to operate on incredibly tight margins in a difficult situation with an expectation to house a very difficult demographic of tenants.”
Owners consider legal action against province
Thanas said the irony is that public operators of similar buildings receive huge subsidies to operate, “and we are being forced to operate on less money, year over year.” In addition, he said, the city has had a stated goal of acquiring this type of housing since 1990.
“They should either purchase and manage these buildings as they see fit, or remove the burdensome red tape, allowing property owners to secure reasonable financing to make these buildings sustainable and bring them back to life,” he said.
Asked why the legal action did not include the provincial government, Thanas said the owners are considering pursuing a similar claim against the province.
Kahlon, who was re-elected Oct. 19 and will continue to serve as housing minister, said in an email during the election campaign that government had no plans to scrap vacancy control in the Downtown Eastside.
An email from the city’s communications department Tuesday said the city would not comment on the legal action because the matter is now before the courts.
