Last month, Suzanne Baustad received her first raise in seven years. Just a few days later, the paralegal and single mother learned her rent was increasing by $300 per month, amounting to a 35-percent jump in family housing costs.
“I lost my entire raise plus some more,” she told the Straight in a telephone interview. “It’s a big hit for me….Many of us now are talking about moving out, saying that we can’t afford to live here.”
Baustad resides in a two-building Downtown Eastside housing cooperative called the Lore Krill. The co-op does not fall under the B.C. Residential Tenancy Act, which would have prevented such a significant rent increase. Instead, the Lore Krill has an operating agreement with B.C. Housing that states that every five years, units classified as market housing must adjust their rates to 90 percent of the value of market rents in the surrounding area.
The new charges are scheduled to take effect July 1. On the low end, a one-bedroom unit at the Lore Krill’s Cordova Street location is increasing by $73, to $765 per month. The largest jump is for three-bedroom units, which are going up 41 percent, or $391, to $1,350 per month. The majority—six of the nine pricing combinations—are seeing rents increase between 20 percent and 30 percent.
Thom Armstrong, executive director of the Co-operative Housing Federation of B.C., conceded that the Lore Krill rent hikes are steep, but he described the situation as a simple reflection of a changing neighbourhood.
According to a spring 2014 social-impact assessment prepared for the City of Vancouver, property values in the Downtown Eastside more than tripled between 2001 and 2013.
Armstrong noted that although the Lore Krill did have to raise its rates for market renters, it did not have to wait the maximum five years to do so.
“My advice to co-ops who are in this position is always do not wait for the five years,” he said. “Make an assumption based on what you know about the market, that rents are going up. And try to increase housing charges gradually along the way so that you know when you do the five-year review, it doesn’t come as such a cold shower.”
Thomas Robson, treasurer for the Lore Krill, told the Straight that market rents were adjusted annually against the B.C. consumer price index. “When we talk about this increase that’s happening in July, it’s a lot closer to a 50-percent net increase over the last five years,” he claimed. What the co-op failed to plan for, Robson continued, is the change in property values that has occurred throughout the Downtown Eastside in recent years.
“When our agreement with B.C. Housing was created, nobody ever foresaw that this sort of staggering leap would happen,” he said. “We have the Housing Ministry of our province saying that this is perfectly okay, simply because a contract says that they can do this. Never mind the morality of it or the actual impact that this is going to have on people in two months.”
B.C. Housing refused to grant an interview on the topic of co-ops.
Armstrong noted that there are additional protections for renters built into the Lore Krill’s arrangement. If tenants paying market see their rent pushed beyond 30 percent of their monthly income, they can use the co-op’s agreement with B.C. Housing to apply for a subsidy, he said.
“Given the tight squeeze that a lot of renters find themselves in, it’s hard to argue that someone whose housing charge is still less than 30 percent of their income is in as tight a bind as many other renters,” Armstrong added.
D J Larkin, a lawyer with Pivot Legal Society who focuses on housing issues, described the rate increases as “mind-boggling”. But she was quick to note that even the new rates at the Lore Krill are still below those in listings on Craigslist for similar condos in the Downtown Eastside.
“I know that some of the units are going up as much as 40 percent, which is extremely significant, but it is still below market,” Larkin said. “So I’m actually glad that that still exists and is holding down at least some families in the neighbourhood.”