Vancouver City Council approves limits on rent hikes for private SROs

Downtown Eastside on Hastings Street looking east towards Main Street. (Google Maps)

New protections for privately-owned single room occupancy (SRO) hotels and the affordability of the units have been approved by Vancouver City Council.

The new measures approved on Thursday were recommended by city staff, after they were previously directed by city council to tackle significant rent hikes by investors who acquire the SRO buildings and then complete minor renovations. Such acquisitions have been deemed speculative in nature, and capitalize on the market revenue that can come from ground-level retail and restaurant spaces.

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Largely located within and near the Downtown Eastside, along with a pocket within the Granville Entertainment District, SROs are one of the primary housing supply tenures for low-income and vulnerable individuals.

Under the new policies, rooms that currently rent more than $500 monthly can now only increase at the rate of inflation of about 2% annually. As well, rooms that rent for under $500 monthly can now only increase at the rate of inflation of approximately 2%, plus an added 5%, for a total increase limit of about 7%.

Rooms that rent for less than $375 monthly — the current shelter component of income assistance — can see rents increased to up to $375.

Additionally, on a case-to-case basis, the measures also allow for the potential for additional rent relaxation to support renovations and upgrades of critical building functions and “extraordinary operating costs.” The intent of this policy is to allow SRO building owners to apply to the municipal government for a rent relaxation between tenancies after securing approval from the provincial government’s Residential Tenancy Branch to increase rents on the tenanted rooms in the building.

Many SROs are in buildings that are a century old, which may be cost prohibitive for private owners to upgrade without additional revenue that comes from rent or public subsidies.

Moving forward, SRO owners will be required to submit rent rolls annually as part of their business license so that the municipal government can monitor and enforce the rent increase restrictions.

The approved measures also include $500,000 in annual municipal funding to support the city’s monitoring and enforcement efforts, with three full-time staff dedicated to the responsibilities. For 2022, this includes a planner with a salary of $125,000 and two compliance officers for SROs with a salary each of $200,000, plus $160,000 for community engagement and education, and $15,000 for legal and IT implementation support.

The municipal government deems this as a “stopgap” policy, as it has an ultimate goal of replacing all SROs with self-contained social housing. In October 2020, city council approved a long-term strategy of acquiring and securing up to 105 privately-owned SRO buildings to protect their use as secured social housing. About 2,500 rooms would be renovated or redeveloped into social housing, and assistance would be provided to the private owners of about 1,300 rooms to improve the physical state of their buildings and secure affordability. However, with an estimated cost of $1 billion to acquire the private properties alone, all of this depends on a partnership with the provincial and federal governments.

Many SROs are in 100-year-old heritage buildings, which may be cost prohibitive for private owners to upgrade. There has also been an increase in private investors who buy SROs in strategic locations on a speculative basis or to maximize revenue from the commercial or retail space.

There were 6,681 open SRO rooms within the downtown Vancouver peninsula in 2019, with 55% privately owned and the remaining 45% owned and operated by government or a non-profit. There were also over 700 rooms across 10 buildings that were currently closed.

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