Students say fixed-term lease loophole is driving them from their homes

When Reese Johnston moved into his apartment on Morris Street in Halifax last year, he expected to live there for the foreseeable future. What he and his roommates didn't realize is the type of lease they signed could make that impossible.

Johnston signed a fixed-term lease, set to end on April 30, 2023. In November of last year, his landlord offered to keep Johnston and his roommates as tenants. But he offered a new lease with a 25 per cent increase in rent, from $675 per room to $850 per room.

Johnston works a minimum-wage job and couldn't afford the increase. In the end, his landlord decided to rent the unit to other tenants.

Johnston and his roommates are now searching for a new place to live, but aren't having any luck.

"We can't find anywhere even close to what we're paying right now," Johnston said. "Young adults need places to live and young adults don't have the funds to be paying these premium prices."

Joanne Hussey, a community legal worker with Dalhousie Legal Aid Service, believes landlords are increasingly using fixed-term leases to get around Nova Scotia's temporary two per cent rent cap.

"I think that landlords have found a way to get what they need," she said. 

"I recognize that everybody's got increasing costs right now and it's putting a lot of pressure on everyone. But I think using those leases in that way is not the reason that they're intended for."

What's a fixed-term lease?

According to Nova Scotia's Residential Tenancies Act, a fixed-term lease is a lease "entered into for a fixed period of time, which includes the day of commencement and the day of termination stated in the lease." This means it doesn't automatically renew every year. 

CBC News asked the Department of Service Nova Scotia and Internal Services if this type of lease has become more common, but the province doesn't record this data.

"Landlords are not required to notify the department when a tenant signs a lease or what kind of lease they have signed," said Blaise Theriault, a spokesperson for the department. 

But Hussey said almost all the leases they've seen lately at Dalhousie Legal Aid are fixed-term — and many people aren't aware of the implications.

"I think that's a really common problem," she said. "It's a very small change in the normal lease. It's just a different box that's checked, and it has an end date on it. And so I think we need landlords and tenants to be more aware of what it is that they're doing."

Hussey said many people negatively impacted by this type of lease are from marginalized groups such as low-income students, seniors on a pension, recent immigrants or people on income assistance.

"It's really scary because there's not a lot of options," she said. "Our vacancy rate is still at one per cent. And for people who are looking for affordable rentals, the vacancy rate is 0.6 [per cent]. So we're having a lot of competition for those really deeply affordable rental units, and there's just not enough of them in the city."

Residential tenancies decision

When Johnston was facing a 25 per cent rent increase, he and one of his roommates took the matter to a residential tenancies hearing. They represented themselves, while their landlord was represented by a lawyer.

The final decision said that since a new lease wasn't signed between the tenants and landlord, the tenants had to vacate when their current lease ends.

"The landlord is not obligated to renew a fixed-term lease and there is no right of the tenants to stay in the rental unit after the fixed-term lease ends," the decision reads. "This is the case even when there [have] been no concerns with the tenants and for all intents and purposes the tenants have been of good behaviour and paid their rent."

According to the Department of Service Nova Scotia, the current rent cap means a tenant's rent can't be increased by more than two per cent per year if they are renewing a residential lease or signing a fixed-term lease for the same unit.

"If a tenant believes their landlord is not following the two per cent rent cap, they should file an application with the Residential Tenancies Program," Theriault said.

Johnston and his partner, Hope Laing, who sat in on the process, were surprised at the outcome of his hearing. 

"If the province says they want to help the housing crisis, they really have to ... make sure that the rent cap can't be bypassed," Laing said. "This is people's lives and their homes, and to just take it away because you want 200 extra dollars a month isn't right."

Laing and Johnston said they know many students and young people who have been through similar situations, but have not spoken up or taken the matter to residential tenancies because they're scared of facing retaliation from landlords or being labelled troublemakers.

Jacob Ferris and his roommate, Andrea Shenton, are in this camp.

The Dalhousie University students signed a fixed-term lease, not knowing the implications, and were offered a chance to re-sign at the end of the year with a rental increase of $100 per month for each of their four roommates.

They all work at least one part-time job, but couldn't afford the new rent. They didn't want to take the matter to residential tenancies and tried to negotiate with their landlord, who wound up renting the home to other tenants.

Ferris said the process has had an impact on his mental health. 

"It's super stressful, on top of all of the schoolwork we have to do, on top of money problems, family problems," he said. 

Shenton said the multi-bedroom units they see listed for rent are priced between $900 and $1,500 a month per person — and most of them are fixed-term leases.

She said some students have chosen to split a bedroom with multiple people, or to sleep in a living room to save money.

Working on a solution

Hussey said the problem isn't with fixed-term leases themselves, but how they're being used.

She pointed to British Columbia's system, where landlords must justify why they need to use a fixed-term lease.

Hussey also mentioned rising costs for landlords. She suggested a new type of rent cap that is used in most other provinces that is tied to the consumer price index, and dictates appropriate rent increases based on the inflation rate.

"There needs to be a permanent system of rent control that everybody can count on," she said. "At this point, we don't have reliability about what's going to happen with that two per cent."

Colton Leblanc, the minister responsible for the Residential Tenancies Act, said after a cabinet meeting on Thursday that it is frustrating to hear of people not following the rules.

He said his department is open to suggestions on how to improve the residential tenancies program.

"We have heard at the department from both tenants and landlords differing opinions on fixed-term leases," Leblanc said. "As we move forward on modernizing the program and continue to modernize our legislation, that is an element that we continue to look at."