Vancouver renter questions landlord's 'duplicitous' new payment scheme

A Vancouver man is worried that a new payment scheme introduced by his landlord means he'll soon be paying more for his two-bedroom apartment in the city's West End neighbourhood.

Wesley Harmer has rented at the 84-suite Holly Lodge building for five years and intended on renewing for a sixth when his lease expires at the end of the month.

But major changes in his new lease documents have raised red flags.

Instead of his current rent of $2,225 per month — utilities included except hydro — the new agreement quotes a lower rental rate but insists he open an account at APT Utility Corp. to start paying $530 per month in utility charges separate from his rent.

Harmer said he fears that once cleaved from his rental agreement, his utility costs will no longer be subject to provincial rent controls.

"It looks like they're just trying to make extra money because they weren't able to increase rent for two years," he said. "There is nothing protecting us from a sudden increase."

In 2018, the province tied the maximum annual allowable rent increase to the rate of inflation, and during the pandemic, rents were frozen altogether until Dec. 31, 2021. The maximum allowable rent increase for 2022 has been set at 1.5 per cent.

Utility company owned by landlord

Harmer became concerned after looking into APT Utility Corp. and discovering a website that provided little information, together with an address tied to the basement of a house on Bute Street.

Most surprising, however, was learning that APT's domain was registered by Wolverton Securities Ltd., one of the many companies in the portfolio of his landlord, Brent Wolverton, who owns several Vancouver rental buildings.

"It looks rather duplicitous that the owner is strategically pretending like he doesn't own this [utility] company. One has to ask why,'' Harmer said. "It doesn't seem above board."

A lawyer with the Tenant Resource and Advisory Centre (TRAC) said the situation at Holly Lodge is something he's never seen before.

"Over the past two years with the rent freeze, if landlords are looking to try and get more income with the recent changes to the Residential Tenancy Act, the province has made it much harder," Rob Patterson said. "So we're seeing, I think, new tactics emerging from landlords who put profit above everything else."

A notice introducing APT Utility Corp. to Holly Lodge tenants reads, in part, "APT Utility Corp has been hired by a building owner to take over handling all the work involved in managing utilities for the building.

"This means that each tenant going forward will pay rent to us, as the building owner, exclusive of utilities. They will also pay APT for utilities including electricity, heat, water, sewer and garbage ... but other than paying two bills each month instead of one, your total bill after the change will be the same."

Utilities turned off and/or eviction

In an emailed statement, Brent Wolverton said the change at Holly Lodge "does not affect the limit on rent increases, which we will continue to comply with."

However, he states, "We think it is clear from the Residential Tenancy Act that the government meant the rental cap to limit increases in rents, not utilities and rents."

Wolverton said utility costs are increasing faster than the rate of inflation and have been "inadvertently" caught by the province's restrictions.

"With the provincial government capping rent, this has become a huge issue as subsidizing utility cost increases is unsustainable for landlords," he said.

In an email to Harmer, Wolverton wrote, "After we hand over your utilities to the utility company, if you did not wish to purchase utilities from APT they will simply be turned off and/or you may be evicted."

Harmer has taken his concerns to the province's Residential Tenancy Branch. A branch spokesperson told CBC News that it could not comment on the specifics of the case because the Compliance and Enforcement Unit (CEU) is assessing whether to open an investigation.

In a 2019 decision, the CEU levied a rare penalty of $1,000 against Huntley Investments Ltd. and Brent Wolverton for misrepresenting the company as a family corporation to justify evicting tenants from a Melville Street property.

A closer look

Harmer's existing tenancy agreement sets his total monthly rent at $2,225, of which $100 is earmarked for utilities. The entire amount is subject to provincial restrictions on rent increases. Harmer pays his hydro bill separately, which he estimates averages $15 a month.

In the new tenancy agreement, Harmer's monthly rent charge would drop to $1,640, with zero dollars earmarked for utilities. A separate form states that he will be charged separately for utilities, including hydro, an average of $530 per month after "mandatory" sign-up with APT Utility Corp.

The legislation says a landlord may terminate or restrict a service if rent is reduced in an equivalent amount to the value of the service.

Harmer disputes that his actual utility usage comes anywhere near $530 per month because he is often away for work. Wolverton said charges will be based on the square footage of each unit.

Patterson, the lawyer with TRAC, said the complexity of the situation may ultimately require an arbitrator to sort it out.

One point of contention could be whether APT Utility Corp. can be considered an alternative service provider to Holly Lodge tenants.

Under the Residential Tenancy Act, landlords cannot terminate a service that is deemed essential. However, the RTB withdrawal of service form states that a service is considered not essential "if the tenant can obtain it, or a reasonable substitute, from an alternative source."

"A tenant could argue that the landlord's utilities company is not an 'alternative source,' since it is still owned/operated by the landlord,: Patterson said.

His advice to renters is they should never feel pressured into signing anything they don't understand.