When employers become landlords

“I have really no choice. Otherwise, my business is going to sink.”

So says Bill Pratt, founder and director of the Chef Inspired group of restaurants in Atlantic Canada, who was forced to buy three houses so that he could keep his 23 restaurants and food trucks running.

With very few local workers available, the chef hired several temporary foreign workers – only to realize they couldn’t afford what accommodations were available. So Pratt ended up buying the houses and renting out rooms at discounted rates to the newcomers.

“It's a tough spot to be in order to do that. And now I've got all these guys filled up in these rooms — that's great. So now I can operate seven days a week in most of my facilities.”

As the cost of living and the cost of housing increase, more employers are considering this option, according to Brandon Hillis, a partner at Roper Greyell in Vancouver.

“For employers that work in more remote areas, it is more common; if you're operating a mine… or a forestry operation in a remote or small community, or if you're also working in an expensive touristy areas, such as Whistler for example, staff housing is a fairly common thing that a lot of employers provide.”

However, it’s not one that employers should jump into quickly, he says.

“They have to go in with their eyes open… they're going to be stepping into the shoes of a landlord, and I think you want to go in knowing full well what that means, says Hillis. And consider whether there are less administratively onerous solutions for employers like a stipend or allowance.”

When employers are also landlords

Not only an employer and certified “chef de cuisine”, Pratt is also the landlord to these workers on the east coast.

“[The arrangement is] tied to the positions, tied to the job; we sign a restrictive one-year lease [that says] ‘You're working for us in that rotation, we're giving you a discounted rate working for us’ in there.”

And Pratt knows this approach well, saying it was “par for the course” when he worked in Fort McMurray.

“The owners had bought homes where they could put all their foreign workers in because… a one bedroom was costing $2,200 bucks when I worked out there… in 2010, 2011.”

It’s a situation that works well, he says.

“As long as I cover the mortgage, that's really the thing, that's been my focus… I could charge more but I'm also trying to help them because... all of them are supporting their families back home. So they send money home.”

Way over on the west coast, the University of British Columbia also provides housing options, through UBC Properties Trust and its subsidiary, Village Gate Homes. Hundreds of staff and faculty can apply by registering once they have a job offer for an eligible position.

“This is a strategy to assist with recruitment and retention,” says Siobhan Murphy, director of housing, immigration and relocation services, HR, at UBC, citing Vancouver’s “expensive housing.”

For example, there's a restricted faculty and staff rental portfolio, which will have about 1,00 units as of Nov. 1, she says.

“These are discounted from what you would find in the market on the west side of Vancouver, approximately 25% across the portfolio.”

There is also a smaller faculty program with 110 spots that is a rent-geared-to-income program. Here, rent is capped at 30% of household income, though there are slightly different thresholds for faculty, says Murphy.

Residential tenancy considerations for staff housing

While obviously it’s a very attractive benefit to offer employees, employers must be aware of their exposure under residential tenancies legislation, and specifically what that means, he says.

“The biggest thing that employers have got to be aware of is that, as the law stands, if you provide staff housing to your employees, the Residential Tenancies Act probably does apply. And that means that you've got the same obligations or similar obligations to [workers] that you would have to a regular tenant, which means your ability to evict somebody is limited; your ability to increase rent, if you're charging rent, is also limited.”

And Hillis says he’s seen employers struggle with those issues.

“They provide staff housing at a very much discounted rate and then the cost of their rent or lease goes up or their property taxes increase and they own the building and it's difficult to recover those costs from the employees.”

A lot of the terms just get left unsaid and employers/landlords “manage to skate by without there being issues or just avoiding issues,” he says, because nobody complains.

“The Residential Tenancies Branch here in in BC... they're not knocking on doors, doing audits to make sure that the legislation is being complied with — it’s a very complaint-driven process.”

Employment law and staff housing

When it comes to legal considerations around housing provided by employers, “it's an area where the law and the legislation probably haven't caught up to the realities that everybody is dealing with now,” says Hillis.

“I'm not aware of language in the Employment Standards Act or the regulations that talks about the provision of staff housing, except for in very limited circumstances, like caretakers of apartment buildings, for example.”

When it comes to ending both employment and a tenancy, notice of termination obligations do apply, he says.

“But I think bigger concerns are going to arise around managing the tenancy during the employment relationship. Is it intended to be a temporary tenancy? I think a lot of employers will provide tenancy for three months or six months to allow the employee time to find their own accommodations in the community. Having these time-barred tendencies, and then ‘You're out,’ that can create potential issues with a Residential Tenancy Branch.”

On the other hand, for employers that own a lot of land and buildings, with resources in place, being the landlord may not be that onerous, says Hillis.

“But for most employers, you probably don't want the headache of it,” he says, citing other options such as rent subsidies or salary boosts. “You certainly then avoid becoming the administrator or landlord for your employees.”