Nova Scotia attempts to find balance as it prepares to regulate its $70M short-term rental market

Short-term rentals seen as potential problem for neighbourhoods
Short-term rentals are beneficial to the tourism industry, but people in one Halifax neighbourhood are banding together to oppose Air-BNB. Alexander Quon has more.

Bill Stewart says his block in the upscale Hydrostone area of Halifax, N.S., is usually quiet.

But he says the typically tight-knit community changed when one of the neighbouring homes was purchased.

Instead of a neighbour he saw every day, Stewart says the home has become host to a string of visitors who stay one or two nights.

“They’re not primary residents of those properties, and that’s a concern for us.”

William Stewart of Neighbours Speak Up.
William Stewart of Neighbours Speak Up. Alexander Quon/Global News

Stewart says he’s frustrated that he has no recourse for the issues that have occurred — such as the parties or even fights that have spilled out into the street — as the building’s new owner doesn’t live at the home. It’s now up to him and the other neighbours to manage the guests’ behaviour.

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WATCH: Nova Scotia’s booming short-term rental market

Nova Scotia’s short-term rental market
Nova Scotia’s short-term rental market

More importantly, he says there’s a fear that the neighbourhood will change due to the “invisible hotels” that are popping up.

“If we see an increase in the number of short-term rentals, potential buyers may try to purchase those properties, and we will begin to end up with a lot more visitors in our neighbourhood than there are residents,” he said.

Stewart has joined forces with many of his neighbours to oppose short term-rentals, creating the group Neighbours Speak Up.

The group’s goal is to lobby the government while informing the public about their concerns with short-term rentals.

READ MORE: Airbnb could pull up to 1% off rental vacancies in Canada’s 3 biggest cities

Stewart’s experience isn’t an uncommon one in Nova Scotia or other areas of the country. More short-term rentals are cropping up every day.

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Data from Statistics Canada shows that the short-term rental market is booming, and more rooms, apartments, homes and cabins are being posted on web-based platforms like Airbnb, HomeAway and VRBO.

Last year, short-term rentals in Canada brought in $2.8 billion in revenue, 93 per cent of which went to hosts, while companies only got a small slice of the pie.

As short-term rental activity has grown, tourist hotspots like Barcelona, New York and Los Angeles have begun to regulate the burgeoning industry, citing lost tax revenue and effects on the local housing supply.

‘Level the playing field’

Nova Scotia isn’t far behind. Provincial Business Minister Geoff MacLellan announced in March that new legislation was coming to Nova Scotia to “level the playing field.”

In an interview on Thursday, MacLellan told Global News that consultations with stakeholders — such as Neighbours Speak Up — have begun and that everybody is approaching the discussion with a positive mindset.

“The sharing economy is coming; there’s no doubt about it,” said MacLellan.

He said the legislation will seek to reflect all sides of the issue while modernizing the “antiquated” rules currently governing tourism in the province.

The new regulations, which are still being decided, will go into effect in 2020.

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WATCH: Nova Scotia moves to regulate short-term rentals

Nova Scotia moves to regulate short-term rentals
Nova Scotia moves to regulate short-term rentals

For the consumer, short-term rentals offer an easy, simple and occasionally cheaper solution to finding temporary housing.

For those who operate or manage a short-term rental property, it can become a profitable, even lucrative business.

But all of those benefits can come with a cost — upset neighbours, a dearth of long-term rental options and complaints of an uneven playing field from the hospitality industry in Nova Scotia.

As Nova Scotia prepares to regulate the market, it’s unclear what approach the province will take and how it will balance the various interests.

But as the Nova Scotia short-term rental market booms, it’s becoming increasingly clear that the provincial government has millions of reasons to want to regulate the industry.

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Statistics Canada/Global News
Statistics Canada/Global News. Global News

A booming market

Nova Scotia’s short-term rental market has exploded over the past four years.

In 2018, private short-term accommodation in the province generated an estimated $70,870,000 in revenue.

It’s a drastic increase from 2015, when revenue was only estimated at $1.115 million, and that economic boom has manifested itself in different ways across the province.

Jordan Hipson, CEO and founder of Over Sea Real Estate Management, says the interest in short-term rentals has helped him grow a business that, in 2016, managed one property focused on short-term rentals to a firm that now manages more than 60 properties in 2019.

“There’s no question that this is a huge surge to our local economy and is forcing — or not forcing but encouraging — travellers to actually live like a local,” Hipson said.

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But has it been beneficial for everybody?

Attempting to get concrete figures on the number of short-term rentals available in Halifax is difficult. There is no registry or list of short-term rentals in the province, and properties can be listed on a variety of services spread throughout the web.

READ MORE: Should Canadian cities ban Airbnb and other home-sharing platforms?

MacLellan said he’s hopeful the new legislation will allow the province to start building data on what the short-term rental industry looks like in the province. Nova Scotia currently has “zero data,” he added.

However, to find out more information, it is possible to look at other factors. When buildings or apartments are marketed as short-term rentals, they are moved out of the long-term rental market.

According to data from the Canada Mortgage and Housing Corporation, the vacancy rate in Halifax has been steadily decreasing since 2014, when it was 3.8 per cent.

Jordan Hipson, CEO of Over Sea Real Estate Management, speaks with Global News on June 27, 2019.
Jordan Hipson, CEO of Over Sea Real Estate Management, speaks with Global News on June 27, 2019. Reynold Gregor/Global News

In 2018, the vacancy rate in Halifax fell to 1.6 per cent, the lowest in nearly 20 years.

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That’s put Halifax in a bit of a housing crunch, with some people placing the blame on the rise in popularity of short-term rentals.

MacLellan said that the government will be mindful of the concerns that people like Stewart and Neighbours Speak Up have raised.

“Social housing and affordable housing and the availability for folks who need it on an annual basis has to be given due consideration,” he said.

Benefits for rural Nova Scotia

Hipson disagrees that short-term rentals are causing an issue with the long-term housing stock.

He says that the type of residences being put on short-term rental services like Airbnb typically aren’t affordable housing or even meant to be used as long-term rentals.

Hipson says that in small towns, short-term rentals have been a booster to the local economy.

“Places like [Chester, N.S.], where there is no hotel, is now seeing a growth in tourism because people actually have somewhere to stay right there,” Hipson said, saying short-term rentals have allowed out-of-Canada tourists and even wedding parties to stay in the Chester area rather than driving all the way to and from Halifax.
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Airbnb, the largest short-term rental company in the world, echoed Hipson in a statement to Global News.

“The tourism industry is transforming, and we are encouraged to see the [Nova Scotia] government modernize their regulations to reflect the way people want to travel,” said Alex Dagg, Airbnb’s public policy manager.

Dagg added that the company is overjoyed to be helping tourists to explore more of Nova Scotia and “spread economic impact outside of traditional tourist zones.”

WATCH: Airbnb contributing to Toronto housing crisis — report

Airbnb contributing to Toronto housing crisis: report
Airbnb contributing to Toronto housing crisis: report

MacLellan agrees, saying that in his community in Glace Bay, N.S., there was a bed and breakfast that was the only reasonable accommodation in the area for many years.

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But the introduction of platforms like Airbnb has also brought heavier traffic to remote and rural areas.

“There is a capacity here that can be filled by the short-term rental economy so tourism accommodations providers recognize that they know, again, that the sharing economy is coming, that it’s going to be a big part of our tourism complement,” said MacLellan.

He said the government is being mindful and is very interested to see the viewpoints of various municipalities in the province and how they would like the government to approach the topic. He’s expecting a variety of different answers depending on the rural or urban location of the various municipalities.

MacLellan said it’s paramount to make things fair for both traditional operators and the new short-term rental industry while balancing the needs of rural and urban centres.

“Some of the rural areas will now have new-found opportunities through the sharing economy,” said MacLellan, saying the province is looking forward to making “sure that everyone feels as though they’re represented and reflected in the laws that govern accommodations here in Nova Scotia.”