This Vancouver home made $18K a month from short-term rentals. Are regulations working?

Click to play video: 'Vancouver’s short term rental problem persists'
Vancouver’s short term rental problem persists
Despite the rules, analysis of the numbers show there are thousands more short-term rentals than have been licensed by the City of Vancouver. Kamil Karamali reports – Aug 9, 2023

It’s got seven bedrooms, 4,000 square feet of living space and is on the market for about $5.4 million.

But this house on Vancouver’s west side has one other big selling point, according to its Realtor: A laneway house and basement suite that its current owner used to bring in about $18,000 a month via short-term rentals.

“They always book it out. Right now, the booking is already run to 2024,” Realtor Layla Yang said.

Click to play video: 'Sechelt, B.C. to limit short-term rental licenses'
Sechelt, B.C. to limit short-term rental licenses

Vancouver is experiencing a surge in short-term rental listings on websites like Airbnb and Vrbo.

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In August 2022, there were just under 3,000 listings in the city, a figure that’s climbed to nearly 5,000 by the same month this year.

Yang said many homeowners she’s dealt with prefer the short-term model, which is both more profitable and more flexible than renting to long-term tenants.

“They say the long-term, they really become like hostages,” she said.

“It is a free market. Canada is capitalism,” Yang added. “You cannot say, ‘Oh, because I do the shorter lease, (as a long-term renter) it affects you badly.’ You cannot do that.”

Click to play video: 'Vancouver council strengthens short-term rental rules'
Vancouver council strengthens short-term rental rules

Under Vancouver’s short-term rental bylaw, drafted in 2018, renting an entire unit, including a basement suite or laneway house, is expressly prohibited if the owner does not live there as their primary residence.

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More than 2,000 of Vancouver’s current listings have been flagged for investigation or audits, and according to the website InsideAirbnb, about 39 per cent of listings in the city are either unlicensed or operating with expired licences.

The apparent flouting of the bylaws has drawn the ire of housing advocates, including X (formerly Twitter) user @Mortimer_1 who has been documenting violations for years — and who has recently caught the attention of Vancouver’s ABC city council majority.

ABC Vancouver Coun. Sarah Kirby-Yung acknowledged that some short-term listings don’t comply with the bylaw and are “taking homes away from locals who need them.”

She said Airbnb has a voluntary data-sharing agreement with Vancouver, and that city staff do “a lot of audit checks on their behalf,” but the city lacks the enforcement tools to truly crack down on the problem.

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“So, I think that’s where having consistent, provincial legislation that provides some teeth to enforcement tools and puts some of the responsibility onto the platforms themselves will help.”

Click to play video: 'What if your tenant lists your suite on Airbnb?'
What if your tenant lists your suite on Airbnb?

At the same time, she said the demand for short-term rental units reflects gap in the city’s hotel market, citing a Destination Vancouver report suggesting the city will be short 10,000 rooms in the coming years.

“We’ve actually lost 1,500 hotel rooms in the city in the last decade,” Kirby-Yung said. “We lost another 500 when the different hotels were acquired for short-term residential use during the pandemic, and we’re simply not building enough.”

Tom Davidoff, an associate professor of economics at UBC’s Sauder School of Business, said it’s unsurprising that property owners are drawn to the short-term rental business model, which can be highly profitable.

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“If you have a difference of $10,000 a month between rental income you get from a full-time rental versus an Airbnb, you’d have to really have a strong preference for (regular tenants). However, if we have units that are full-time Airbnb that otherwise would have been rented, that’s fewer permanent housing units for people who live and work here.”

Click to play video: 'BIV: Airbnb cracking down on Halloween parties'
BIV: Airbnb cracking down on Halloween parties

Davidoff said the municipal and provincial governments have enforcement tools in the the form of the empty-homes tax and the speculation-and-vacancy tax, respectively.

But with housing affordability worsening, he said those tools may not be calibrated well enough.

“I think we do want to give a break for people who provide housing that is full-time as opposed to short-term, so I think that involves probably higher tax on Airbinb and again enforcement of the empty homes and speculation and vacancy taxes,” he said.

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In a statement, Airbnb policy lead for Canada Nathan Rothman said the company has voluntarily shared data with the city since 2018, “and provided customized tools to city officials to help them strengthen their oversight.”

“We will continue to work with the City to promote compliance while also ensuring hosts are able to share their homes and continue to bring positive economic impacts to neighbourhoods across the city.”

The company said it requires mandatory licences for Vancouver listings, and noted the city’s primary residence restriction, adding it works with the city, which is responsible for enforcement.

It also said there are “a number of issues” with third-party sites like InsideAirbnb that scrape data from Airbnb, and said they “should not be used as an accurate source.”

Earlier this year, the company said it had remitted more than $67 million in tax to the province last year, up about 70 per cent from the year prior.

A crackdown on the short-term rental market could be in the wings. B.C.’s Ministry of Housing is expected to deliver new regulations this fall.

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