Some B.C. property owners 'panicking' following short-term rental legislation: realtors
But the B.C Real Estate Association says it's too early to tell what the impact will be provincewide
Deanna Steele says she has never seen as many condo and vacation homes for sale in Kelowna, B.C. as she has this month.
The founder of Keys to Kelowna Properties Inc., a luxury vacation rental management agency, said the lake-front city's real estate market is "saturated'' by properties zoned for short-term rental use. Some of the sellers are people who bought not that long ago and are already trying to get out.
"They thought they were going to make a mint because they saw what was happening in the gold rush. And now they're realizing, 'Oh, big mistake,'" said Steele.
That gold rush — investing in short-term rentals in Kelowna and many other Canadian cities — could potentially slow to a trickle in the wake of new legislation to regulate short-term rentals introduced by the B.C. government in mid-October.
While the B.C. Real Estate Association's chief economist Brendon Ogmundson says it is likely too early for the regulations to have a major impact on listings, he is hearing anecdotal reports from realtors that investors are looking to offload properties as the new rules come into effect.
"My guess is that this change in policy will certainly motivate some investors to sell, but I'm not sure we are going to see a major shift in the aggregate listings numbers," Ogmundson said via email to CBC News.
What has changed?
The policy changes include requiring all short-term rental platforms, such as Airbnb, to share data with municipalities to improve local enforcement and increasing fines for hosts breaking local municipal bylaws.
In addition, all short-term rental platforms will have to include the business licences and registration numbers of listings where they are required by a local government, and must remove listings without those requirements quickly.
Short-term rentals will be limited to the host's principal residence plus one secondary suite or accessory dwelling unit.
WATCH | B.C. housing minister says rules meant to target multi-listing hosts:
The rules will come into effect in stages between now and late 2024, the province said.
"It's an attempt to ensure that housing comes back to people," Housing Minister Ravi Kahlon said Monday.
Two days later, the province also expanded its speculation and vacancy tax to 13 more municipalities.
Concerned and confused
Kelowna realtor Tamara Stone said the day after the short-term rental legislation passed its first reading on Oct. 16, six people called her afraid about what it would mean for their finances if they could no longer rent short-term to supplement mortgage payments.
"Everyone's just sort of panicking because no one's really understanding what the fallout is, what this means, and there's a lot of confusion," Stone said speaking on Daybreak South earlier this week.
She said since the government announcement, she has seen 250 new house and 392 new condo listings in the Central Okanagan area at a time of year when listing levels are typically low.
"A lot of people are looking, thinking I'm not going to wait, you know, the rules are here to stay and there's going be way more competition come spring. So, sell these now."
Stone also said, while she has an alert set up on her computer to flag listings with the word Airbnb in them to show investor clients, she is no longer getting any hits.
"Almost everybody has edited so they're not talking about Airbnb because you can't really, right now. I wouldn't feel comfortable selling a suite on the promise that you're going to make all this money because we don't know," she said.
Victoria listings up
According to Statistics Canada, between 2015 and 2018 alone, the amount of revenue earned by the owners of private, short-term rental homes in this country rose to $2.2 billion, a nearly tenfold jump in just a three-year period.
In addition to tougher regulations, the financial side of the equation has also changed dramatically.
Interest rates are much higher than they were a few years ago, meaning property owners interested in the short-term rental market need to be able to generate more income just to cover their mortgage costs.
These factors are likely contributing to the rise in listings in Victoria, B.C. observed by real estate analyst and housing advocate Leo Spalteholz.
The capital city banned people from renting secondary suites on Airbnb in 2018, but allowed short-term rentals to continue in buildings that had previously explicitly allowed that use in their zoning.
The new regulations now prevent those units from being short-term rentals and Spalteholz said, since the October announcement, listings of those units rose 389 per cent (44 in 2023 versus nine in 2022) in the last four weeks versus the same period in 2022.
"It's possible that some owners had suites as short-term rentals and now are needing to or choosing to sell. However, note, this is speculation at this point," Spalteholz said via email.
Watch | Airbnb spokesperson says new rules do not address the housing crisis:
Dustin Miller, a Victoria real estate broker, said the regulations have resulted in dozens of units being listed, but not selling, likely because they are priced at a premium buyers can't justify without an Airbnb revenue stream.
"The units are simply priced way too high," said Miller.
Of the 44 units listed, Miller said only two have sold in the past month.
And more restrictions could be coming.
On Monday, Federal Housing Minister Sean Fraser said the Canadian government is considering a series of measures to curb the number of Airbnb and other short-term rental units to boost the supply of homes available to rent for a longer stretch.
Miller thinks this could also force more people to sell, especially in regions where there are not already existing civic rules.
"I think we could see an increase in listings in surrounding municipalities that don't have the legal structure that City of Victoria does," he said.
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With files from The Canadian Press, Chad Pawson, Daybreak South and John Paul Tasker