Airbnb’s Cancelled Listings Create a Surplus of Rental Inventory: How Property Owners Can Mitigate the Flux
While some renters, and critics are meeting the new short-term rental market changes in Vancouver with resounding praise, others are feeling the flux where it hurts the most; in their pockets. Vancouver has seen the wave of high priced rental properties for well over a decade and gained notoriety as one of the most expensive cities to live in, albeit also one of the most sought after in the world. It comes as no surprise that home owners have been renting out their properties either on short term rental basis’, such as we have seen with Airbnb or longer-term rentals to build wealth as investment real estate. Over the years however, short term rental properties have, along with many other factors, been driving rental property prices up, eliminating affordable housing, as well as available housing in the Vancouver rental market. With this argument in mind, critics and city officials, most notably Mayor Gregor Robertson, have been vying to bridge this gap and make housing more available and affordable. In short, along with Airbnb’s new policies, and initiatives taken by the City of Vancouver to regulate short term housing, Vancouver is experiencing an influx in the available inventory of rental properties as well as some decreasing in pricing.
What is considered a short-term rental?
The City of Vancouver defines a short-term rental as a home, a room within a home that is rented for less than 30 consecutive days at a time. Additionally, short term rentals can only be operated from your principal residence, the home where you live as an owner or tenant and use for bills, identification, taxes and any insurance. Short term rentals can only be permitted in a secondary property or basement suites if the operator lives in the suite full time. Short term rentals are not allowed in Vancouver’s Empty Home Tax, this tax applies to homes that are not the owner’s principal residence or that are not rented as a long-term rental.
Why are these new regulations affecting the rental market?
Well, for starters once these new bylaws were implemented as of September 1, 2018 many short-term rentals in Vancouver, which had been operating illegally through Airbnb, and other advertising streams were immediately pulled off all third party sites pending the approval of the new documentation. This meant that through Airbnb alone over 2000 properties were taken off the popular site, that doesn’t include properties advertised on other popular rental sites or buy and sell sites. All these short-term rentals without the new required licensing have flooded the rental market resulting in an increase of rental inventory, and competitive pricing strategies.
How are the new bylaws being enforced? What documentation you need going forward.
The City of Vancouver is actively enforcing bylaws on all short-term renal operators throughout Vancouver. Operators maybe fined up to $1000 per offence or be subject to legal action for operating without a valid business license, listing or advertising a short-term rental without displaying a valid business license, operating a commercial short-term rental. And operating in an unsafe or nuisance property. Commercial short-term operators and those with multiple offenses may be subject to prosecution and fines up to $10,000. Homeowner groups in British Columbia are also able to fine owners or residents up to $1000 per day for defying the strata corporations bylaws on short term rentals.
Going forward short-term rentals expecting to operate responsibly and legally should comply with all of The City of Vancouver’s short term rental bylaws including ensuring guests are adhering to the regulations stipulated. Operators should check their eligibility to apply, meet the license requirements and then apply for short term rental business license, once received ensure that they are in compliance with responsible landlord operations.
Weighing your options. Should you continue to short term rent or should you look at long term rental solutions?
The new wave of regulations has become a hot topic among investment property owners looking for solutions to empty rental properties or legal alternatives. While there are no legal alternatives to obtaining or the adherence to bylaws, the instability of short-term rental market has investors questioning their best options. Both short term and long term offer pros and cons, and while we will touch on this in a later article, the basic principles apply.
Short term rentals may offer high rate of return during busy seasonal times and then tapper into off into slow seasons, while long term rentals afford the opportunity for consistent wealth building in all seasons. Some companies, like RIF, with expertise in rentals and the rental market can help you achieve your short term rental strategies, legally, in the changing market.
Rather than fight the inevitable, this flux in short term housing provides an opportunity for serious and savvy real estate investors to find long term tenants and secure a consistent return on investment. To find out what your rental property’s long term rental potential is, connect with us here.