Vancouver Has 3x As Many Illegal AirBnB Rentals As They Do Apartment Vacancies

AirBnB Vancouver Screenshot optimized

Working at the speed of government just sucks. The City of Vancouver is still sorting out the details of an impact study on AirBnB, which likely won’t report any results until there’s been a significant amount of damage to an already strained city. So we decided to unleash our hungry data analysts to crunch the available numbers, to see just how many long-term rentals are listed in the City of Vancouver. Turns out there are approximately 2,570 potentially full-time AirBnB rentals – that’s roughly three times the 0.8% average vacancy rate in Vancouver according to the Canadian Housing and Mortgage Report (CHMC).

It’s important to note that the numbers above are only the long-term rentals, which had availability of more than 30 days. Actually, if AirBnB’s server hints are an accurate measure, we may have found 4,606. We aren’t counting the ‘I need to help pay my mortgage so I’m putting one of my bedrooms on AirBnB’ crowd, who are utilizing it help make ends meet. Short-term rentals aren’t really an issue, the problems arise when landlords decide it’s more lucrative to use their property for the sole purpose of AirBnB. Not only are these landlords no longer providing rental units for city dwellers (or as politicians call them “constituents”) in many cases they also aren’t paying the same taxes and fees hotel owners and bed and breakfast owners are required to pay.

Exponential Growth Means Exponential Marketshare

While this may not be a problem now, the exponential growth of AirBnB and copycat competitors will very soon become a problem if left unaddressed. Oh yeah, you didn’t know there were other companies? HomeAway had 672 listings available for more than 30 days at a time, and FlipKey by TripAdvisor had 266, and that’s just a few of many.

AirBnB Laws

This begs the question, should AirBnB be regulated and required to leverage a tax on operators? While Canadian cities have just been watching this slow motion train wreck occur, cities across the United States have been quick to implement frameworks to prevent it from getting out of hand. San Francisco (AirBnB’s home turf), forces would be hoteliers to pay a $50 licensing fee every two years, as well as a 14% hotel tax. Additionally, licensed home share users cannot rent their places for more than 90 days in a year.

Santa Monica passed a law last year which is being hailed/critiqued as one of the strictest in North America. The law prohibits the rental of whole units for less than 30 days, longer than 30 days requires a standard landlord-tenant agreement. The law still allows hosts to rent a spare room for a few days while they’re home, but 80% of home share rentals were eliminated. The law convicted it’s first violator last week, rental operator Scott Shatford, who pleaded no contest to 8 misdemeanour counts of operating a business without a license. He agreed to pay $3,500 in fines, to stop renting properties in the city, and was placed on two years probation.

New York recently approved a new bill that will go into effect this fall, making the advertising of units in multi-unit buildings for less than 30 days illegal. Violators will be hit with a $1,000 fine on their first offence, a $5,000 fine on their second offence, and $7,500 for each offence after that. Anything longer than a 30 days requires a landlord-tenant agreement.

“This bill, once it’s signed into law, will send a strong message that we prioritize hardworking New York families and affordable housing”
–Linda Rosenthal

The sponsor of the bill, NY State Assembly Linda Rosenthal said “This bill, once it’s signed into law, will send a strong message that we prioritize hardworking New York families and affordable housing”. Which leaves us wondering: What message is the BC’s government sending to hardworking Vancouver families?

Does Vancouver Need Home Sharing Laws?

Turns out they already have a law to address home sharing, likely making the vast majority of units being rented illegal. Locations being rented for less than 30 days (4,371 by our count) are only permitted if they are a hotel or a bed and breakfast. The former requires a valid hotel license and the collection of the city’s 3% hotel tax. The latter requires a bed and breakfast license, and the owner to be present while the guest is there. The city of Vancouver has issued 105 hotel licenses, and 58 bed and breakfast licenses if you’re curious.

Why aren’t they doing anything? It’s a combination of sloth and politics in our opinion. The city’s system is complaint driven, which means they only investigate once a complaint has been officially launched. Usually a complaint only results in a stern warning from the city, but with the absence of strictly defined penalties there isn’t a whole lot of reason to stop. The reason behind the cities logic is that they’re cash strapped, although if short term unit rentals were being properly taxed, the city could be generating an additional $10,000,000 by our estimate – more if you include the registration fee. Although $10,000,000 is a drop in the bucket for many people in Vancouver apparently, it is the equivalent of 140 family household incomes at the provincial median.

In the meantime, the city has hired a consulting firm, at an unknown cost, to study the issue of whether it has an impact on rental stocks. We get the feeling we’ll get the results in the first quarter of 2017, right around the next municipal election, while the city’s strained inventories only get worse for the next 8 months. It’s funny how busy politicians get tackling issues just before elections. Must be a moon phase or something.

So which side of the issue do you stand on? Does Vancouver need home sharing so they can bask in the glory of embracing modern technology? Give us a tweet and tell us why. Do you think we need to address the law yesterday? Why not give Gregor Robertson a tweet?

Let’s Have An Honest Discussion About Real Estate

At Better Dwelling we’re exploring the issues around Canadian housing from all sides. Like this post? Like us on Facebook to get notified when the next one goes live. Hate it? Give us tweet and let’s get the discussion started.

16 Comments

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  • Reply
    Emma 8 years ago

    @ screenshot lol. “Arica” [sic] is making a pretty decent living on her AirBnB rental there…on her ad that’s not in English for Vancouver.

    • Reply
      Alice 8 years ago

      Don’t hate the player, hate the game! If you had the opportunity too, you would also.

      • Reply
        James 8 years ago

        Sadly Alice, most people wouldn’t. The reality is that if you engage in the Air BnB listing process as a condo or home owner, your insurance is likely to be voided in the event that damage occurs to the residence. And, if you’re a condo owner and your temporary guests damage strata/common property, guess who has to pay? That’s right, you, the “player”. Thanks to people that don’t read or understand the rules, or the basics of their home insurance, people like me will always have a client base.

        • Reply
          S 7 years ago

          Thankfully Airbnb has insurance for that situation. Phew.

          You’re about to become a dinosaur, James.

    • Reply
      Derek 7 years ago

      Arica’s ad is for renting a place in Richmond. Perhaps this is an issue in Richmond as well, but that isn’t what this particular article is about.

  • Reply
    James 8 years ago

    As a lawyer, I’ve drafted many bylaw amendments for strata corps hat restrict Air BnB’s.

    The city lacks the will and resources to track and regulate the air BnB industry here. They also know that many use it to pay their mortgages and monthly living costs.

    The net result is regulation has been passed on to owners/strata corps at the condo level.

  • Reply
    Peter Labrie 8 years ago

    I am concerned that Air BnBs are cannibalizing both: i) our rental market, and ii) the hotel market. It is difficult for renters to find suitable accommodation, at a reasonable price. This pushes talent out of Vancouver. Air BnBs are absorbing much of that rental market for short-term gains. On the other hand, hotels are a major employer in Vancouver. They train many workers, who go into other hospitality industries. Yes, I am all for competition, but Air BnBs are neither paying the same wages as hotels, nor are the reinvesting in their staff. The rules must be coherent, and fair to everyone. Right now, that is not the case.

    • Reply
      benoit 7 years ago

      You forgot it also cannibalize the buyers market with many people buying property with only purpose of putting it on air bnb, making huge profit over the mortgage right away even by having it rent just half of the time.

  • Reply
    mona 8 years ago

    I think home owners should be able to do what they want with a home they own. While monthly rents are high in this city, they are way lower than they should be considering the price of buying real estate. Currently, owners can pay their mortgages much easier by renting short-term through Airbnb, especially now that it is illegal and inventory is low and prices are high.

    The way to battle Airbnb is let the snake eat it’s own tail by making Airbnbs completely legal and taxing them. For owners, renting your home to strangers through Airbnb comes with certain risks, as more places get put on Airbnb, rates and occupancy will come down. Eventually it will make more financial sense for owners to move to a standard tenancy. All this time the city can be making tax money it can use to build subsidized housing.

    my .02

    • Reply
      James Macdonnell 8 years ago

      Mona,

      Your .02 only makes sense regarding single family dwellings of a detached nature. In those cases the impact on neighbours and surrounding environment is less severe than in the cases of attached residential units in a strata complex, for example.

      Home ownership is imbued with certain rights. However, those rights do not come at the expense of another’s right to the peaceful enjoyment of their property.

  • Reply
    Kyle MacDonald 8 years ago

    This is an incredibly stupid correlation. I own a house and we have an in-law suite that is empty 7 months of the year. We rent out both our main house and the in-law suite on Airbnb from time to time. NEITHER of these Airbnb listings would ever be monthly rentals. Ever. To think that all Airbnb listings will magically become monthly rentals is dreaming at best.

  • Reply
    Kyle MacDonald 8 years ago

    Everyone who thinks stopping Airbnb will create more monthly rentals should read this article: http://www.sightline.org/2016/06/15/why-quashing-short-term-rentals-is-a-zero-sum-game-in-a-hot-housing-market/

  • Reply
    Airbnb landlord 8 years ago

    As someone already said, don’t hate the players hate the game. I have 15 airbnb units and have been making a killing the whole summer. Sometimes I get a fine from the strata but it’s just another $200 fine every 3 weeks or so; nothing compared to what I’m making per night. The best thing is that none of the units is mine; I simply sub-lease them. Caching caching.

  • Reply
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