Rental furore: Part 2

By Mark Ameerali

City council’s role in short term vacation rentals

Kelowna is facing a desperate rental shortage, with vacancy rates at 0.5 per cent and rents last year jumping considerably.

City council is well aware of the shortage of low-income and rental housing in the city and they are finally taking meaningful action to resolve this desperate situation.

In 2015, 329 rental units were built. In 2016, about 1,000 rental units were complete or underway and another 1,000 are expected in 2017.

As Kelowna made the top 10 list of most expensive rental markets in the country Coun. Ryan Donn addressed the issue in a recent article saying:

“It’s going to have an effect in a year or two; we truly do hope that it balances out the housing market and also makes it more affordable to live in Kelowna."

By comparison, in its 2016 report, the city recognized the presence of 500 STR homes in the city, which represented just about four per cent of the 12,736 total rental units.

Keep in mind that many of these units would “shared space” accommodation, where the property owner rents out a room or even a couch to travellers.

I don’t think anyone would vilify an STR host sharing a spare room in their home to low-budget vacationers who could otherwise not afford the vacation. I also don’t believe anyone would think poorly of a family renting out their home as a means to help pay for their own vacation.

However, both of these types of hosts are included in the total STR number. This creates an artificially high number of rentals on the market.

Even if you assumed that 60 per cent of the STR options are of the “entire house, non-owner occupied” variety, I don’t believe that the 300 units that are repurposed to allow tourists and students an affordable option to visit our city are the primary culprit behind rising rents.

Rather, I would point back to the severe lag in building permits issued dating back to 2002.

The city had suggested back in 2015 that they might propose a licensing system for STR. We expect to see this in the fall of 2017. This means the city is potentially pre-determining a base number of licences to start and increasing the number of licenses as the vacancy rate increases above 3 per cent.

I’m not sure anyone knows the last time the vacancy rent in Kelowna was above three per cent but I do wonder if we are willing to forego the economic benefits from the tourism we would lose by limiting the number STR licences.

Every STR listing that would be prevented by a licensing cap would represent lost economic benefit to our city.

I don’t see the need to place an artificial cap on the number of STRs when the atypical rental market (less than 12 month rental) would naturally perform that function much more accurately by diminishing profit margin for STR.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.