“There has definitely been some knee-jerk reaction,” says AJ Hazzi of Vantage West Realty.
Kelowna realtors are hearing from condo owners who are considering putting their units up for sale because of new provincial, federal and possible municipal rules cracking down on short-term rentals.
“We have property management as well. So, we have seen a lot of these folks switch to long-term and then we’ve also seen some folks put their properties on the market,” said Hazzi, noting others are taking a wait-and-see approach.
Jerry Redman, owner/director of RE/MAX Kelowna tells Castanet there is a lot of concern among owners of short-term rentals about what the total impact of the combined crackdown will be.
He says there is a lot of confusion, but he was glad to see Kelowna city council delay a decision on proposed changes to the city’s bylaws until after the province formally introduces legislation. That could happen in the next few weeks.
He’s seeing a bit of an impact on the market.
“There’s definitely some people talking about getting out ahead of it and getting out of the short-term rental and selling their property. But we haven’t, as of yet, seen a massive flood of it.”
Hazzi believes those panicking the most are those who purchased a property based on the numbers working out based on short-term rental revenue.
“A lot of people realized that they would have been in negative cash flow buying a property and putting a long-term tenant in it, but bought it based on a pro forma of short-term rentals.
“I think those people are quite scared right now. Some of the younger investors. There was a lot of hype around building a business around short-term rentals. There was a lot of people that jumped into that, created a company and started to look to that as their investment strategy. Now, all of a sudden, the rug has been pulled out,” says Hazzi.
Neither realtor sees this having a significant impact on the shortage of affordable rentals
“The governments, for some reasons, think that some of these short-term rental places are going to become long-term renters. I don’t think that anybody in the short-term rental game are going to become long-term renters unless the government does a serious overhaul of the Residential Tenancy Act,” says Redman. “The Residential Tenancy Act is enticing nobody to become a landlord.”
However, both he and Hazzi say it could help some home buyers.
“Perhaps somebody who wanted to move into them that’s been kept out or gated out of the buildings by prices. They might have an opportunity to buy and live in a building for less money than they would have otherwise,” Hazzi suggests.
Redman says it’s not a bad time to buy right now. Typically sellers are motivated in the winter months, and he expects interest rates will be lower when today’s buyers are ready to refinance.
“Once the rates start to come down and people see that changing and that stability coming back, then I think we’re going to see a bit of pent-up energy. If the market starts to get a little bit warmer again, I think the motivated sellers will go away as well.”