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Housing Minister said that commercial STR hosts have the option of switching to a strata hotel format amid the regulation changes

Two commercial short-term rental (STR) hosts in Nelson have expressed frustration over new regulations, citing that their properties aren’t suited for long-term rentals (LTR).

The first phase of the provincial government's principal residence requirements took effect on May 1, 2024. This restricted STR hosts to a single primary residence in urban areas with room for a secondary suite or laneway house.

Hosts were also required to obtain a valid business license and later required to share their suite data with their municipality. The registry will become completely operational on May 1, 2025, and by June 1, the government will begin to remove properties that aren’t adhering to the new guidelines.

These changes now encompass both residential and commercial STR properties.

Karen Belland said that commercial properties like hers should not be placed in the same category as residential ones.

“I think there are about 45 of us that have commercial properties in and around Baker Street. We’re all being forced to shut down our businesses.”

Belland owns a commercial property in downtown Nelson, and two residential ones in Rossland. She said that she anticipates long-term renters who live in the same dwellings will be more inclined to switch to STR because of the changes.

She added that she believes that these new regulations fail to fix the problem.

"By restricting commercially-zoned STRs, the government is jacking up the demand for residentially zoned STRs which will reduce the number of LTRs available rather than increasing them."

Another issue that commercial STR hosts said they are facing, is that Nelson isn’t privy to the same exemptions as some of their neighbouring municipalities. This is because they have a population greater than 10,000 and aren't a designated resort town.

Communities do, however, have the option to opt out if they have a vacancy rate of 3 per cent for two years.

Essentially, if communities increase their housing supply in a manner that allows the people in the community to access housing, they can use the excess housing for STRs.

As it stands right now, Belland said that one solution she and others will have to consider is moving their businesses elsewhere.

“I could see people doing that for sure,” she said.

However, Cal Renwick said that people shouldn’t have to move to be able to keep their properties.

He purchased a space designed for STRs in 2019 but now faces restrictions due to legislation requiring owners to live on-site.

Renwick said that the commercial property he rents out in downtown Nelson is not conducive to a LTR or a strata hotel model.

“For instance, if you want to take the garbage out, it's over a block walk just to take the garbage out," he said, adding that he isn’t interested in moving his business elsewhere, like others may be considering.

“I’m happy here,” he said. “We're not prepared to move, nor do I think we should be. I don't think that's a solution.”

Renwick said that the provincial government should have considered a slower approach to the regulatory changes. He said that a one-size-fits-all approach to opening up more housing doesn’t work, and grandfathering existing owners in to new regulations would have allowed people the time to asses their situations.

“Nelson could have been a poster child for the province,” he said. ”Part of the problem is ... the Residential Tenancy Act (RTA)."

He suggested that adding more balance to the RTA would make landlords more comfortable with transitioning to LTRs.

One thing that has scared some STR hosts away from opting to operate as strata hotels is having to employ front desk administration and the huge increase in property taxes.

The switch would make it so STR hosts have to pay similar property taxes as hotels do.

However, Renwick said he doesn't blame the city. He believes that creating more housing is the provincial government's responsibility and shouldn't be implemented in a way that negatively impacts good-faith landlords.

Despite this, the Minister of Housing and Municipal Affairs, Ravi Kahlon, said that the new STR registry is necessary to capture data within the housing market in order to get more housing back online.

“It ensures that all local governments know what is being operated,” he said. “ Due to some of the money laundering work that we've been doing, it gives us the ability to link those two systems together.”

Kahlon said that the answer to many of the concerns expressed by STR rental owners is simple. Someone operating a commercial STR can apply to become short-term hotel if they’re operating a building suite.

Belland has argued that this doesn't apply to her suite as she doesn't own a building.

But Khalon said that he is not entirely sure what people feel the difference is.

He explained that the core reason behind some of the changes to these regulations is to make sure homes that could be made available for people to rent for the long term are prioritized.

According to the Minister, this is in response to a significant increase in investors buying up units and complete homes, placing them on the market for STRs, and operating them as hotels.

“Yet at the same time, people in our communities are struggling for housing,” he said. “It’s not fair.”

Nelson's vacancy rate currently sits at 0.8 per cent.

Although the numbers don’t sounds great, Kahlon suggested that these changes have made a difference in just a small amount of time.

When the new regulations were announced in October 2023, Nelson’s vacancy rate sat at 0.6 per cent

Kahlon said that he understands landlord's frustrations but explained that he is also frustrated with the for-profit housing model that has only benefited some.

"I've heard from so many people who are now moving into house rentals that now have stable housing because of it."

According to the provincial government, just under 200 structures have been installed in the Kootenay region since the changes, with another 98 currently under construction or in development.

“We're not there yet. We still have more work to do.”