Study finds growing short-stay market is driving up rents

Short-stay driving up rents

A new study has confirmed what the City of Victoria says it already knew — short-term rentals are contributing to the housing affordability crisis.

In July, Victoria council approved several changes to its short-term rental regulations, including increasing fees as well as fines for non-compliance, and limiting use of some units for short-term stays.

A study released this week by McGill University found growth in the short-term rental market is driving up the cost of long-term rentals.

The researchers said short-term rentals took another 16,810 housing units out of B.C.’s long-term rental market in June, tightening up the rental market and driving up rental rates.

The study noted the addition of one dedicated short-term rental per 100 rental units in a neighbourhood contributes to an average rise in rent of $49 a month for that neighbourhood, while across the province, rents increased up to 16.6 per cent last year as a result.

Those were two of the figures the City of Victoria used to justify new regulations for the industry.

“The initiatives recommended in July and approved by council are intended to better regulate [short-term rentals] in Victoria, however, there is only so much that municipalities can do within the existing legislative framework,” the city said in a statement.

Victoria is hoping the province will bring forward legislation that addresses the industry and empowers local governments to do more than is currently permitted under the Community Charter or Local Government Act.

The new Victoria regulations included increasing fines for operating without a business licence to $1,000 from $500, and to $500 from $250 for those who advertise without a licence; doubling the fine for contravening allowable use to $700; and increasing the cost of a licence for a non-principal residence to $2,500 from $1,000.

The city also moved to restrict the occasional rental of someone’s entire home to four bookings per year and require those renting out their principal residence to furnish proof that the home is their principal residence.

The McGill study noted the short-term rental market in Victoria grew 7.4 per cent to 800 daily active listings over the past year. It said host revenue growth jumped 3.8 per cent over the last year to $4 million.

Across the Island, the number of short-term-rental listings grew 17.5 per cent to 6,310 over the last year, while host revenue grew two per cent to $29.6 million.

The researchers say if the province’s short-term rental market stays on its current trajectory, the long-term-rental market will lose another 19,400 housing units by next summer, which could mean a further $23 increase in average monthly rents in cities like Victoria.

“Across Canada, our existing stock of affordable housing is disappearing at an alarming rate,” Annie Hodgins, executive director of the Canadian Centre for Housing Rights, said in a statement citing the study.

For every new unit built, at least five are lost to excessive rent increases, renovation, redevelopment and conversion to other uses such as short-term rentals, Hodgins said.

“This report demonstrates the extent to which commercial short-term rentals are exacerbating Canada’s affordability crisis by driving up rents and taking sorely needed units away from renter households.”

Thorben Wieditz, executive director of Fairbnb Canada Network, said the report marks the first time the effects that the “transformation of homes into ghost hotels” has on tenants’ rents across the province has been quantified.

“It illustrates beyond doubt that limiting short-term rental use to actual home-sharing — by eliminating commercial short-term rental growth — must be part of regulatory efforts to address British Columbia’s housing crisis.”

Fairbnb wants provincial regulations that would crack down on purely commercial short-term rentals.

For example, it’s pushing for legislation that would have a principal-residence requirement for homes used in short-term rentals to ensure they are genuine “homesharing” operations, not full commercial ventures.

It also wants a province-wide registry.

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