British Columbia has recently implemented legislation aimed at curbing the prevalence of short-term rentals, a move designed to address the chronic housing shortage in the province. The new rules restrict property owners from offering any property in B.C. for short-term rental purposes, except for their primary residences, with some limited exceptions.
The government estimates that as many as 8,000 homes could be returned to the regular housing market out of the 28,000 listed on platforms such as Airbnb and VRBO in the province.
The immediate impact of this policy initiative is evident in the rental market data. In October, British Columbia witnessed a 21% increase in listing volume compared to September, with the city of Vancouver experiencing a substantial 46% increase in total listings. These figures defy typical seasonal trends, which would expect a decline in listings during October.
The purpose-built rental industry is closely monitoring the implications of this policy change on competition, achievable rents, tenant acquisition, and the influx of new rental units into the market. Following the initial implementation of the legislation, there has been an immediate notable increase in new rental listings, many of which are owned and managed by property owners with limited rental knowledge and experience.
While this influx has impacted average market rents, with a reported -3.7% month-over-month decline in Vancouver and a -0.6% decline in the province of British Columbia (Source: October Rent Report by rentals.ca and Urbanation), the long-term trajectory of rents remains largely unchanged. This is because the policy does not address structural issues in the long-term supply of new units.
Increased listing volume will affect lead generation in the short term, but given the strong demand and low vacancy rates in major BC markets, this is expected to be a temporary phenomenon. Once these newly introduced units are leased, vacancy rates are likely to remain at record levels, and availability will continue to be limited.
In order to limit the effect of this legislation, leasing professionals must effectively convey the advantages of purpose-built rentals over other housing options, emphasizing security of tenure and professional, experienced management. Despite short-term challenges, purpose-built rentals will continue to offer benefits that outweigh those of privately owned units.
Apart from its impact on the rental market, the legislation is likely to trigger an influx of properties being listed for sale, as property owners reassess their ability or willingness to maintain and rent out their properties. This was evidenced by at least 22 condo owners in downtown Victoria listing their units for sale last year, according to an analysis of listings shared with The Globe and Mail by a Victoria-based advocate for zoning reform.
In addition to this, the millions of tourists planning to visit British Columbia and stay in short-term rentals will need to adjust their plans, potentially increasing the cost of conventional hotel accommodations and making tourism in the province more expensive for the foreseeable future.
Across the other provinces, Quebec’s new tourist accommodation law is now in effect, imposing fines for short-term rental platforms listing properties without a government certificate. Newfoundland and Labrador cracked down back in April with its Tourism Accommodations Act, while Nova Scotia also imposed legislation with stronger rules for short-term rentals.
Housing advocates in Ontario have urged the province to follow B.C. to help ease the housing crisis, while New Brunswick is studying the impact of the short-term rental market on housing availability with a potential for regulations to be imposed.
Attempts to restrict short-term rentals in Alberta, P.E.I. and Manitoba have been limited to a municipal level in Edmonton, Charlottetown and Winnipeg respectively so far, while there has been no official stance from Saskatchewan.
In conclusion, the recent short-term housing legislation in British Columbia is already reshaping its rental landscape, prompting property owners to reconsider their investment strategies and leading to a temporary influx of rental listings. While short-term effects on market rents and lead generation are noticeable, the long-term impact on the overall rental market is expected to be limited.
Purpose-built rentals, with their inherent advantages, will continue to be a preferred choice for tenants, and the multifamily housing sector must ensure they are hammering home these advantages in their marketing messages.