More than 2,000 short-term rental (STR) units have been removed from Vancouver’s housing market since regulations were enforced last September. The City of Vancouver recently announced this result, along with its mission to strengthen regulations in 2020.
There’s the intent to develop a better strategy to delist more properties, along with reviewing technologies like 3-1-1 complaint intake, licensing and enforcement systems.
Plans are also in the works to include more strata corporations in the Prohibited Buildings List. This list flags buildings that aren’t eligible for STRs, so the city won’t issue a business license to units within those buildings.
Strata boards or managers will be able to submit a formal request to have their building included, but they must show proof and documentation to support the strata by-law ban.
A pilot launched this past year, which included a partnership between the city and two major strata property management companies, Rancho Management Services and First Service Residential, resulted in banning the auto-issuance of online STR business licenses in 18 strata plans (6,468 units) across the city, with pre-existing strata by-law prohibitions.
Jim Allison, president of CCI Vancouver Chapter, emphasizes the gaps that exist without a strata by-law in place.
“Unlike other parts of Canada, a strata corporation built before 2010 can limit the number of rental units in a strata,” he said in an email. “It appears, however, that an Airbnb is not considered a rental because it is typically for a period of less than 30 days. For it to be considered a rental, it must be more than 30 days. So, this loophole allows any condo owner to operate an Airbnb if the strata corporation has not enacted a bylaw, which states that Airbnb and other such operations are not permitted.”
One benefit of joining the Prohibited Building List is the financial penalties that can ensue.
“A strata can only fine an owner $200 for the violation of the bylaw,” says Allison. “The city has much more power. The operation of an Airbnb can be so profitable that the fine from the strata is not a deterrent.”
He says while strata corporation boards appreciate the efforts on behalf of the city to create some controls around STRs and strengthen the program next year, this is a small part of a much larger issue.
He stresses these regulations are exclusive to Vancouver, a population of almost 680,000 in a Greater Vancouver Area of more than two million. This means there are over one million residents in 20 other municipalities who are not protect by the same regulations. This includes cities like North Vancouver, West Vancouver and Burnaby. Richmond, another city, was recently singled out as one of the poorest performers when it comes to rental housing, according to the Goodman Report.
Housing market impact
More than 2,100 long-term rental licenses have been issued, according to the city, and nearly 80 per cent are for individual condo units. For properties already delisted, only 300 have likely returned to the long-term rental market, according to Dr. David Wachsmuth, Assistant Professor in the School of Urban Planning at McGill University and co-author of an upcoming independent report on short-term rentals.
Adil Dinani, real estate advisor, Royal LePage West Real Estate Services, says while there has been substantial drop-off in investor interest around condo purchases, investors are searching for other opportunities, and some of these opportunities include short-term rentals in areas outside Vancouver that don’t have provisions in place.
And while results from the short-term rental program are promising, Dinani says they still aren’t enough to move the market in a meaningful way where this new legislation is changing pricing trajectory. He says the rental stock is not being increased as much as the market commands, while big tech companies like Amazon and Microsoft are opening up offices and attracting the tech sector to live and work nearby.
“As the Vancouver narrative goes, we’ve got mountains on one side and water on the other; the city can only grow one way and that’s vertically,” he points out. “As we see more projects come to market in the multi-family arena, particularly high-rise condos, they’re being sold at more of a premium price because land values are so strong.”
He sees much higher rents coming to market in the next three to five years as rental demands grow stronger.
In a recent Q3 update, Housing Vancouver revealed that purpose-built rental approvals are currently below the 10-year, 20,000-unit target set by the city. The government aims to push harder for the creation of rental stock in the next year, but this period saw fewer purpose-built rental projects come forward for council approval compared to previous years.
The city is calling for 72,000 new housing units over the next 10 years to make housing affordable to local incomes. In the first three quarters of this year, 2,987 units were approved, including 601 townhouse units, 649 purpose-built rental units, 301 laneway homes and 529 social and supportive housing units.
Photo by John Tekeridis