This article is the third in a five-part series exploring the key issues in BCREA’s election platform, which is focused on resolving the critical housing challenges in British Columbia. In this article, we will delve into the impact of short-term rentals on housing affordability, supply, and the broader real estate market. Short-term rentals, facilitated by platforms like Airbnb and Vrbo, have become a controversial issue in BC, especially in high-demand areas such as Vancouver, Kelowna, and the Okanagan region. The BC Real Estate Association (BCREA) has highlighted the need for a balanced approach to regulating short-term rentals to address housing shortages without harming the province’s tourism and business sectors.

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The Problem: Short-Term Rentals and Housing Supply

The rise of short-term rentals (STRs) has significantly impacted housing availability in BC. Homeowners and property investors have increasingly turned to short-term rentals to generate higher income than they would receive from traditional long-term leases. This trend has removed many homes from the long-term rental market, exacerbating the already tight housing supply and contributing to rising rents and decreased availability for residents.

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According to McGill University’s research, led by David Wachsmuth, short-term rentals in BC reduced housing availability by up to 30% in some areas, pushing rents higher and contributing to affordability challenges​. The City of Vancouver and other municipalities across BC have implemented regulations to restrict STRs to principal residences, aiming to return more units to the long-term rental market. However, the problem persists, especially in high-demand tourist areas like Kelowna, where housing shortages are acute.

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Key Challenges

1. Reduced Housing Supply: Short-term rentals reduce the overall supply of housing available for long-term renters, leading to higher rents and housing shortages. In cities like Vancouver and Kelowna, this has a significant impact on affordability for residents.
2. Tourism vs. Housing: The challenge for policymakers is balancing the economic benefits of short-term rentals in supporting tourism with the need to protect housing availability for residents. In popular tourist destinations, short-term rentals provide a significant income stream for property owners, making regulation a contentious issue.
3. Inconsistent Enforcement: While cities like Vancouver have introduced rules that limit short-term rentals to principal residences, enforcement of these regulations remains inconsistent. Many units continue to operate without licenses, exacerbating the housing crisis and leading to illegal short-term rentals.

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BCREA’s Recommendations for Short-Term Rental Regulations

BCREA acknowledges the need for regulation but advocates for a balanced approach that accommodates both housing and tourism needs. Here are the key recommendations:

1. Stricter Enforcement of Existing Regulations: While regulations exist in many BC cities to limit short-term rentals, enforcement needs to be strengthened. This includes improving the mechanisms for reporting illegal short-term rentals and increasing penalties for non-compliance. BCREA supports stricter enforcement to ensure that housing designated for long-term rentals is not misused for short-term purposes.
2. Exemptions for High-Tourism and Special Use Cases: BCREA recommends creating exemptions for certain groups and areas where short-term rentals are essential, such as:
   • Medical staff relocated to remote areas for short-term contracts.
   • Workers in the film industry who are temporarily residing in BC for production purposes.
   • Tourists in high-demand regions like Kelowna, where hotel accommodations may be insufficient during peak seasons. These exemptions would support the tourism industry and essential services while still limiting the impact on housing supply.
3. Increased Transparency for Short-Term Rental Listings: BCREA calls for platforms like Airbnb and Vrbo to provide more transparency by requiring hosts to register their properties and display license information publicly. This would help municipalities track and enforce short-term rental regulations more effectively, ensuring compliance.
4. Reinvesting Revenue into Affordable Housing: BCREA recommends that tax revenues generated from short-term rental activities, such as fines for unlicensed units or taxes levied on short-term rental income, be reinvested into building affordable housing units. This approach could offset some of the negative impacts short-term rentals have on housing supply.

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The Impact on Kelowna

In cities like Kelowna, which heavily rely on tourism, short-term rentals play a significant role in the local economy. However, the city also faces a housing shortage, with vacancy rates remaining low, and housing prices and rents rising consistently over the past decade. According to Kelowna City Council, the regulation of short-term rentals, particularly in high-demand areas like the Okanagan, has resulted in some positive shifts in the housing market.

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For example, Kelowna has introduced licensing rules for short-term rentals and recently launched efforts to increase enforcement. The goal is to balance housing needs with tourism, particularly during the busy summer months when demand for accommodation surges. If enforced consistently, these rules could help free up rental units for long-term residents and alleviate the housing crisis in the region.

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Conclusion

Short-term rentals remain a contentious issue in BC’s housing landscape. While they provide economic benefits to property owners and support the tourism industry, they also contribute to housing shortages and rising rents. BCREA’s recommendations advocate for a balanced approach that allows for short-term rentals in specific cases while ensuring that housing availability for residents is not compromised.

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This article is part of BCREA’s ongoing election platform series, aimed at tackling the key housing challenges facing British Columbia. Stay tuned for the next article in our series, which will focus on the establishment of a Permanent Provincial Housing Roundtable.

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Sources:

• City of Kelowna
• BCREA