By John Francis
There is a growing problem in tourist destinations around the world — visitors have much deeper pockets than locals. Landlords are pulling their properties out of the long-term rental market in favour of the short-term rental market to take advantage of the influx of wealthy visitors. This pushes both rental prices and house/condo prices beyond the reach of residents and workers.
This pattern is probably most advanced in Venice, Italy, where the city’s population has dropped by 75% in the last 40 years. Reykjavik, Iceland, Barcelona, Spain and Dublin, Ireland are all headed in the same direction. In London, England as well as Toronto, Ottawa and Vancouver, workers are having to commute from further and further out as rents and property values climb.
In many smaller communities — especially those around National Parks such as Ucluelet, Tofino and Northern Bruce Peninsula — the same pattern can be seen. A recent news story told how workers at Tofino routinely “couch-surf” for the entire tourist season. With rising costs to buy or build and dwindling rental stock, Tobermory and Lion’s Head may not be far behind.
All members of MNBP’s current Council have agreed that Short-term Accommodations (STAs) are an important factor in our housing market and vowed to “do something” to solve the problem. They are making an honest effort to move forward — they hired Skelton Brumwell and Associates to quantify the issues and propose potential solutions. Skelton Brumwell’s report is due at Council’s Dec 16, 2019 Meeting.
At last summer’s STA Public Meetings, Skelton Brumwell’s Michael Wynia dropped a tantalizing bit of information. “Short-term rental” is not the same as “residential”, he explained; it is not necessarily included as a permitted use in Residential zones. MNBP has never made this distinction but other jurisdictions have — and the distinction has stood up in court.
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Toronto, Ottawa and Vancouver all have two separate problems. One problem is the conversion of long-term rental accommodation into short-term accommodation, typically blamed (somewhat unfairly) on AirBnB. The other problem is housing properties being bought by international investors and held — vacant — as investments. This is hollowing out whole neighbourhoods in Vancouver and a recent study published in the Toronto Star suggests a lot of condos in downtown Toronto sit empty for years.
Vancouver is experimenting with a tax on non-resident property purchases and considering a tax on vacant housing.
On Nov 19, the Ottawa Citizen ran a story entitled “City committee votes in favour of proposals restricting short-term rentals”. The article explains how Ottawa “wants to ban people from renting homes for short terms if they don’t live in those places. The proposed regulations would impact people who have invested in homes for the specific purpose of making short-term rental income.” The proposed regulations were passed by a committee studying the issue but have yet to be debated by the whole Council.
The City of Toronto is a little further along in the process of trying to free its housing supply from short-term rentals. Bylaws were passed in 2017 and 2018 but a court challenge by STA landlords delayed implementation. Last week, a Local Planning Appeal Tribunal (LPAT) upheld the regulations, which are known colloquially as “the AirBnB regulations”. Toronto’s approach is to forbid owner-absent STAs. Here is an excerpt from that bylaw (Chapter 547, easily found online):
“Short-term rentals are permitted across the city in all housing types in residential and the residential component of mixed-use zones.
People can host short-term rentals in their principal residence only – both homeowners and tenants can participate.
People can rent up to three bedrooms or entire residence.
People who live in secondary suites can also participate, as long as the secondary suite is their principal residence.
An entire home can be rented as a short-term rental if owner/tenant is away – to a maximum of 180 nights per year.
People who rent their homes short term must register with the City and pay $50.
Companies such as Airbnb must pay a one-time licence application fee of $5,000 plus $1 for each night booked through the company.
People doing short-term rentals must pay a 4 per cent Municipal Accommodation Tax (MAT) on all rentals that are less than 28 consecutive days.
Companies such as Airbnb can enter into voluntary agreements to collect the MAT on behalf of those associated with their company.”
Toronto’s and Ottawa’s regulations target investors. Homeowners and B&Bs escape regulation almost entirely.
MNBP’s process will begin again on Dec 16. Skelton Brumwell will present a summary of the measures other municipalities have taken and the success or failure of those measures. Council will then have to decide what to do.
It won’t be easy. Investors will vigourously resist regulation but the need for long-term rental accommodation has never been more urgent.