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Airbnb blamed for increasing pressures on rental markets

This 29-unit apartment building in Vancouver made headlines earlier this month following media reports that it has 17 Airbnb listings.

This 29-unit building in Vancouver made headlines earlier this month following reports that it has 17 listings on Airbnb.

DARRYL DYCK/THE CANADIAN PRESS

Cities take aim at Airbnb

Airbnb and other short-term operators are being blamed for reducing housing for renters, reports Sunny Dhillon

In the southeastern British Columbia community of Nelson, a battle is brewing.

Nelson, situated in the rugged Selkirk Mountains, has long had a rental vacancy rate of close to zero.

But some residents fear whatever cushion the community of 10,000 had concerning rental housing is dwindling, and the finger is being pointed in a direction increasingly familiar to Canadian cities big and small: Airbnb.

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NO VACANCY

The rapidly rising cost of rental units in Canada’s largest cities, along with vacancy rates near zero, mean it’s increasingly difficult for people who rely on rental units to find – and keep – their housing. Like the real estate market, rental prices have become detached from incomes and are forcing people to live in cramped apartments, find roommates well into adulthood or simply move away.

The Globe and Mail is spending the summer examining how those factors have shaped the lives of renters, landlords and their cities.

Nelson's city council will receive a report on the impact of Airbnb and other short-term rental operators next month. Vancouver city staff will provide their update in September, and staff members in Toronto have begun work on a similar report.

But while many Canadian cities are still weighing their options, municipal governments elsewhere have already taken action. Paris launched a high-profile crackdown on suspected short-term rentals in 2014. A Berlin law restricting the short-term rental of entire houses took effect earlier this year. And Airbnb late last month filed a lawsuit against its hometown of San Francisco, after the city passed an ordinance that could see the company face fines.

In Vancouver, how to respond to the growth of Airbnb and other short-term rental services has taken on new urgency amid concerns about availability of housing. Though home ownership has drawn much of the attention, renters have seen prices jump while contending with a vacancy rate of 0.6 per cent. Housing experts have said a healthy vacancy rate is 3 per cent to 5 per cent.

Nelson Mayor Deb Kozak said the issue is complex, and her community is grappling with the same concerns as others. On the one hand, she said, some Airbnb hosts told a recent public meeting they need help supplementing their income. On the other is the fear of losing badly needed rental housing.

Ms. Kozak said she's heard from two people who fear they were evicted so landlords could use their suites as short-term rentals. The city is investigating.

"Our rental rates have always been low. We've never had a huge amount of rentals available. But now the pressure is really on," the mayor said in an interview.

Short-term regulation

Here's a look at some of the jurisdictions that have either regulated or cracked down on Airbnb:

Quebec: New regulations took effect in April of this year, requiring Airbnb listings to be certified, and taxed, in the same way as hotels and bed and breakfasts.

Philadelphia: The city introduced new rules last year that permitted short-term rentals while imposing a hotel tax and other requirements. Listings rented for more than 90 days per year must obtain a permit.

San Francisco: A law is set to take effect on July 27 that would require companies such as Airbnb and FlipKey to remove listings that aren't registered with the city, as currently required. Airbnb filed a lawsuit late last month challenging the new rules.

New York: It's currently illegal for owners or renters of apartments to rent them for fewer than 30 days unless they remain present, and a newly proposed law would also ban online advertising for such short-term rentals.

Hawaii: A bill passed by the legislature in May would have allowed Airbnb and similar services to collect state and local taxes, but the state's governor recently said he would veto the measure. The bill was introduced during a debate about the growth of illegal campsite listings on Airbnb.

SOURCE: The Associated Press, Airbnb

For months, Warren Psutka said he wondered what would happen to his one-bedroom Vancouver apartment. He had lived in the space for two years, but a new landlord said he would have to leave in eight months – citing the need for major renovations without providing details.

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Mr. Psutka moved out in April. Less than a week later, he said, the suite appeared on Airbnb. He could tell from the photos it had received a new paint job and light fixtures, but the work hardly seemed major.

"I felt deceived and angry," he said.

Mr. Psutka said he felt he had no recourse because he had signed the eight-month lease and agreed to leave. He stayed with friends for two months but was unable to find a quality apartment at a comparable price. He is working in Haida Gwaii for the summer.

Geoff Meggs, a Vancouver councillor, said he believes Airbnb has had a negative impact on Vancouver's rental housing stock: "I think we passed the tipping point some time ago, where the downsides of this new business are becoming much bigger for people than the upsides."

Mr. Meggs said a report last year by Simon Fraser University master's student Karen Sawatzky served as an eye-opener. Ms. Sawatzky found there were 3,473 Airbnb listings in Vancouver at the time, raising concerns that long-term renters were being shut out.

"[Airbnb] provides a profit incentive to property owners to rent their units out to tourists instead of tenants on a full-time basis," she said in a recent interview. "I think it's definitely something to be concerned about."

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Karen Sawatzky, who has written her masters thesis on the impact of Airbnb on the rental market, stands for a photograph on Vancouver's Granville Street Bridge as condos fill the skyline behind her.

Karen Sawatzky, who has written her masters thesis on the impact of Airbnb on the rental market, stands for a photograph on Vancouver’s Granville Street Bridge as condos fill the skyline behind her.

DARRYL DYCK/THE GLOBE AND MAIL

Airbnb, which has been in contact with the City of Vancouver for its upcoming report, last week released details on its presence. It said it now has more than 4,200 active hosts in Vancouver and the number of listings booked last year jumped to 6,400. The number of listings booked in 2013 was about 1,800.

However, Airbnb pushed back on claims it's negatively affecting the rental market. The company said it's making it possible for people to afford their homes, and the "typical" Vancouver Airbnb host earns $6,500 on an annual basis. It said a survey of about 230 Vancouver hosts found 53 per cent reported "being able to afford to stay in their homes because of the money they earned through Airbnb."

When asked about its impact on the Vancouver rental market, Max Pomeranc, public-policy manager at Airbnb, said: "The majority of people are simply just renting their home on occasion. And if you're renting your own home, and you're doing this a few times a month or a few times a year, it's hard for me to imagine how you're having that kind of an impact."

Ms. Sawatzky – whose interest in the topic was helped by the fact that she is a renter herself – criticized the Airbnb report for, among other things, failing to state exactly how many self-contained units are being used only as short-term rentals.

The owner of a Vancouver apartment building who has listed some of its suites on Airbnb and other short-term rental websites said the process has not been as lucrative as some might believe. He asked not to be identified due to the "emotional and divisive" nature of the debate.

He said he first listed a suite as a short-term rental after a friend who was coming to Vancouver complained about the high cost of hotel rooms. Shortly after, a suite in the apartment building happened to become available.

The owner said he has been using short-term rental websites for about a year, and while there has been considerable interest in the summer, other seasons have been rather slow. He said he has not ruled out going back to long-term rentals.

Airbnb said its growth in Vancouver is consistent with what it has seen in Toronto and Montreal, though it did not provide data for those cities.

The website Inside Airbnb, which tracks the number of Airbnb listings in certain cities, said Toronto has 6,700 listings, while Montreal has more than 10,600.

Quebec announced legislation to regulate Airbnb last year, making it the first province to do so. The bill, which took effect on April 15, requires those listing properties to obtain the same certification as hotels and bed and breakfasts. It also charges a lodging tax. A Tourisme Québec spokesperson said it is too early to tell how much money has been collected.

Tom Slee, the Ontario-based author of What's Yours is Mine: Against the Sharing Economy, said there has been less debate about Airbnb in Toronto than Vancouver.

Mr. Slee, who has also collected data on Airbnb listings, said listings in Canada tend to be located in areas popular with tourists. In Toronto, he said, much of the concentration has been near the waterfront.

A city of Toronto spokesperson said its executive committee in January requested a report on short-term rentals, including "options to regulate, restrict and/or prohibit" the practice. An interim report is due in the third quarter of 2016, and a final report is to be delivered next year.

The City of Nelson this week is inviting the public to comment on possibilities for regulating short-term rentals. The possibilities include licensing requirements, as well as restrictions on how such rentals can operate and how many there can be. The city said unlicensed short-term rentals would be subject to a non-compliance fine of up to $500 per day.

Alex Thumm, a researcher for the city who is working on the Airbnb report and consultation process, said there are roughly 120 short-term rentals in Nelson, though not all of them operate year-round.

"We'll have to wait to see what council actually adopts. A lot of this is still up in the air," Mr. Thumm said. "But hopefully a lot of the research that's gone into this will be useful in every municipality – particularly smaller ones that don't have the resources to put a lot of time into it."

Mr. Meggs, the Vancouver councillor, said he did not want to prejudge the staff report when asked if there were cities whose Airbnb approach Vancouver should emulate. But he said enforcement will be key, and he'd like it to be simple and quick.

Vancouver last month passed a motion that called on the province to collect hotel and provincial sales taxes from short-term rental websites. The B.C. government did not provide a response when asked for comment on the motion.

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