Dockside Green, a 15-acre harbourfront community and condo development, claims to be a LEED platinum targeted project with "green" building, in Victoria on Oct. 3, 2010.The Globe and Mail
New legislation restricting British Columbians from listing their investment properties on Airbnb and other short-term rental platforms may already have led to an uptick in sale listings for these properties in Victoria, according to an analysis by a long-time housing market observer.
The shift could be a sign that investors who bought homes intending to rent them to visitors are now trying to get out of that business before they have to register with the province under the Short-Term Rental Accommodations Act, which received Royal Assent Oct. 26. The new principal residency rules are scheduled to go into effect in May.
The legislation would bar people from offering any property in B.C. for short-term rental other than their main residences, with limited exceptions. This would instantly make many investment properties ineligible for short-term rental use. The B.C. government has said the new rules will help alleviate the province’s chronic housing shortage by returning as many as 8,000 homes to the regular housing market, out of the 28,000 in B.C. listed on platforms such as Airbnb and VRBO.
At least 22 owners of condos in two dozen buildings in downtown Victoria listed their units for sale in the last two weeks of October, according to an analysis of listings shared with The Globe and Mail by Leo Spalteholz, a Victoria-based advocate for zoning reform who has been performing professional housing market research for the past decade.
All of the buildings allow short-term rentals, Mr. Spalteholz said. Only nine units were listed for sale at these addresses in the first half of October, before the legislation was introduced, he added.
Mr. Spalteholz said he had found virtually no difference in the number of condos listed in the first and second halves of October inside Victoria buildings that have banned short-term rentals, suggesting that the spike is related to the new law.
He noted that the last half of October is ordinarily the beginning of the slow season for real estate on the West Coast. “It’s not a great time to be listing anything, so you have to be super motivated as a seller to list now,” he said.
None of the units had sold as of last week, and Mr. Spalteholz said selling them might prove difficult, because owners are still pricing in a premium for potential income from Airbnb and other short-term rental platforms.
A separate analysis Mr. Spalteholz conducted on all condo sales in downtown Victoria from 2020 to 2022 pegged that premium at nearly 13 per cent.
There are signs the same effect is taking hold in other B.C. cities. Jolene Iglesias, a realtor in Kelowna, said she had until recently devoted about a quarter of her business to helping investors from B.C. and Ontario scoop up some of the 700 units legally allowed to be used as short-term rentals in the tourist hot spot.
After the new law was introduced, she said, she began seeing many properties hit the market that she knows are being used as short-term rentals because the listings say the sales are subject to GST. Units are subject to the sales tax if they gross more than $30,000 a year. Ms. Iglesias said a short-term rental in Kelowna can bring in $8,000 a month in July and August.
So far, she said, none of her clients with short-term rental properties are interested in selling.
“There’s not enough information yet for them to make a decision whether they want to pull the trigger,” she said.
A recent study from a group led by David Wachsmuth, a Canada Research Chair in urban governance at McGill University, found that about 16,000 of the 28,000 units on short-term rental platforms in B.C. appear to be whole homes being rented out repeatedly for short stays only, turning them into “mini-hotels.”
Airbnb has disputed that study. Nathan Rotman, a company spokesperson, told The Globe the idea that the new rules would have an impact on the housing market “is simply not true.”
He said 83 per cent of Airbnb’s hosts have just one listing each on the platform.
Tony Gioventu, executive director of the Condominium Home Owners Association of B.C., a group that represents strata corporations across the province, said it may take one or two years for the true effects of the legislation to become obvious. But he said the impact will be significant.
Orion Rodgers, a spokesperson for the Property Rights Association of B.C., a group that represents about 2,300 property owners, most with short-term rentals, said many investors bought rental properties under the impression that they were protected by existing municipal zoning. The new provincial law overrules activity allowed by municipal law, he said.
With a report from Xiao Xu
Editor’s note: This article has been updated to clarify that the Short-Term Rental Accommodations Act received Royal Assent Oct. 26.