By V. Adams

On June 9, Victoria City Council will receive a report from staff on “home-sharing” or “vocational rental” services such as Airbnb, and their impact on the rental housing market and tourist accommodation. In particular, Council in Victoria, like Council in Vancouver, are looking for options to mitigate harm to the rental market (almost zero in the city) and obtain information on what other cities are doing.

A quick glance at tripadvisor.ca today revealed more than 1,000 vacation rental properties available in the Greater Victoria area. Because Airbnb limits search results, the site lists only 300+ units available in Victoria, 44 of which appear on their digitized map of James Bay.

One prominent condo property in James Bay has no less than 10 units currently listed on Airbnb. Another recently renovated former hotel property, (now an upscale apartment complex owned by a larger developer) has recently advertised a suite on the same vacation- rental property site. By way of comparison, the ratio of Airbnb units to residents in James Bay is 1:272 compared to German cities such as Berlin, Hamburg, Munich and Cologne which offered one Airbnb unit for every 300-700 residents.

The vacation rental properties fetching the premium prices are concentrated in neighborhoods near the downtown area within convenient walking distance of local amenities and tourist hot spots. Properties operating as commercial ventures tend to be advertised on Airbnb as entire homes or suites that can accommodate up to six or more individuals. James Bay has 13 such listings. While the average nightly rate for an Airbnb property in James Bay is $132, ($22 above the Greater Victoria rate), at least 5 properties are currently charging more than $300 a night.

Victoria, like other popular urban tourist destinations and retirement havens, has seen an unprecedented growth in real estate sales (predominantly high-end condos). The increasing use of these properties is not as principal living quarters—but as investment vehicles—through their highly profitable short-term rental business. This new holiday accommodation business operates largely outside the formal “hospitality industry” taxation and regulatory framework. Local governments have difficulty monitoring them. They remain an unregulated “grey area”. How are such businesses to be integrated into the civic landscape?

Airbnb has been reluctant to provide aggregate listings details to some local governments. They cite privacy issues. Example: amid soaring rents and a critical housing shortage in Berlin, Germany, the city government ordered Airbnb to turn over details of their clients in the city. Berlin’s Planning Minister indicated that it was necessary to legally curtail their operations as “a larger number of apartments that Airbnb offers in Berlin are apartments diverted from their intended purpose (for commercial use)” rather than being rented out as spare rooms to help with family finances. Airbnb, rather than face a total ban on operations in Berlin, chose to cull its listings by half! The result was delisting of thousands of landlords who had rented out entire ‘holiday’ apartments on a commercial basis.

Apparently, Berlin’s decision to ban Airbnb properties operating as commercial ventures, has sent ripples through our local real estate community as seen by the comments in the househuntvictoria.ca forum highlighting how Victoria’s condo prices have risen steadily in the core area over the past decade. Many were being purchased for profitable short-term rentals.

While the courts may eventually rule that the ban on holiday rental flats represents an unacceptable condition that restricts constitutional property rights, a recent Berlin court heard the case of an individual who was refused a legal permit to rent her premises to a tourist in order in order to help her pay her mortgage on the property. The judge, in dismissing the claim, stated that there was nothing preventing the owner from finding a regular tenant and using such proceeds to pay off the mortgage.

When residential real estate becomes a global investment asset-class and a global commodity (like base metals and oil) and when speculation runs rampant in what appears to be an unregulated market—what happens? “Affordable housing” becomes a pipe-dream for ordinary working families and pensioners. When tourists are considered more valuable than long-term tenants seeking a roof over their heads, something has to change.

Would the neighbourhood benefit more if the local real estate market were limited to those who live and work in the city most of the time? And, if tourists demand non-hotel accommodations, should those who host them be willing to pay into an affordable housing fund for the locals who are displaced?

Sources:

May 13, 2016 – Karen Sawatzky, Sources for Tofino and Uclulet presentations – Short-Term Consequences, Examining the Impacts of Airbnb and other short-term rental services on tenants, housing, and cities

https://shorttermconsequences.wordpress.com/

CTV News, April 4, 2016 – Rental Housing is for resident, says Vancouver councillor, eyeing Airbnb rules

http://bc.ctvnews.ca/rental-housing-is-for-residents-says-vancouver-councillor-eyeing-airbnb-rules-1.2844935

Irish Times, April 28, 2016 – Airbnb dumps Berlin holiday flats before city crackdown

http://www.irishtimes.com/news/world/europe/airbnb-dumps-berlin-holiday-flats-before-city-crackdown-1.2628000

Airbnb vs Berlin

http://www.airbnbvsberlin.com/ - Creative Commons Attribution 4.0 International Public License

House Hunt Victoria – April 28, 2016-05-20 – The CMHC is out to lunch,

May 2 posting by Just Jack and Rover

http://househuntvictoria.ca/2016/04/28/the-cmhc-is-out-to-lunch/