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Will B.C.'s short-term rental laws come up short?

B.C.'s new provincial short-term rental laws will force hosts to declare their homes as primary residences, with information going to a new registry that will be accessible by Canada Revenue Agency.
Housing advocate Rohana Rezel nearby newly built condos in south Vancouver.

B.C.’s new provincial short-term rental laws are raising many questions, from the exact impact it may have on affordable housing, home prices and even tax fairness.

Vancouver affordable housing activist Rohana Rezel calls the provincial government’s proposed legislation on short-term rentals “disappointing” but also “better than nothing.”

Two key issues stand out to Rezel: first, the province has sanctioned secondary suites and laneway homes — which are generally championed as affordable housing options across B.C. — to qualify for short-term rentals. This is a “huge blunder,” said Rezel.

Second, Rezel says the provincial legislation needs to ensure online platforms face stiff penalties for violations, as has been reported in Quebec and Paris, for example. Those penalties have yet to be determined.

“In 2021, the City of Paris fined Airbnb $10 million for platform violations. The province needs to go after platforms with huge fines to bring them into line,” Rezel told Glacier Media by email.

Rezel is in a protracted battle with the City of Vancouver to release business licence information on short-term rentals, which are typically found on the juggernaut online platform Airbnb.

Rezel has argued that municipalities are falling short of enforcing their own rules.

At the core of the legislation is a new, provincial licensing registry for short-term rentals, which must be in a primary residence. Should that residence have a secondary suite and/or laneway home, one additional such dwelling may also be rented. The province is also increasing maximum municipal fines against hosts, from $1,000 to $3,000, for non-compliance with the registry. The rules apply in municipalities with more than 10,000 residents.

Premier David Eby and Housing Minister Ravi Kahlon claimed Monday that the proposed legislation will give cities more rights to enforce violations.

But, said Rezel, “just giving powers to local governments to demand that platforms deactivate unlicensed units is not strong enough.”

The legislation will improve information sharing between the province and municipalities, who may set their own bylaw rules to supersede provincial rules (in Vancouver, secondary suites and laneway homes are prohibited as short-term rentals).

Andy Yan, director of the Simon Fraser University City Program, said at first glance of the legislation, platforms “got off light.”

“What it is, is a pragmatic acknowledgement of what Airbnb does and how it started as opposed to what it has become,” which is “this parallel hotel system that takes away what would be, in Vancouver, rental housing.”

But, said Yan, the key to the new rules is information sharing.

Yan said short-term rentals have been more problematic in the condo sector, not necessarily in secondary suites but if governments see an uptick in the latter the rules can be amended.

“The focus and bulk of short-term rental challenges has been in the condo market,” said Yan.

But to obtain the right information, “it all goes to enforcement,” says Yan.

The City of Vancouver has faced criticism for having a licensing system similar to the one proposed by the province, but not necessarily having active licences displayed on many of the listings found on Airbnb.

The Ministry of Housing says the provincial registry will not be accessible to the public, so people will not be able to independently ensure they are staying in a legal rental. The ministry said to Glacier Media that merely providing a list of business license numbers violates privacy.

However, the Short-Term Rental Accommodation Act also states that information collected from platforms and hosts will be shared with federal and provincial taxation authorities. This means the Canada Revenue Agency can use those declarations and compare them to tax filings for rental income and also for capital gains purposes.

“It’s important because [the agency] does not have to guess and that there’s an element of enforcement and compliance when you have this type of data sharing. This is overall an element of fairness [in the legislation],” said Yan.

“Of course, we won’t know the amount this person ought to be reporting but that’s when your risk analysis comes into play and then your audit analysis,” he added.

Housing expert Tom Davidoff, an associate business professor at the University of B.C., believes with the registry, enforcement will be stricter and more effective.

A primary goal of the province is to return some of the 28,000 estimated short-term units back to long-term tenancies.

Davidoff said the new rules are likely to do so and spur sales, especially after legislation comes into force next May.

“I think it obviously makes prices lower and rents lower because you’ll have some people decide to sell or rent out to long term (tenants).

“But it’s not going to restore affordability,” said Davidoff.

The rules around suites and laneway housing are controversial, added Davidoff; however, he noted there are no existing laws that compel people to rent them out.

"You can use your laneway house as a yoga studio or suite as an entertainment den, as it stands," noted Davidoff.

In a statement provided to media, Airbnb, which lobbied BC MLAs in the days ahead of the provincial legislation, also said the new rules won’t alleviate the province’s housing concerns.

Airbnb takes the position that the platform allows hosts to cover the costs of living while providing accommodations to tourists, especially in parts of the province without hotels.

Airbnb said it collected and remitted $67 million in taxes in B.C., an increase of about 70 per cent from 2021.

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