British Columbia’s Short-Term Rental Restrictions Are Driving Down Rents: Study

A crackdown on short-term rentals in British Columbia led to an actual rent reduction of 5.7 per cent, saving tenants more than $600 million last year, according to a report by the Canada Research Chair in Urban Governance at McGill University.

This amount is the result of restrictions imposed by municipalities, in particular the requirement that premises intended for short-term rentals must be located in the operator’s main place of residence.

In Vancouver, for example, the report found that renters pay an average of $147 less per month than if the city did not have a primary residence rule.

The report, led by study chair David Wachsmuth, said recently introduced legislation for communities with populations of more than 10,000 could deliver similar savings across British Columbia, helping to ease funding constraints.

The change went into effect in May, and from now on, listings on Airbnb and Vrbo platforms must be in the operator’s main residence and one secondary apartment.

Assuming the province-wide requirements are as effective as the current city regulations, Wachsmuth’s report finds that tenants in those cities should expect rents to decline by four per cent, translating into annual savings of $592 million by 2027.

If the provincial law were repealed after this year, renters would have to pay an additional $1 billion over two years, a report released Wednesday said.

Premier David Eby’s New Democrats make this point in a statement released a month before the British Columbia election, saying provincial Conservative Leader John Rustad recently told his supporters he intends to roll back restrictions on short-term rentals.

The report says the BC Hotel Association commissioned researchers to conduct an early analysis of the province’s short-term rental regulations. The authors, from the Urban Politics and Governance Research Group, are solely responsible for all analysis, findings and conclusions, it adds.

McGill researchers looked at 52 of 55 neighbourhoods in British Columbia that had a primary residence restriction in place as of January 2023. The analysis found that rents were, on average, $110 lower than they would have been without the rule.

In October 2023, British Columbia passed a nationwide short-term residential rental law, and the government is phasing in the measures.

The McGill report says a registration system with additional “accountability requirements” for platforms offering deals is due to be introduced early next year.

The article pointed out that the “full implications” of the BC rules will only become clear once platforms are required to remove listings without valid licenses.

However, the report concludes that major housing restrictions in British Columbia mean that the average monthly rent will be $94 lower in fall 2027 than it otherwise would have been.

Researchers also looked at the number of listings on Airbnb before and after the province’s residency requirement went into effect in May.

As of June 2023, 13,624 “frequently rented entire homes” were found on the platform in British Columbia, along with 34,665 other property types.

The report found that more than 86% of frequently rented homes were still visible in July 2024. Nearly 89% of other listings were also still visible.

“Generally speaking, the more active a listing is, the less likely it is to continue to be visible on Airbnb after May 2024,” the report noted.

The report says that the researchers used public and private data sources to conduct the analysis, as well as a modeling approach that is widely used by economists.

This report by The Canadian Press was first published September 18, 2024.