2016’s Top Stories #3: Housing market tightens, council regulates short-term rentals

Nelson's rental vacancy rate was 0.7 and the real estate market was out of control.

This building is part of a former motel on Nelson Ave. that will be rebuilt to create 48 affordable housing units by Nelson CARES with a $6.3 million grant from BC Housing.

City council noticed this year that there were more than 130 Airbnb operators in Nelson without business licenses. They wondered if the short-term rental operations were cutting into the availability of long-term rentals in the city.

They hired Alex Thumm, an SFU student working on a Master’s degree in urban studies, to look into the issue.

He set up a website and an online questionnaire and got a considerable response, possibly because he reached out to short term rental operators in a non-threatening way and made their opinions part of the solution.

City council then spent several months debating and tweaking, and by November they had come up with a new short-term rental operator license, with attendant rules about application requirements, inspections, fees, and parking, to take effect in 2017.

Around the world, municipal governments have been scrambling to decide how to respond to a recent proliferation of Airbnb and other short term rental operators. In Nelson there was concern that short term rental operators are competing unfairly with hotels by operating without buying business licenses, paying taxes, paying the tourism development fee, or complying with zoning.

There were also concerns about safety standards and parking, and about the question of whether more short-term rentals means fewer long-term rentals.

No one knows for certain what effect Airbnb and other short term rentals have on the availability of long-term rentals, but anecdotally, some landlords remove their rental property from long term rentals and use them for short-term rentals instead, because it’s more lucrative and some say they find dealing with long-term renters burdensome.

Several other housing issues were prominent in our coverage this year.

In January we reported that Nelson housing prices had increased 5.7 per cent in 2015, compared with rises of less than two percent in the three previous years.

In May we interviewed two real estate agents who told us the real estate market in Nelson was out of control. That week there were 37 family dwellings listed for sale in Nelson. At the same time last year there were 60, and in May 2014 there were 110. The realtors told us there was a surplus of buyers and a lack of inventory, resulting in most houses selling within days or weeks.

Good luck deciding you would rent for a few months while waiting out the housing market. There were no places to rent either.

In October the Canadian Mortgage and Housing Corporation reported that Nelson’s vacancy rate was 0.7 per cent, up a bit from 0.4 last year, and compared to a provincial rate this year of 1.3 per cent.

Ann Harvey of the Nelson Committee on Homeless and realtor Trevor Jenkinson, the president of the local landlord association, both said there is simply no rental housing available and none has been built for many years.

The sixth annual Report Card on Homelessness for Nelson presented grim statistics.

City council continued to wonder what it should do about affordable housing.

Some citizens continued to think city council should build rental housing, and council continued to say that’s not a city council’s job and besides they can’t afford it. Council was asked for an endorsement by two groups applying to BC Housing for funds to build low-cost rental housing, and it endorsed one of them: a plan by Nelson CARES that was ultimately successful.

BC Housing announced in November that Nelson CARES will receive $6.3 million for a re-build of four buildings that it owns on Nelson Ave. that were formerly a motel.

The units will be for seniors, adults with disabilities, homeless and homeless at risk.

In the meantime, the city and Nelson Commons worked out a deal that will see three of the Commons’ apartments sold at 75 per cent of market value even in the event that they are re-sold in the future.

And the owners of Nelson Landing, who this year were planning to begin building high-end (for Nelson) condos on their land near Red Sands beach, were not able to pre-sell enough of their initial 8-unit phase to begin construction.

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