Do Nelson’s short-term rentals reduce the supply of long-term rentals?

Do Nelson’s short-term rentals reduce the supply of long-term rentals?

The question is complex because no one knows how many would otherwise rent long term

When Stephen Harris formed the Nelson Short Term Rental Owners’ Association last year, one of the first questions the half-dozen inaugurating members asked themselves was: do short-term rentals cut into the stock of long-term rentals?

The answer, at least for them, was no.

“We were not in the long-term rental business beforehand,” Harris said. “We were not operating a long-term rental, so it had nothing to do with getting out of long term and into short term.”

But that’s only about six people, and of course Harris doesn’t know what all other short-term rental operators would say.

“But anecdotally there are people who typically have had a negative experience with a long-term rental — bad tenant, expensive damage, having to go through an eviction process with the Residential Tenancy Act — it can tie you up for months at a time, and if you are counting on that rental income to pay a mortgage….”

When Alex Thumm devised the questionnaire for short-term rental operators last year as an information gathering exercise for the city, he did not ask whether they would otherwise be renting out their premises long term.

“But it would have been a good idea,” he said. “The closest thing we got is that we asked, ‘Why did you become a short-term rental host/operator?’ Many said that they were former landlords who wouldn’t go back.”

He offered several typical comments about this from survey respondents:

• “I own six rentals: three long-term suites, and three short-term smaller accommodations that are on Airbnb. Regardless of city policy I would choose to continue renting illegally or frequently leave my rentals sitting empty rather than deal with local renters who have given me nothing but stress and problems for 13 years. If I could have all six of my rentals as Airbnbs I would love it.”

• “I will be happy to pay the hotel tax and buy a business license, as long as I don’t have to deal with the residential tenancy board.”

• “I would think that the short-term rentals would be better maintained and be less likely to have problem tenants, i.e. people partying, being loud, not dealing with garbage or yard, etc.”

He said he has also spoken to a few people who were renting short term but decided not to pay the short-term licence fee and have gone back to long term.

Related: Nelson council dissects staff proposal on Airbnb (July 19, 2016)

Thumm said he doesn’t know how many have done that, or how many current short-term operators would otherwise be renting long term if short term were banned.

“I haven’t heard of any reliable method of calculating that,” said Thumm, who has studied the issue extensively both in Nelson and elsewhere.

He said one of the most important effects of Nelson’s regulations of short-term rentals is the principal residence requirement: you aren’t allowed to rent out a property if you don’t live at the property yourself most of the time.

“We no longer have investment properties doing short-term rentals, which did exist prior and would have likely grown much more,” he said.

“We get calls from real estate agents asking how their Vancouver clients could do Airbnb, and they usually leave disappointed because they can’t. It should follow that that house will then be bought by someone who at least lives there part-time, or full-time, or rents it out to long-term tenants.”

Related: Nelson council passes short term rental bylaw (Dec. 9, 2016)

Related: American firm to monitor Nelson’s Airbnb licences (Feb. 28, 2017)

Short-term rental landlords with multiple properties are a major issue in big cities, turning what Airbnb bills as home sharing into an industry that bears little resemblance to sharing.

A 2016 study by the Canadian Centre for Policy Alternatives (CCPA) found that 13 per cent of the hosts with more than one listing in Toronto were responsible for 37 per cent of all the listings, and made up 46 per cent of Toronto’s revenue estimates in July 2016.

“The increased usage of unregulated, short-term rentals could very well impact the supply of long-term rentals and increase the cost of the rest of the housing stock that is available,” the CCPA report states.

“One thing is for certain: short-term rentals offered through the platform do not in any way help the problem of low vacancy rates for long-term renters seeking affordable housing in Toronto and elsewhere.”

The city recently announced that there are 54 active short-term rentals in Nelson. It reported that many operators had dropped out, faced with the business licence fee and the various regulations. However, Airbnb’s website currently shows 118 properties in Nelson.

Asked about this discrepancy, Thumm said there are three reasons for this. First, Airbnb doesn’t recognize the city boundary and many that are shown on the map to be inside the city are actually outside.

Second, many of them are listed but inactive. And finally, in many cases there are several properties listed in the same building.

Related: Nelson monitors, enforces short term rental rules (Oct. 11, 2017)