Is Airbnb’s slump a golden opportunity for rental?

A cursory glance at Airbnb is enough to indicate that some Vancouver homeowners are flouting city regulations that have made it illegal to rent a secondary property for short-term rental.

Several downtown condos, fully furnished, are available, and attached reviews indicate that they’ve been recently rented.

However, since the Coronavirus pandemic began, bookings have slowed enough that several of those short-term rentals appear to be finding their way into the long-term rental market, popping up on Craigslist and other rental sites. Some are furnished and fully equipped with linens, dishes and WiFi, and appear to have been operating as well-appointed holiday rentals. Now those operators are willing to rent them out for longer terms.

But will it last? In a post-pandemic world, once the tourists return, will those tenants once again find themselves on the firing line, facing eviction or enticements to vacate? City by-laws bar short-term rental operators from providing long-term rentals.

Realtor and property manager Aaron Best says that operators will be “financially motivated” to rid themselves of long-term renters once the crisis is over.

“If you look at Craigslist, for sure you are seeing what used to be furnished [short-term] rentals,” says Mr. Best, who manages 200 properties.

“If they came to us, we would turn them down because it’s not our line of work. … But there are a number of property managers that do furnished rentals.”

Among the listings on Craigslist is a furnished garden suite in a house in the Riley Park neighbourhood, available for $1,850 a month, including utilities.

“Your length of stay [over 30 days] is flexible,” the ad says.

A group of citizens that sees short-term rentals as removing affordable housing stock from the city’s supply wants more scrutiny over the process and better enforcement. They see the protection of existing housing to be just as important as the construction of new housing. And they see the slump in the short-term rental business as a golden opportunity to permanently add those units to the long-term rental market, where the Residential Tenancy Act protects renter rights.

“There is so much conversation around how new housing is slow and troublesome and unaffordable. My argument is this is existing housing that is quietly disappearing,” says Ulrike Rodrigues, one of several citizens who are fighting to protect rental housing. “I’m interested in how we can pivot now that Airbnb is down, and how we can lock down housing.”

She was one of 10 citizens who prepared a comprehensive report to city council last year that cited 47 gaps in the system that allow illegal short-term rentals to continue. Short-term rentals are such a moneymaker for these operators that for policy makers, it’s a huge undertaking to try to control it.

Last year, a 10-bedroom Shaughnessy mansion at 1569 W. 35th Avenue garnered media attention for its partying Airbnb guests. In that case, the operator said he was living on site. And two years ago in Burnaby, B.C., a seven-bedroom house at 6270 Elgin Ave. was being operated as a mini-hotel on Airbnb.

“It’s happening in buildings across the city, and in the last few years, it’s been happening in newly built buildings,” Ms. Rodrigues says. “A lot of those units were turning into Airbnb units before the coronavirus. Now, of course with the coronavirus and travel bans, the market has fallen out for all of these Airbnb hosts … and they have lost their customer base.

“And guess what’s happening? Apartment units are now appearing on local rental websites such as Craigslist.”

A Twitter user who goes by the handle Mortimer and prefers to remain anonymous, has been regularly posting properties that were once Airbnb listings that are now appearing on Craigslist for longer-term rental. They don’t require leases and some even boast of their success as Airbnb properties.

In a motion that was scheduled to go before Vancouver city council last Tuesday, Councillor Pete Fry wrote that “short-term rental property owners are reportedly seeking the stability of conventional long-term rentals over the uncertainty of short-term tourist apartments.”

There are around 5,333 active short-term rental (STR) listings in Vancouver, according to the city’s website, and those include the many property owners and managers with multiple properties listed on Airbnb. Mr. Fry’s motion called for staff to review “STR licensing, fees, regulation and safety in the context of COVID-19 and overall health of city rental vacancies and hotel industry recovery.”

Among other resolutions, he asked staff to circulate memos to STR licence holders to remind them that they can only rent for less than 30 days. He also asked staff to look into taxing STRs at the much higher class-6 business rate, rather than as class-1 residential. Residents currently pay $2.92 for every $1,000 of their property’s taxable value. Businesses pay $6.73 for every $1,000.

As well, he asked staff to distinguish between those STR owners and brokers with multiple listings and those who are homeowners with a single listing.

He also asked that strata councils and property managers have access to Open Data records of STR licenses so they can see who’s operating out of their buildings.

In 2018, the city brought in several regulations to protect tenant housing and curb multiproperty STR operations as STRs grew. Short-term rentals are legal in Vancouver, if the owner has obtained a business licence and they’re part of the homeowner’s primary residence, such as spare bedrooms. A short-term rental licence allows rental for up to 30 days. The licence number must be included on all listings that are posted online, or on any advertising. Fines are up to $1,000 for each offence. Commercial operators who repeatedly offend face fines up to $10,000.

For longer stays, the city requires a separate rental property business licence and fee. For 2019, the city estimated a licence compliance rate of 74 per cent, which it said is one of the highest in North America, according to a city report.

Operators who obtain licences are not all property owners: 36 per cent of those with licences in 2019 were renters. A renter needs authorization from the landlord.

The vast majority of STRs are located downtown, but many are spread throughout the city.

Forty per cent were single detached homes and 34 per cent were condos.

In 2019, the city issued 4,187 business licences for short-term rental, according to its website. That year, 1,528 licences were flagged as worthy of investigation and audit and 135 were referred to prosecution. So far, 2,983 licences have been issued for 2020. The number flagged for audit is 136 this year. Another 103 warning letters have been issued for 2020, 55 legal orders issued, and six referred for prosecution.

Ms. Rodrigues runs the Facebook page Homes Not Hotels – No Airbnb, and she also wants to see transparency in the Open Data records. The city began redacting names and addresses that she’d been using for her research into short-term operators. For several years, Ms. Rodrigues, who owns a condo in a 60-unit Mount Pleasant building, has been fighting against the owner of 11 units in her building who had been renting the suites on Airbnb. The owner, a realtor who does not live in Vancouver, was renovating the units as hotel rooms and listing them on Airbnb, without obtaining permission from the residents. She became an outspoken researcher and advocate for tenant rights in the face of growing illegal STRs.

Even though an operator should only have one listing for each licence number, she’s seeing multiple listings with the same numbers. Some of those licence numbers are expired. Some operators are getting licences under different names.

She’s seeing many homeowners listing basement suites and laneway houses even though they are not principal residences.

In her building’s case, the property owner was flouting the strata’s rules. She says another gap in the system is the unpermitted subleasing of units by tenants, for short-term rental. There have been cases where landlords have been surprised to see their so-called tenants acting as hosts on Airbnb. Mr. Best experienced that situation with one of his properties and the culprit turned out to be a realtor. Unpermitted subleasing is an old problem, he adds, but Airbnb makes it easier and more efficient to do it on a large scale.

“He was running this Airbnb management company and basically renting properties like ours, and then subleasing them through Airbnb, and we found out and evicted him.”

Mr. Best says he tried to file a complaint with the Real Estate Council of B.C., but was refused.

“It was out of their jurisdiction. It didn’t matter he didn’t have a property manager licence, or whatever. There is a grey area there,” he says.

Most Airbnb hosts are individuals who run small operations. But the serious money is made by the commercial operators who run multiple listings of entire homes. Research by Canada Research Chair in Urban Governance at McGill University, David Wachsmuch, showed that the most successful commercial operators “earn millions of dollars per year running commercial short-term rental services across dozens or even hundreds of homes.”

According to Prof. Wachsmuch, Airbnb has taken away as much as 13,700 housing units from rental markets in Vancouver, Toronto and Montreal.

Airbnb is proving beneficial to at least one local business amid COVID-19. Toby Chu’s corporation owns several apartment buildings and two downtown hotels, with a focus on providing student housing. Mr. Chu said that he’s renting hotel rooms on Airbnb at drastic discounts, and it’s keeping his hotel business afloat, now that bookings on sites such as Hotels.com have plummeted. It’s a new way of doing business, he says.

“Airbnb was typically for tourists and business visitors to save some money instead of hotel. But as it turns out in the recent two or three weeks, it’s being used by local residents, mostly health care workers – nurses and doctors looking for a 30- to 60-day stay,” said Mr. Chu, chairman, president and chief executive officer of CIBT Education Group. “That became really popular and they happen to book through Airbnb and even Craigslist because of the short-term nature.

“That never happened before. It’s kind of an extraordinary event.”