Municipalities raise housing affordability concerns after study outlines Airbnb’s impact on long-term rental markets

Theglobeandmail.com
June 21, 2019
Tom Cardoso and Matt Lundy

Local politicians are calling on Airbnb to work to reduce housing affordability concerns after a study’s findings that the short-term rental company has likely removed 31,000 homes from Canada’s long-term rental market.

Authored by researchers at McGill University in Montreal and first reported on by The Globe and Mail, the study connects Canada’s expanding short-term rental market to the growth in housing unaffordability and unavailability, even as some municipalities have worked to keep the practice in check by bringing in new regulations.

The report also finds that Airbnb grew to more than 128,000 active daily listings in 2018, a 25-per-cent increase over the previous year, and that commercial operators (those operating multiple listings) accounted for nearly half of the platform’s Canadian revenue last year. Airbnb is one of several platforms -- joined by HomeAway, VRBO and others -- that offer short-term rentals.

Of the 31,000 homes cited in the study, more than 12,000 are in the Montreal, Toronto and Vancouver areas.

“It’s a fairly large number, 31,000, especially in this city where we’re in an acute housing crisis," Vancouver Mayor Kennedy Stewart said. “If it’s not working, we could tighten our regulation or increase our enforcement.”

In Vancouver, short-term rentals can only be operated from a host’s principal residence, a rule that went into effect last year.

Ottawa city Councillor Shawn Menard said the report illustrates the challenge the city is facing with short-term rentals. “We can’t put [housing] up fast enough to compete with what’s coming off the line as a result of Airbnb coming online,” he said. "Particularly in the downtown core, we’re seeing a huge increase in the non-owner occupied, purpose-purchased homes that are slated for Airbnb that may have been rentals previously.”

Ottawa has zoning bylaws that don’t allow the operation of short-term rentals outside a primary residence. Mr. Menard said enforcement has proven difficult. “We have very limited tools to enforce that,” he said.

In Toronto, Mayor John Tory’s office said it expects the city will be reviewing the McGill report’s findings.

City Councillor Joe Cressy has been outspoken about the growth of short-term rentals in the city. “For years, short-term rental operators have actively contributed to housing unaffordability in cities like Toronto and right across this country,” Mr. Cressy said when asked about the study’s findings.

Toronto’s planners estimate the city would need 5,000 new rental units to bring its vacancy rate -- which currently sits at 1.1 per cent -- to 3 per cent, a rate generally regarded as “healthy,” Mr. Cressy said. According to McGill’s researchers, the Toronto metropolitan area, which has roughly double the population of the city itself, had more than 5,200 homes likely removed by Airbnb from the long-term rental market as of April, 2019.

In 2017 and 2018, Toronto’s city council voted in favour of regulating short-term rentals in the city, instituting a licensing and registration system. However, zoning amendments necessary to allow for short-term renting are under appeal and thus the regime has not come into force and there’s been no enforcement. A hearing on the appeal is set for August. Until then, short-term rentals are “not permitted,” the city says.

So far, that hasn’t slowed down the market: Airbnb hosts in the Toronto area brought in $302.4-million in revenue last year, according to the McGill report, the largest sum for any metro area.

In an e-mailed statement, Alex Dagg, director of public policy for Airbnb Canada, said the company is “legally unable to abide by the requirements of the regulations that are currently under appeal” in Toronto. “Airbnb and its Toronto hosts worked collaboratively with the city throughout the regulatory process for short-term rental regulations,” she said.

Mr. Cressy doesn’t see why Airbnb and other short-term rental services need to wait for a ruling, which could be months away.

“If Airbnb and other platforms want to be part of the housing affordability solution, they could de-list all the units that are secondary, tertiary units that should be rental housing stock," he said. "They could do that tomorrow. There is nothing stopping them from doing that.”

“Why actively contribute to housing unaffordability when you could help solve it?"