Response to the City of Vancouver’s proposed approach to regulating short-term rentals

Below are the written remarks I gave today at city hall – actually a slightly longer version because I crossed out a few things just before speaking in order to fit the time limit.

Here is the staff report to which these remarks respond.

You may also wish to see my related comments in response to an October 4 story in Metro News, in which Airbnb proponents suggest a more flexible approach to regulation than restricting eligibility for licences to principal residences. Airbnb’s representative, Alex Dagg, confirmed today at city hall that the company does want to see STRs allowed in secondary suites and laneway housing.

October 5, 2016

I support the approach to regulating short-term rentals, or STRs, outlined in staff’s report. I’m speaking as someone who recently defended my master’s thesis in urban studies, in which I investigated the nature and extent of Airbnb listings in Vancouver. I looked at Airbnb’s growth, where listings were located, how much they cost and the type of listings. I also looked at the implications of this data in light of the local rental housing context and the city’s housing policy goals, concluding that the unchecked growth of Airbnb is an obstacle to the city reaching its housing goals, which include the protection of existing rental stock and ensuring that people of all incomes and ages can afford to live here. Having immersed myself in this topic for almost three years, I can probably appreciate the complexity of staff’s task more than most. I think they’ve done a very good job and thank them for their work.

Most broadly, I appreciate what I see as a framework that prioritizes the protection of existing and potential rental housing. I understand the importance of tourism to our local economy and the desire to balance the protection of housing with other interests, such homeowners wanting to earn money from STRs and the benefits of having options for tourists. Staff have struck a good balance between these interests for now and I especially endorse the proposal to limit STR licences to principal residences, so that investment condos, secondary suites and laneway houses can’t be used full-time for tourist purposes. I also believe that limiting licences to principal residences is important if council wants to increase support for further diversification or densification of the housing stock. While I favour more diverse and dense options myself, I think it’s reasonable and predictable that people who are less supportive of that direction will resist it more if they don’t see the city taking proactive steps to ensure our existing housing supply is used for its intended purpose, especially when the need for that housing is so great. I also support this approach based on its simplicity and believe it will be easier to explain, administer and enforce than adopting models that involve caps on the number of nights rented or limits on the licences granted by neighbourhood or dwelling type. However, enforcing STR rules has proven challenging in most jurisdictions, not least because of a lack of actual, rather than just rhetorical, cooperation from the platforms. But that is certainly not a reason to move forward or to lower reasonable expectations. I suggest you move ahead, understanding that rules and strategies may need to be adjusted based on how conditions change on the ground, including how cooperative STR operators and the platforms turn out to be.

I commend staff for including a requirement to display the licence number in the online listing itself and hope you will make it a separate offence to omit or fake that number. I also agree with the proposal to commit resources to monitoring through a third-party service that can match listings with addresses.

 I do, however, worry that this approach seems to allow for people to use individual bedrooms for STR purposes on a full-time basis, as long as a principal resident also lives in the dwelling. It seems we could have a person who lives in a two or three-bedroom apartment, or even a five-bedroom house, and rents out all but one bedroom for STR purposes on a full-time basis. When we have so many people, including but not only young people, whose wages don’t allow them to rent a self-contained studio or one-bedroom for less than 30% of their gross pay, I see that as a problem. For some, the only affordable option is shared housing. This concern also pertains to the need for family housing. We know we have a shortage of units with two or more bedrooms. Airbnb makes it possible and lucrative for some to fill those scarce larger units with tourists instead of families with children. Is that a practice we want city policy to allow? I recognize this “spare” (or private, in Airbnb terms) rooms issue is complicated for a variety of reasons, but I think it’s at least worth flagging for future consideration.

The report also limit discussion of non-compliance penalties to the STR operators or hosts, excluding the platforms. Perhaps that discussion is yet to come. I suggest that effective and fair regulation would require the platforms, which are after all earning money from non-compliant listings, to share the burden of compliance and also be liable to penalties.

An argument I’ve heard against limiting STRs and that we may hear today is one where one property owners say they could not afford their house, or run their business, or have the quality of life they want without renting out their basement suite, investment condo or laneway home on Airbnb. My response is that if someone can’t afford their housing without doing something that breaks city bylaws and has so many negative impacts on others, including those whose housing security is more precarious than their own, their decision to purchase that housing in the first place was probably unwise. Similarly, many of us could have an easier or better quality of life if we chose to earn extra money in ways that were illegal or socially damaging. I don’t believe city policy should implicitly endorse people buying more housing than their own incomes and long-term rental revenue allow for. Finally, in a broader sense, it’s worth remembering at this point that the revenue stream Airbnb provides is overwhelmingly available only to homeowners, since provincial law says tenants must have their landlord’s consent to sublet and, understandably, many landlords are unwilling to give that. So, by allowing part-time use of dwellings as STRs you will help homeowners afford their housing and I’m sure many will be glad for that. But you will not be helping the vast majority of renters afford their housing – and census and NHS data shows they are much more in need of that help. I argue that one of Airbnb’s broad effects is to undermine tenants by providing property owners with a cash-flow solution that is more lucrative and flexible than renting to long-term residents. In so doing, I believe it contributes to housing inequality and further commodifies housing. In light of this, it’s urgent that council take steps to limit and hopefully reverse the growth of STRs in Vancouver. I urge you to move forward with doing so.

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A response to “Vancouver renters fight for the right to Airbnb”

Here is my response to a news story published in Metro News today about tenants who sublet part of their rented house on Airbnb, were threatened with eviction, and then moved and bought a condo in False Creek. It illustrates several points that I think are important in the debate about Airbnb’s benefits, so I wanted to respond. I plan to make separate, though somewhat similar remarks, in support of the city’s proposed new approach to regulating short-term rentals tomorrow in person at city hall. Here is a link to the staff report containing those recommendations.

While not the focus of my letter, I do think that tenants who give “the finger” to a landlord’s very reasonable and legal request to stop subletting on Airbnb are doing a disservice to their fellow tenants.

Also, it’s possible that the points raised in this article regarding flexibility are a preview of Airbnb’s response strategy. If so, that would be consistent with how I’ve seen Airbnb respond to proposed STR regulations elsewhere, which is to essentially say, “Yes, please regulate us. We’re all in favour of fair and sensible regulations.” However, when it comes time for those regulations to actually be implemented, Airbnb starts changing its tune, to the effect of, “Of course, we’re all in favour of sensible and fair regulations, it’s just that these particular regulations aren’t quite fair and reasonable enough for our liking. Especially parts X and Y.” And it’s usually parts X and Y that are essential to protecting housing from conversion to full-time STR units or actually enforcing the rules Airbnb claims to support.

If it is going to advocate for more flexibility, rather than strictly precluding housing units that are not primary residences from eligibility for an STR licence, I’m quite interested to hear what Airbnb’s alternative regulatory proposals are. I’m also very interested in its response to the proposed requirement to display a permit number in online listings – an idea it has resisted elsewhere.


 

Dear Mayor and Council,

In advance of your consideration tomorrow of the staff report on a proposed new approach for regulating short-term rentals, I would like to draw your attention to a story in the news today that I think may be used to argue for a different and looser approach to this issue than the one staff has recommended. I would also like to outline what I see as the flaws in those arguments.

The linked story in Metro News describes a situation in which a two-income couple with three children rented an entire large house in Kitsilano for $4,200. They said they could only afford the rent by subletting out a separate basement suite in that house on Airbnb for an average of $2,000 per month, a rate that is considerably higher than the long-term going rate for a one-bedroom basement suite in that area. When new owners later bought the house, they told the couple to stop subletting the separate suite on Airbnb, which the couple refused to do, though they subsequently agreed to move and then bought a condo in False Creek.

As I understand it, if properly enforced and with due attention to the requirement for proof of primary residence, staff’s proposed rules would prevent this type of situation from occurring, or at least offer an avenue of recourse when such situations come to light. That is very good and is part of why I support the proposed approach. However, in the story one of the tenants in question seems to be suggesting that their situation provides an example of why the rules should be more flexible. He says: “Do we want a hard and fast rule? Is that what we want, for there to be no exceptions?” He then goes on to argue that Airbnb is good for the neighbourhood because it allows “tourists, new immigrants and older people visiting new grandchildren a place to stay right within Kitsilano, which has few hotels.”

The latter quote illustrates an idea that I often see implied regarding the benefits of Airbnb – an idea I’m opposed to and consider detrimental to tenants. Certainly, I agree that if a housing unit would be otherwise be vacant while someone is away on holiday, it is likely to bring extra business and vibrancy to a neighbourhood if a tourist is able to stay there during the vacant period. But that is not the situation here – the situation in this example is one where Airbnb proponents seem to be arguing (as per their own circumstances) that it is better to have “tourists, new immigrants and older people visiting new grandchildren” staying in the self-contained basement suite than it would be to have renters living there. I don’t see how this is accurate in an economic sense, but more importantly, I find it offensive, as it suggests that tourists are a greater benefit to communities than actual residents who happen to be renters. I see this idea as diametrically opposed to Vancouver’s housing and healthy city goals. It is also not the reason the city legalized secondary suites, a policy change that was partly justified based on the need for more affordable rental housing.

Further, given the occupations of the couple in question (inventor and designer), I would not be surprised to hear Airbnb proponents argue for having looser regulations so that people like these (people in the arts or other creative occupations) can earn extra income by renting out entire suites they don’t live in. This argument was implied in one of Airbnb’s recent Vancouver advertisements  profiling a filmmaker, who it turns out also rents out an entire unit that is not his principal residence. While I understand that many arts workers have a very hard time living in Vancouver due to low earnings in that sector and the high cost of housing and studio space, I don’t think allowing those in the arts who are in a position to own or rent more housing than they need to use that surplus housing for full-time STR purposes is a good solution to that problem. People with low incomes, including many in the arts, are more likely to be renters and the best way to help them afford to stay in Vancouver is to require that housing be used to house residents, not for tourist accommodation.

This news story also illustrates how Airbnb provides a mechanism for those who are better off to benefit at the expense of those who have less – less income and less housing security. Those who are better off in terms of housing are vastly more likely to be homeowners, but in some cases, such as this one, they can include renters too. Although I am a tenant, I don’t endorse other tenants taking housing out of the rental market to benefit themselves – because other renters need that housing. While I agree with the staff proposal to allow renters to be eligible for the new STR licences if they have the consent of their landlord, I suggest that only a small minority of renters (who will tend to be better off) will be able to obtain that permission.

The proponents in this story also argue for looser regulations because Airbnb allows visiting grandparents to stay close to their families in neighbourhoods, rather than in downtown hotels. Relatives have been finding ways to visit their families in cities long before the popularity of urban short-term rentals exploded, which was shortly after Airbnb was founded in 2008. I agree that the popularity of Airbnb indicates that many visitors would prefer to stay in neighbourhoods rather than in downtown cores, where hotels are typically found. I also see how short-term rentals may suit families better than conventional hotel suites. I hope the hotel industry will respond to these market signals and submit applications to the city that will meet this need, and that the city will view them favourably. However, given Vancouver’s chronically low vacancy rate, I don’t think the desire for visiting relatives to stay closer to families should be prioritized over the urgent need for more year-round rental housing. Also, under staff’s proposed rules, family-friendly entire units will still be available for short-term rental, it’s just that it’s likely there will be a significantly smaller number of them, because they will only be principal residences, not units dedicated to full-time STR.

I also take issue with the proponent’s use of immigrants to justify turning housing into tourist accommodation. Many immigrants have few resources when they first arrive in Canada and can’t afford to buy homes. That means they need rental housing and, like other tenants, probably can’t afford to pay the much higher nightly rates typical of short-term rentals. It’s true that some STR operators offer the option to rent by the month instead of by the night, but when that’s the case I’ve observed that those longer-term rates tend to be slightly discounted over what it would cost to rent the unit at the nightly rate for 30 days. That tends to be much higher than regular monthly long-term rates found for rental units on Craigslist.

As in many other cases I’ve seen, the proponents in this story seem to be arguing for looser regulations based on the quality-of-life benefits that operating an STR provides them with, regardless of the negative impact that has on others in this low-vacancy climate. While I agree with allowing entire homes or spare rooms to be rented on an occasional basis, I do not agree that the staff’s proposed approach should be more flexible, so that entire units can be devoted to full-time STR purposes, as is suggested in this story.

Finally, when considering the arguments for the benefits of short-term rentals, I urge you to be skeptical of claims, such as are often made by Airbnb or its proponents, that renting out a separate non-principal residence on Airbnb is the “only way” a given household can afford to live in Vancouver. Proponents arguing for a non-restrictive approach to STR regulation are advocating for a significant policy change that is likely to have far-reaching negative impacts on tenants, and typically that policy change is one that would directly benefit them financially. Yet they do not provide actual, verifiable evidence to support such hardship claims. I’ve noticed that those claims often falter under scrutiny or requests for proof.

Sincerely….