A commentary by a past president of the Victoria Real Estate Board and a founding member of the Greater Victoria Short-Term Rental Alliance.
There are 634 legal, licensed, tax-paying short-term rentals in Victoria. All were protected by their legal non-conforming status after the city removed transient use from more than 140 property zones in 2018.
Protected, that is, until the passage of Bill 35, the Short-Term Rental Accommodations Act, which received royal assent on Oct. 26, a mere 10 days after being introduced.
The act should have been called the Hotel Monopoly Act, as it effectively wipes out locally owned private vacation rentals, leaving no accommodation alternatives for the travelling public, visiting medical professionals, film and television productions, patients travelling for treatment and anyone else for whom a hotel stay makes little sense.
The act is based on a McGill University study that was wholly funded by the hotel industry. This is not a secret; the funding source is in the report.
The hotel lobby declared total victory for their corporate multinational clients in an email blast bragging that the government had adopted all of their report’s recommendations.
Victoria lobbied for the removal of legal non-conforming status for short-term rental owners, and were rewarded. Section 36 of the act removes legal non-conforming protections from this very specific class of property owner with no compensation.
Legal non-conforming rights are an integral piece of the limited property rights that Canadians possess. They guarantee that a property owner can continue to use their property for the purpose for which it was purchased, regardless of a change in zoning in the future.
It ensures that the business that predated a housing development can remain in business, that a farmer can still farm regardless of zoning changes and it protects owners against capricious changes in land use rules that can wipe them out overnight.
This is the first time in B.C. that such a move has been attempted and, regardless of how you feel about short-term rentals, this move should cause you great alarm.
What did the city win in its lobbying effort? Of the 634 units, about 50 per cent will return to the long-term rental market. Twenty-five per cent will be left empty and used as a second home, as they are now, by their owners. Twenty-five per cent will be sold and occupied by owners.
For round numbers, let’s say the city gains 300 rental units. Not affordable rental units as these are generally newer and nicer than the existing housing stock, but rentals nonetheless.
What will it cost?
The city will lose $1.6 million per year in licensing fees. The city will lose an additional $500,000 in hotel tax generated, collected and remitted by vacation rentals.
The local economy will lose about $20 million in direct spending, cafes, restaurants, shops and services, from the guests who will no longer be staying in these properties. Over 10 years this amounts to a loss of $221,000,000(!).
This does not include the lost revenue and subsequent tax payments by owners or address the fact that the vast majority of vacation rental owners are local and the money they earn stays in the community versus the multinational hotel chains who vacuum money up and out of the local economy.
It also does not include the hundreds of job losses and significant financial setbacks that have been visited upon vacation rental owners who have played by the rules.
The city is effectively paying $736,000 per unit over 10 years to force 300 units into being unaffordable long-term rental units while creating a monopoly for hotels; $221 million over 10 years, approaching half a billion dollars over 20 years! Only to those in government can these numbers possibly make any sense.
But the housing crisis! A housing crisis effectively manufactured by the incompetence of all three levels of government over the past 30 years will not be solved by stripping property owners of their rights or by producing a paltry 300 units at a cost of hundreds of millions of dollars to the local economy.
It is a great irony that the governments that are responsible for the housing crisis have also managed to set citizen upon citizen in a search for blame, distracting all from their own culpability.
Victoria council claims it can do nothing, but this is not true. They lobbied for this change, they can lobby against it, if they can set aside their ideological world views for a moment.
The regulations for the act have not yet been written, and there is the opportunity for city council to make a real difference in the implementation of the act. Now that they know the cost, how can they not?
