An effort by the provincial government to transition short-term rental units into long-term rentals to help ease the housing crisis will have unintended negative consequences, says the owner of a B.C. condo that is rented out on Airbnb.
Anurag Sharma owns a 290-square-foot condo in the Janion building in Victoria. He and his wife purchased the unit as an investment in July for around $400,000.
“We have been working for the last 10 years, saved a lot of money cutting corners here and there, and then took a heavy mortgage,” he said.
Sharma is passionate about his business, and like most people making their first investment, he is nervous about whether they have made the right decision.
“Trying to make money or to break even, you might take a couple of years to cover the cost of the initial $400K and I’m just talking about the initial cost of setting up the interest rate.”
The province recently unveiled new legislation restricting short-term rentals, a decision that has been criticized by Airbnb and led to a flood of letters to the editor from people who own short-term rental condos in Victoria. These owners say the legislation will hurt the tourism industry, including people who run businesses specializing in cleaning short-term rental units.
Sharma does not understand why the legislation targets people who own legal non-conforming short-term suites as they are already required to pay for a City of Victoria Short Term Rental Business Licence for $2,500.
“The money which landlords contribute to the City of Victoria by paying the licences and the taxes is more than one and a half million,” Sharma said.
The changes in the new Short-Term Rental Accommodations Act will force more landlords out of the rental market and might not have the desired result of increasing housing stock, said Sharma.
“Many landlords in this building will not do it. They will say, ‘OK, I will use it for myself on the weekends.’”
The owner of a Victoria duplex, Wendy Shi, told Black Press Media the new legislation threatens her future.
“I just feel very hurt that I purchased a legal non-conforming unit,” she said. “I was under the impression that it’s a promise made by the city and the province that you can continue to operate this property the way you want legally.”
Like Sharma, Shi has paid a lot of taxes and fees.
“Eventually, $2,500 licensing fee, plus $2,000 GST, plus around $5-6,000 occupancy tax.”
Combined, she said, this will be around $10,000 that will go to the province, which it already uses to fund affordable housing.
Shi is concerned about the research methodology used and the BC Hotel Association’s research funding regarding the short-term rental market.
“If the research is funded by the government, we might not be as angry, but we’re also very familiar with hotels,” Shi said. “Because we are the competition.”
Under the changes, people will limit short-term rentals to the host’s principal residence and one secondary suite or accessory dwelling unit. Motels and hotels will be exempt from the new law.
The law is well-intentioned, said Brendan Harris, who owns a single-bedroom Airbnb unit in Victoria.
The aim of cracking down on people who own three or four or more condos is a good thing and needs to have limitations on them, but this legislation paints people who are just trying to make a living as villains, he said.
“I resent that local and provincial government frames me as a cheat who profiteers on others’ housing misery,” Harris said. “This is a deep mischaracterization of the hard work we do and the service we provide.”
The problem with this legislation is it casts such a wide net, catching everything in sight, and is getting families like Harris’s caught in the middle.
“I agree with its intention to make B.C.’s outrageous housing market more accessible. However, the person that ends up with our condo due to this legislation does so at my family’s expense.”
Airbnb has meant Harris and his family can own a home, and the income received from his condo and the current law change will take this away.
“Homeownership has barely been attainable in our lifetimes. Airbnb has facilitated small business ownership for us and allowed us to own a home.”
Many think wealthy relatives handed people like Sharma the money, but the reality is that they came to Canada with nothing and had to build their income.
“My wife and I moved to Canada in 2016-17 and came from zero,” Sharma said. “We started doing all sorts of chores, worked our way up, like in the last six or seven years, cutting corners, skipping meals.”
He does not understand why the law needs to change, with cities like Seattle and Portland using the same model that existed in Victoria to fund its affordable housing.
“In cities where things like this happened, like New York, they banned the Airbnbs. People went underground and went through other routes to find short-term rentals.”
Everything with this law change feels very rushed, Sharma said, and has blurred how he sees the government.
“The unintended consequences, what we are saying here is, we don’t trust the lawmakers because they can change the law the very next day.”