Airbnb pledges to help B.C. cities regulate, tax vacation rentals

UBCM forum told of growing concern about impact on housing supply, options for local regulations

An upstairs apartment above a plaza in Revelstoke rents for $250 a night on Airbnb.

An Airbnb representative says the online booking platform welcomes regulation by B.C. cities to help control the exploding market for short-term vacation rentals and is prepared to collect and remit accommodation taxes.

Public policy manager Alex Dagg made the comments Thursday to a packed Union of B.C. Municipalities forum on the contentious issue, where municipal and hospitality industry representatives on a panel outlined potential measures.

The common theme from panelists was that the phenomenon is here to stay but rapid growth of online bookings of vacation rentals will, if left unchecked, worsen an already dire rental housing market where workers and students increasingly can’t find places to live for the long term.

“We want to be good community partners,” Dagg said, noting Airbnb already collects and remits taxes in 200 U.S. cities. “We have no problem to do that here as well.”

She said applying existing eight per cent hotel room tax and additional municipal and regional district accommodation tax of up to three per cent would generate up to $2.5 million a year for the province, based on the 166,500 Airbnb bookings in B.C. in 2015 through 13,600 hosts.

Dagg suggested the province eliminate an exemption from those accommodation taxes that now exists for operators with fewer than four rooms, which excludes most current Airbnb hosts.

“We would be more than willing to comply,” she said. “And to then build in that municipal tax on our platform and collect and remit to the provincial government.”

The tidal wave of vacation rentals has already hit hard in more tourist-oriented areas like Tofino and Nelson, the forum heard, but officials in cities like Abbotsford, with an estimated 40 Airbnb rentals so far, are bracing for many more.

Nelson Mayor Deb Kozak said her city has a near zero rental vacancy rate and concern at city hall grew after two families were evicted to potentially make way for vacation rentals.

She also said the city became aware of speculators buying multiple properties specifically to rent online as vacation units.

But Kozak said it was also clear residents wanted the ability to rent out units via services like Airbnb and a balance had to be struck.

“There’s definitely a high profit margin,” she said, adding it’s a more lucrative alternative to renting out rooms or units conventionally. “Most people say you can make at least double as opposed to renting to someone long term.”

The Nelson mayor said she also heard from people who had bad experiences with bad renters as conventional landlords.

New rules set by Nelson allow vacation rentals only of a primary residence, not an investment property.

Operators are expected to get licences for either a limited 31-day period or seek one of a limited number of year-round licences.

Tofino is tightening its vacation rental regulation system, using an online system to identify owners advertising rentals and then chase them to get a business licence and comply with other requirements.

“We mean business and we expect regulatory fairness across the community,” Tofino Mayor Josie Osbourne said.

Paul Nursey, CEO of Tourism Victoria, said a rise in speculators buying vacation rentals is accelerating an “absolute crisis” of scarce housing.

Some of them are Airbnb hosts with many units operating as individual rentals that amount to “shadow hotels.” He said there are an estimated 2,000 Airbnb rentals in Victoria.

Saanich Coun. Fred Haynes said the Airbnb rentals have sent an already bad student housing crisis into “overdrive” and forced some international students to give up on their studies here and return home.

He recounted how some enterprising students rent units long term, then offer them as vacation rentals at peak season, earning as much money in three months as they would working in a year.

Concerns for neighbours of vacation rentals include more pressure for parking and garbage removal, and safety concerns with a steady stream of strangers having access to parkades and other common areas of condos.

Lumby Coun. Nick Hodge called it “crazy” to try to quash vacation rentals that he said are the legitimate use by homeowners of underutilized assets – their empty rooms.

“Nobody’s talking about quashing it,” B.C. Hotel Association CEO James Chase responded. “This is not going away.”

Chase urged cities to act quickly to set up any regulation scheme, noting bookings are being made now for next summer.

“It’s going to keep growing at a very rapid pace,” Chase said. “If you don’t manage this, it’s going to overrun us.”

The risks include a growing number of businesses that can’t house their workers, he said, as well as a freeze on investments in new hotels in cities that fail to impose regulations.

Chase recommended requiring all hosts to get business licences – no exceptions – adding the extra fees and the prospect of their income being more traceable by federal auditors will act as levers to push more vacation rentals back into the long-term rental housing market.