Victoria could look at enhancing its short-term rental regulations as a report lays out how operators are skirting thousands in annual fees by saying they live in their listed unit.
As it hosts one of the most expensive rental markets in Canada, the city found there’s a clear upward trend in the number of units being converted into short-term vacation accommodations.
That finding is from the same staff report that focuses on how the city’s short-term rental regulations are hampered by limits on municipal powers and enforcement difficulties. That comes as the number of non-principal operator applications has been steadily increasing every year as the city warns of housing being diverted to the short-term market amid an “affordability crisis.”
Last year, McGill University researchers found that for every housing unit in B.C. that gets lost to the short-term market, the average monthly rent of 100 other units increases by $49. Victoria’s renter households are paying an average of an additional $1,151.56 per year due to units being converted to short-term rentals, the city said.
The existing rules allow owners to rent out up to two bedrooms of their principal residence or list the entire home as short-term accommodation on occasion while they’re away. Operators also have to get a business licence every year and abide by certain rules.
The city found operators were using creative ways to apply for a $150 fee meant for principal resident operators instead of the $1,500 fee for non-principal operators. Many owners improperly filled out their application forms – therefore benefitting from the lower-cost permit – by selecting a “single-family dwelling” option when they should’ve picked “single-family dwelling with suite.” Self-contained suites are not allowed to be used as short-term rentals.
Victoria began conducting inspections for all principal resident operator applications in 2020 and denied one-third that were previously licensed, while another third never re-applied.
While some operators applied for lower-cost licences they weren’t eligible for, hundreds aren’t applying for the permits at all. The city found just 66 per cent of hosts complied with getting a licence in 2022. There were no fewer than 990 short-term rentals operating at any point last year, but only 665 licences were issued.
The city called the compliance rate an ongoing issue. Even if officials identify an unlicensed listing and take the time to try and get the owner to come into compliance, the operator may just start operating illegally the next year, the report stated.
“When a third-party property management company is involved, the problem can be exacerbated,” the report added.
Many new applicants are from out of town and are retaining property management companies to operate the units – a trend the city said has increased rapidly through the first half of this year. The city estimates over half of all owners who listed themselves as rental operators are using property managers.
Some operators are likely only using the companies as their local point of contact or for the local mailing address. The city estimates out-of-town owners make a higher share than the 42 per cent of licences issued to those living outside Greater Victoria.
“Staff have found it increasingly common to be referred to a property manager by an owner when requesting compliance with licencing requirements,” the city said, noting third-party participants are already barred under current regulations. “In situations where property managers avoid responsibility of regulations, and the unit is registered to an out-of-town owner, staff have more difficulty gaining compliance.”
Council on Thursday (July 27) will vote on whether it wants to craft amendments to its bylaws that would close wording loopholes, make third parties open to enforcement and crack down on compliance by increasing fines, expanding fine applicability and allowing tickets to be mailed to out-of-town owners.