Short-term rental restrictions push down rents, report finds

British Columbia’s crackdown on short-term rentals reduced rents by 5.7 per cent, saving tenants more than $600 million last year, according to a report led by McGill University’s Canada Research Chair in Urban Governance.

This figure is the result of municipal restrictions, particularly the requirement that short-term rental units be located in the operator’s primary residence.

In Vancouver, for example, the report says renters are paying an average of $147 less each month than they would have without the city’s primary residence rule.

The report, led by research chair David Wachsmuth, says recent provincial regulations for communities with populations over 10,000 have the potential to generate similar savings across B.C., helping to alleviate affordability issues.

The provincial change came into effect in May, requiring listings on platforms such as Airbnb and Vrbo to be located in the operator’s primary residence or a secondary suite.

Assuming the provincial requirements are as effective as existing municipal rules, David Wachsmuth’s report says tenants in those cities would see their rents drop by 4%, representing a total savings of $592 million per year by 2027.

Renters would pay $1 billion more over two years if the province’s rules were to be repealed after this year, the report released Wednesday said.

Housing at the heart of provincial elections

It’s a conclusion that B.C. Premier David Eby’s New Democrats have already pushed, while provincial Conservative Leader John Rustad recently told supporters he would roll back restrictions on short-term rentals.

According to the report, the British Columbia Hotel Association asked the researchers to provide a preliminary analysis of the province’s short-term rental rules.

The authors are solely responsible for all analysis, findings and conclusions, the report adds.

Researchers of McGill looked at 52 of the 55 neighbourhoods in British Columbia where a primary residence restriction was in effect in January 2023.

The analysis found that rents were on average $110 lower than they would have been without the rule.

The paper says the researchers used public and private data sources to conduct their analysis, as well as a modeling approach widely used by economists.

British Columbia passed its provincial short-term rental housing law in October 2023 and the government has been gradually implementing the measures.

THE full implications future

The report of McGill adds that a recording system with accountability requirements Additional fees for ad platforms are expected early next year.

It stipulates that the full implications The province’s rules will only be clear at that point, when platforms will be forced to remove ads without valid permits.