Victoria’s city council struck the right balance in regulating short-term rentals. The measures approved last week protect people already in the business, level the playing field for hotels, and help address the housing shortage.
But the issue is a reminder of the increasingly complex challenges faced by municipal governments as new ways of doing business disrupt traditional models.
Airbnb provided the platform that connected travellers and people with space to rent and in nine years created a new business model. In desirable communities such as Victoria, investors saw the chance to buy a condo or house and operate it as a mini-hotel.
There were far-reaching consequences. Taking hundreds of units off the market adds to the serious housing shortage in the region. The city estimates there are about 1,500 short-term rental listings for Victoria. While some are spare bedrooms, most could be long-term housing to meet local needs. There are about 26,000 renter households in the city; the loss of even 500 units to short-term rentals — almost two per cent of supply — is significant.
Hotels face competition from businesses that pay few of the same costs, including business licences and taxes.
And, council heard, people who buy units in what they think are buildings where they will have neighbours and a resident-driven strata council find themselves surrounded by transient visitors with no stake in the building.
Council’s response was measured. Short-term rentals will now be illegal in “transient zones” — basically the downtown and areas where there are already many hotels and motels. Those already operating will be allowed to continue, an important recognition that people made significant investments based on the existing rules. People renting rooms or suites in their own homes won’t be affected. And business licences will be required.
Despite the grandfathering of existing businesses, some people, such as those who have committed to purchasing a condo they planned to use for short-term rental, will still likely be caught out by the change.
That highlights the importance — and challenge — for municipal governments in staying on top of disruptive changes, from Airbnb to Uber to ones barely on the radar. Rules have to be in place before problems become serious and before citizens have made investments or life decisions based on the existing regulations.
The issue is also a reminder of the importance of a co-ordinated response, supported by the Union of B.C. Municipalities, meeting in Vancouver this week, and the provincial government. That’s much more efficient than expecting every city and town to tackle these issues on their own.
A co-ordinated response also helps head off any potential ripple effects. In this case, Victoria’s policies could simply export the problem to Esquimalt or Saanich.
Victoria’s council, while arguably several years too late, handled the issue well.
But all municipal government face many similar challenges in the years to come.
