Unveiling Solutions: Curbing Short-Term Rentals to Alleviate Canada's Housing Crisis

In the quest to address Canada's housing crisis, a recent report from Desjardins economists sheds light on a potentially impactful solution—placing restrictions on short-term rentals. The likes of Airbnb and Vrbo, while providing lucrative opportunities for investors, have inadvertently strained the country's housing supply, leading to increased rents and reduced availability for long-term tenants.

Impact on Affordability and Availability

The report reveals that the rise of short-term rentals has significantly impacted both the affordability and availability of long-term rental units. Investors, enticed by the prospect of higher incomes, are opting for short-term rentals, leaving thousands of potential long-term housing units vacant.

Quantifying the Issue

Data from AirDNA indicates that there were 235,000 active short-term rental listings on Airbnb and Vrbo in Canada over the last year, equivalent to 4.9% of long-term rental units or 1.4% of the total housing stock. With a national rental vacancy rate of 1.9% in 2022, well below the balanced market rate of 3%, the housing crisis intensifies, with rents rising nearly 10% in the past year.

The Call for Policy Intervention

Desjardins economists advocate for targeted public policies to curb short-term rentals, focusing primarily on commercial investors who purchase properties for full-time listing. The proposed measures aim to protect the long-term rental market without penalizing homeowners who engage in occasional short-term rentals.

Successful Policy Models

Cities like Toronto and Whistler have implemented successful policies, requiring licenses for short-term rental hosts, capping rental days for entire homes, and restricting short-term rentals to designated tourist zones. Additional taxes on short-term stays have been introduced in some Ontario cities, while provinces like Quebec, British Columbia, and Alberta collect comparable taxes at the provincial level.

Vancouver's Success Story

Highlighting Vancouver's success, the economists emphasize the impact of restricting short-term rentals to primary residences. In Vancouver alone, an estimated 800 housing units were reintroduced into the long-term rental market virtually overnight. Finance Minister Chrystia Freeland estimates that such restrictions could bring back 30,000 housing units in Vancouver, Toronto, and Montreal.

Swift Impact on Housing Crisis

Desjardins economists stress that while there's no singular solution to Canada's housing crisis, restricting short-term rentals is a swift and impactful component. Unlike the lengthy process of building new housing developments, these measures can quickly inject much-needed units into the long-term rental market.

The report underscores the potential of targeted policies to rein in short-term rentals and offers a glimpse into how such measures could play a pivotal role in alleviating Canada's housing crisis. Stay tuned as the country navigates this multifaceted challenge, seeking effective solutions for a more sustainable housing future.