The recent federal measures introduced to regulate short-term rentals are being hailed as a "crafty way" to bolster support for municipalities, according to Robert Hogue, an assistant chief economist at RBC Economics. The move, outlined in this week's fall economic statement, focuses on denying income tax deductions for operators of short-term rental units who fail to comply with municipal regulations, effective January 1.
In addition to these changes, the federal government has committed $50 million over three years to assist local governments in enforcing restrictions against short-term rentals. The funding is set to commence in the fiscal year 2024-25.
The primary objective of these regulations is to increase the availability of rental units in major cities such as Toronto, Vancouver, and Montreal. The federal government's fiscal update revealed an estimated 18,900 homes being utilized as short-term rental properties in these three cities.
Robert Hogue, in an interview with BNN Bloomberg, characterized the federal government's move as part of a broader effort to "crack down on short-term rentals." He commended it as a "crafty way for the federal government to lend support to municipalities."
Nicki Skinner, a realtor at Bosley Real Estate, views these new rules as an "added layer" designed to eliminate incentives for short-term rental units. In her interview with BNN Bloomberg, Skinner emphasized that from the federal perspective, this initiative aims to reintroduce these properties into the long-term rental pool. However, she also acknowledged a potential unintended consequence if investors opt to sell their units rather than placing them on the rental market.
"Now we have a flood of units on the market, which is good in some ways for people who are looking to buy," Skinner stated. "But I’ve got to be honest, a lot of these units that are on Airbnb, they're small, these aren't places that people are looking to live in long term."
Airbnb, a major player in the short-term rental market, responded to the new regulations. Nathan Rotman, Airbnb Canada policy lead, highlighted that the impact of these rules would be on a small segment of Airbnb users. Rotman stated that Airbnb represents less than one percent of the overall housing stock in Canada and major cities. He also emphasized that Airbnb is already restricted to operating only in a host's primary residence.
While expressing a willingness to collaborate with the government, Rotman raised concerns about how the government framed the issue. "We support compliance of our hosts in the communities where they operate. What we don't support is vilifying short-term rentals as part of the problem with Canada's housing market," Rotman said.
As these regulations come into effect, the broader implications for the housing market and the rental landscape in Canada will be closely monitored, with stakeholders assessing the impact on both supply and demand dynamics.
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