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People are listing their short-term rentals in B.C. — and some are selling way below asking price

One short-term rental in Victoria was listed for $467,000 and sold for $167,000 under the asking price.
Debra Sheets owns a 250-square-foot unit in The Janion building near Victoria’s Johnson Street Bridge. DARREN STONE, TIMES COLONIST

Like Airbnb owners across B.C., Debra Sheets is in a holding pattern.

The Victoria resident talked to a realtor about selling her 250-square-foot unit in The Janion building that she bought in 2017 for $420,000. However, she was told she would be lucky to get $350,000, a loss she can’t afford as she nears retirement.

With four months until the B.C. NDP’s ban on most short-term rentals that aren’t in the owners’ principal residence takes effect, some Airbnb owners are trying to make as much money as they can before their investment dries up or becomes a liability, while others are panic-selling.

Victoria realtor Ira Willey has been showing his clients micro-lofts in The Janion, several of which have hit the market since October when the short-term rental crackdown was announced.

The problem is, none of them are selling.

“This is just too small to live in,” said Willey, standing simultaneously in the kitchen, living room, dining room and bedroom of the 300-square-foot unit that’s listed for $375,000. “It’s a perfect investment [property], perfect for a couple days. But renting long-term, it’s not the right place.”

The living room/kitchen becomes a bedroom by way of the Murphy bed that pulls down and reaches almost to the loveseat set against a turquoise accent wall.

The last unit to sell in The Janion, Willey said, was in June for $450,000, months before B.C. Housing Minister Ravi Kahlon announced that those in the business of managing several short-term rentals as investment properties should find another career.

By Willey’s count, there are 64 listings for condos in Victoria buildings that allow short-term rentals. By the fully furnished photographs, he estimates 50 of them were used as Airbnbs.

Willey can only cite one example of a former short-term rental property that’s sold in Victoria since the legislation passed. A 464-square-foot unit in Mermaid Wharf overlooking Victoria’s Inner Harbour was originally listed for $467,000 and sold at the end of November for $300,000.

“They got a fair price for it,” said Willey.

Willey said people who purchased a condo in an Airbnb-friendly building paid a premium of between 15 and 20 per cent for the investment opportunity.

“Now that premium seems to have disappeared.”

Orion Rodgers, who owns one short-term rental in Victoria and manages 30 others, said he saw a lot of Airbnb owners listing their units for sale “to kind of get ahead of the market. But the market had already stalled before that.”

“So we were seeing throughout the holiday season people unlisted their properties because there weren’t any sales,” said Rodgers. “There’s just no buyers.”

He partially blames high interest rates.

Rodgers is a spokesman for a group of about 2,500 property owners called Property Rights Association of B.C., which was formed to formally oppose the legislative changes. He said many owners are trying to decide whether to shell out the $1,500 to renew their City of Victoria short-term rental licence even as they face the new rules May 1.

The goal of the province’s legislation is to encourage owners to rent their units on the long-term market, which Kahlon said could provide reasonably priced homes to low- and medium-income British Columbians.

Kahlon wasn’t available for an interview Tuesday but said in a statement: “While the legislation has just been passed, we’re already seeing reports of former short-term rentals coming back to the long-term housing market, including both listings of former short-term rentals as furnished long-term rental homes, and short-term rental units that have been listed for sale since the province passed the legislation.”

A search of Craigslist in Victoria, for example, shows six units listed for long-term rent in The Janion at prices ranging from $1,300 to $1,800 a month. The Janion building is specifically zoned for short-term rentals and therefore isn’t subject to a City of Victoria bylaw that, like similar laws in Vancouver and Kelowna, already restricts short-term rentals to one’s principal residence.

However, that will change May 1 when the legislation ends the “legal nonconforming use principle,” which means that about 1,600 units the City of Victoria can’t regulate will now be subject to the principal residence rule.

Willey and his wife own two short-term rental properties, including a unit in Mermaid Wharf. Willey said he’s not in a rush to sell and will wait until the law takes effect in May to determine next steps.

Vancouver realtor Jordan Ballantyne said his clients with short-term rental properties are taking a similar approach.

“I don’t think anyone’s really panicking yet,” he said. “People are just going to continue [renting on the short-term market] until the rules take effect and it doesn’t really work anymore, right? People are going to kind of wring it for every last drop.”

Ballantyne recently sold a property in Hope, owned by a Vancouver resident and used as a vacation rental, for five per cent under the $800,000 asking price.

The City of Vancouver has seen a slight dip in the number of applications for short-term rental licences with 1,902 issued this year compared with 1,963 issued at the same time last year, according to data provided by the city. The licence fee was raised this year to $1,000 from $109.

About 30 municipalities already regulate short-term rentals through bylaws and licence fees, and those municipalities are responsible for investigating and imposing fines on rule-breakers. The City of Victoria even went to court to collect $20,000 worth of fines against illegal Airbnb owners.

Starting this spring, the province will create its own enforcement team which will have the power to mete out hefty fines of $3,000 per infraction, per day.

The Housing Ministry said in a statement that the team lead for the enforcement squad will be hired by April 2024, with the first investigators trained in April and May.

However, the provincial registry of short-term rentals — which can determine one’s principal residence by cross-referencing data collected by the government’s speculation and vacancy tax disclosure form — won’t be up and running until late 2024.

“To be honest, they’re doing this a little bit backwards,” said Nathan Rotman, policy lead for Airbnb in Canada. “They’re putting in place regulations on May 1 and then a registration system later. Normally it’s the other way around.”

Rotman said other than in Vancouver, which has its own short-term rental registry system, “we don’t know who is and who is not allowed to operate.”

“So it puts everyone in a very difficult position by the way they’ve designed the rollout of these rules,” he said.