Airbnb Operator Facing Major Losses due to New BC Rental Laws

In downtown Victoria, nestled among the bustling cityscape, Steve Nguyen operates two Airbnb lodgings, one of which charmingly pays tribute to the celebrated television series, “Friends”. However, shaken and dismayed, Nguyen recently received news that due to new legislation, he will soon lose the ability to run his units as short-term rentals since he doesn’t live on the property.

“An immense shock”, is how Nguyen characterized his reaction. “The equity that I’ve painstakingly accumulated over time in these units simply evaporated overnight.”

Just last Monday, a new law was put forth by Ravi Kahlon, B.C.’s housing minister, which demands a principal residence requirement. While the legislation isn’t set to take effect until May 1, those affected by it are already making contingency plans.

Nguyen confided that he has been able to cover his unit’s mortgage by renting it out on Airbnb, even in the face of rising interest rates. Yet, due to the small size of the unit – which is smaller than 400 square feet – it is not appealing for long-term rentals. Moreover, the monthly revenue from it wouldn’t suffice to cover his hefty mortgage of over $3,000.

Understandably worried about the forthcoming situation, Nguyen stated, “The arithmetic fails utterly – investing in a GIC would have been a wiser choice.”

Following this development, Nguyen feels compelled to sell his loft unit, anticipating a loss of $150,000 from the initial purchase price, a sobering consequence of the fact that in a few months, the unit will no longer qualify in most cases as an Airbnb. He reasoned, “The value of a property is determined by its potential revenue”, revenue which is inevitably going to vanish for short-term rentals.

The recent legislations, meticulously crafted to create more opportunities for long-term rentals, have raised eyebrows in the hospitality business. Ian Tostenson, the head of the BC Restaurant and Foodservices Association, expressed anxiety over a potential shortage of hotel rooms in Victoria and Vancouver, with the inevitable disappearance of many short-term rentals.

Highlighting the worst-case scenario, he suggested, “The new regulations could result in fewer tourists visiting British Columbia, especially the more popular areas, due to the lack of available accommodation.”

The government, while acknowledging the possible blow to tourism, categorized these policies as a “balancing act”, arguing that the ongoing housing crisis is already causing harm to the tourism sector.

As Paul Nursey from Destination Greater Victoria argued, the city’s tourism industry stands solidly behind these new short-term rental rules. Nursey highlighted, “Large-number property owners, owning any number of units ranging from two to sixty units, are depriving our residents, including workers, of housing.”

However, as Nguyen, who has already been forced to let go of his employees maintaining the units, sees it, he and his disbanded team are the unintended casualties as the province grapples with the ongoing housing crisis.