As the City of Vancouver reviews new rules to restrict short-term rentals, Airbnb has released a study underlining the economic benefits of its business model on the local economy.
According to the economic impact report, there has been approximately $402 million in direct and indirect revenues due to Airbnb use in the 12 months up to August 31. The study, carried out by University of Victoria business professor Brock Smith, estimated hosts received $72 million in revenue and spent $57 million in related costs, guests forked out $179 million locally, and other spinoffs accounted for the remainder.
While this study shows short-term rentals are a financial boon, the City of Vancouver is reviewing the regulations surrounding these types of rentals and the impact they’re having on housing availability and rental affordability. The city is proposing to allow people to rent out all or part of their principal residences for short-term rentals, as long as owners got business licences. A decision on regulations is not expected until early in the new year.
“The City of Vancouver needs to realize that there are a lot of people that are interested in generating income from their properties,” Smith told Business in Vancouver. “[The city] needs to balance the economic considerations with the social considerations.”
Airbnb and alternatives like Nightswapping give tourists – some of whom can’t necessarily afford to stay at a hotel – more options, especially those from south of the border. An Airbnb host, who wished to remain anonymous, said three-quarters of their guests were American budget travellers.
Vancouver has already begun cracking down on listings that appear to be run as businesses. So, too, have other cities.
The Richmond News exposed a residence, known as the “Lancing House,” as having up to 18 customers staying nightly, with 10 to 11 rooms constantly operating. This is just one of 82 cases of suspected illegal hotels being observed in Richmond.
According to a report by the City of Vancouver, three-quarters of short-term rentals in Vancouver are entire units, which has sounded the alarm for residents who are suspicious of rental activity and fearful of safety.
“The regulations that are suggested for Vancouver are meant to crack down on those professional Airbnb hosts that are taking entire apartments or entire homes and renting them on a short-term basis,” said Smith.
Would-be renters should also be aware of the income tax implications of accommodation sharing, said Heidi Hofstad, communications manager for the Canada Revenue Agency.
According to the agency’s website, using some, or all, of your home to produce rental income, or income from a business, may result in a change in use that affects whether you can take advantage of the full principal residence exemption (PRE). The PRE is the exemption that allows you to sell your home without paying tax on the capital gain. •