Rents are out of control in many parts of the country. The federal and provincial governments have taken some steps to provide relief, such as waiving GST and HST on rental housing construction.
However, more immediate relief is still required. To that end, a number of provinces have taken steps to crack down on short-term rental markets.
Short-term rentals have exploded in popularity in large part thanks to the ingenuity of ‘sharing economy’ platforms like Airbnb. Airbnb, a company with an US$82-billion market cap, has enabled homeowners to become hoteliers, renting out their primary residences — or other properties — to guests for as little as a day or as long as many months.
Airbnb and similar platforms have become so large they’re now recognized as having a material effect on cities’ long-term housing supply. A July 2023 report by researchers at McGill University found that “More than 16,000 entire homes are being used as short-term rentals for the majority of the year in British Columbia. This is making it more challenging to find affordable long-term rentals.”
British Columbia has since announced increased restrictions on short-term rentals. Quebec and Nova Scotia have as well.
The differences in their approaches are striking.
Quebec has taken what you might call a ‘light touch’ approach. It has imposed stiffer requirements on property owners to register short-term rental units, ensure there is a Quebec representative for the property, pay a lodging tax and pay sales taxes. Fines for non-compliance now run as high as $100,000. The city of Montreal has reportedly started deploying inspectors to identify illegal short-term rentals and hand out fines.
Nova Scotia’s new rules, introduced in October and expected to take effect in the spring, will impose annual registration fees on short-term rentals. The size of the fee will be based on the size of the community where the property is based. Fees for units in a principal residence will be set at $10 across the province, so as to not discourage these rentals. Fees for units that are not located in someone’s home will range from $240 in the most rural communities to $3,600 in downtown Halifax.
British Columbia is taking the ‘heaviest hand’ approach. Its rules, which will take effect in May, will prohibit property owners in communities with populations greater than 10,000 from offering a short-term rental for rent unless the unit is in that person’s principal residence or a secondary suite on the principal residence’s property, such as a basement suite or laneway home.
Like Quebec, both Nova Scotia and BC have also — appropriately — strengthened registration requirements and fines. Short-term rentals have, for too long, been tacitly allowed to skirt tourism-related rules and fees due to a lack of enforcement. This needs to change. Property owners who profit from renting out their properties should not be given an unfair advantage over hotels.
But there are strong reasons for favouring Nova Scotia’s other measures over BC’s.
Nova Scotia’s $3,600 annual registration fee in popular locations (like downtown Halifax) will change the calculus about whether it makes sense to favour short-term renters over long-term ones. But the fee will not fundamentally interfere with owners’ freedom to use their properties as they choose.
By comparison, BC’s proposed rules materially interfere with property owners’ rights — limiting their ability to choose who gets to use their properties and on what terms. To enable officials to ensure compliance, it will implicitly authorize a high level of government intrusion into property owners’ privacy. For these and other reasons, it could also be vulnerable to a court challenge.
People purchase property precisely because it makes them masters of their own domains. It is no small thing to curtail those rights so fundamentally.
Of course, property rights can be and are restricted in many ways. Property can be subject to zoning rules, condo by-laws or landlord-tenancy legislation, to name a few examples.
But the fact that there are already limitations on property owners’ rights does not mean that the decision to impose additional restrictions should be taken lightly.
Few would question the merit of BC acting to address its acute housing crisis. But if a ‘lighter touch’ approach like Nova Scotia’s is capable of achieving the same end, it is preferred.