the early impacts of short-term rental restrictions

With an avalanche of new policies targeting housing coming from all levels of government across Canada of late, one can be forgiven for not keeping on top of each and every one.

For our part, we’ve opined on many of them vis-a-vis their impacts on the market—in the rennie landscape and elsewhere—though a good proportion of our analyses have been forward-looking, as they’ve highlighted what the potential implications might be.

With the new short-term rental restrictions from the BC government now taking effect, along with upcoming changes to the residential tenancy act and changes to the capital gains tax inclusion rate, it’s worth looking at how investors in both the short- and long-term rental markets have already been responding to the changing regulatory environment. To this end, we’ll take a look here at the long-term rental market and the for-sale housing market in Metro Vancouver to assess the early impacts of the changing policy landscape.

Shorting short-term and going long on long-term

As of May 1st, any short-term rentals in British Columbia are now limited to principal residences and secondary suites (with some exceptions). As such, owners of stand-alone short-term rental properties—think of a condo on Airbnb—are now faced with renting their properties to long-term tenants or selling them (a third option would be to live in them as their principal residence). 

Naturally, many market-watchers had been expecting—and the provincial government hoping—that this policy shift, which received Royal Assent in December 2023, would be accompanied by an expansion in the number of apartments for rent and condos for sale.

Prior to last April, however, that anticipated surge in listings hadn’t been reflected in the data, with monthly new advertised rental listings in Metro Vancouver increasing marginally in the early months of 2024 but remaining below their levels from 2023. The trend did shift in April, with total new advertised rental listings up 36% from March, compared to an average March-to-April increase of 10%, and 52% from the same month last year. Notably, 1-bed listings were up 40% in April from March versus a typical seasonal increase of 12%, and were up 71% from last year.

There are plenty of other factors that could potentially be influencing the expansion in rental listings, such as an increase in new supply (4,100 new apartments and condos have been completed to-date in 2024) or elevated migration flows leading to the higher turnover of homes. Given these factors, it’s worth isolating specific types of listings that are more likely to have been short-term rentals: furnished homes. And sure enough, furnished listings were also up significantly across Metro Vancouver in April—by 43% from March and 21% higher than one year ago. Over the past two months, new furnished listings were up 86%, which is the highest two-month increase since April 2020, at the onset of the pandemic.

Rent it or list it Vancouver 

The resale market is also featuring an increase in listings: while new MLS listings are up across the board in the Vancouver Region, the new listings of condos were, in April, the highest relative to their long-run average (by 45%) than those of detached homes (by 5%) or townhomes (by 29%). 

New listings are also inherently seasonal, with totals generally bottoming out in December and peaking in spring, so part of the recent surge can be chalked up to good ol’ seasonality. That said, while the typical December-to-April change in new listings for condos is an expansion of 177%, the change observed this year has been double that, with condo new listings up 362%.

Overall, the most likely culprits for rising listing counts are a confluence of factors that include policy changes—like the province’s short-term rental restriction—as well as high interest rates, which have financially squeezed many investor-owners and owner-occupiers alike. The important observation here, beyond what is mostly causing the uptick in rental and for-sale listings, is that the uptick is a valid trend—and one that we’ll be following closely to see if any meaningful impacts on overall housing supply, rents, or prices follow.