Considering the outrageous prices charged by motels in every city I've been (up to Chicoutimi) and even by road side motels near nowhere, I'm not surprised :-/
>Business groups like Montreal’s Bed and Breakfast Association have been pushing for the government to crackdown on home rentals for years.
Somehow the regulators (and governments) prefer more money over their own citizens. Banning short term rentals would solve (or atleast reduce) housing problems in many cities, while tourists can still come and stay in hotels.
While Airbnb is not the sole reason, it definitely is one of the factors if not a major factor for the steep rents here in Toronto.
Just to give you an example, when i moved in my current condo back in 2017 my rent was $1700/month. 2 years in and my landlord wants to suddenly "move back in" and now the rental price for similar units are around $2200/month. I find it hilarious top brass of Y Combinator talk about things like UBI and rest and meanwhile Airbnb actively tries to screw over the locals when it comes to renting a place and won't even assist local government in enforcing the rules.
If it's anything like my small Canadian province rents are astronomical for a small quite town. Often $1,200 for a one bedroom apartment. We're a tourist town and many homes have been bought up by people running short term rental or STR.
There was a town meeting and one owner of several buildings called in to complain that any regulation would hurt her business. She was calling while on vacation at Lake Como Italy. The sense of entitlement was thick.
Many so-called "reno-victions" are common. Oh that wall needs paint? Gotta evict you with 14 days notice. Good luck finding anywhere else to live since it's a 0.1% vacancy rate on a good day 0% most.
There's no damn breakfast either since there's no owner there it's just a way to get around paying the taxes that hotels do.
No it's not that hotel prices are artificially high, they are priced in a completely separate market to residential properties. If there is no regulation on Airbnb rentals, tourists are now competing more in the residential market. This can obviously have an effect on cities.
This is a byproduct of 10-15 years of low rates - in the 1-2% area. Corporations could borrow in the money market for that 1-2%. They then purchase residences of all kinds - even build. This is houses, apartments, condo-style or not. In this tight rental market they then rented them out in several ways - short AirBNB type, weekly/monthly/annually - there are steady demands at all levels. The shorter times at higher rents ---annually = lower. They hire rental managers - often existing ones that do this. All of these models earn in the 10-20% area (some even more). Cities have long sucked $$ from hotels that do this with hotel taxes. Cities hate them, hotels hate them, people who need to find a place to live hate them. They can operate in a stealth mode - who knows who rents this flat/suite or that. Rental agents screen out the bad tenants who would draw too many flies = city inspectors who have tried to outlaw/tax these.
Cities could make these subject to commercial real estate taxes, like a small variety store. (in Toronto if a flat pays residential real estate taxes - a store of the same size pays about $4000 business taxes).
This would require a large and intrusive city regulatory structure because there are 20 times as many assorted flats compared to businesses, so that ratio of inspectors would be needed as a lot of door knocking would be needed. There would also be a huge degree of evasion as well as missed tenants at home = even more inspectors? This can be corrected with huge fines to coerce people as well as finance inspectors. There could also be leaker rewards?
This is the root cause of the housing cost increases. There are many vacant places, since these units earn well at 50% vacancy rates, even as Joe +wife +kids are forced out of cities by this mechanism.
Building more houses will help, higher rates also curb the profits made and people exit the business. The best way is to make it illegal in some way - yet we need rental apartment houses? Getting rid of the sub renter market will help with units run as AirBNB places at assorted tenures...
And this is not even central. Hopefully they all get their fingers badly burned when rates rise, this tax comes in and equity drops.
I'm very disappointed to hear this. Quebec is one of the last places in the Western world where rentiers have a hard time.
Also for people saying these are "for a few weekends".
Many AirBnb are not "a few weekends" they are a second home bought / mortgaged for the express purpose of permanently letting in out on airbnb and not paying tax.
The thought with a few commercial Airbnb people I know is that, at least in major Canadian cities, the demand for living in Canada won't allow this to happen. What's more likely are controls that will be put into place to extract more of the profit, making it less profitable to run such a business, in order to fund displacement from gentrification and low-income housing projects. This is however one of those invisible beasts that has enough people + Airbnb as an organization aligned to lobby politicians to push back against any legislation that will harm their profits.
Vancouver is about to do the same with a new bylaw governing short term rentals. The cause is an unbelievable shortage of actual long term rentals for people who live in the city. But the cause of THAT shortage is not AirBnB. It’s rampant speculation by both locals and foreign investors.
Rather than fix the tricky speculation issue, government focused on Airbnb. IMHO this will hurt both cities by making it more expensive to visit.
I've read the other AirBnB threads on here discussing the externalities. And I still think the cities would be better off with AirBnB than without it.
The opportunities for property owners to profit as well as providing tourism/business visitors with $40 rooms is massive.
It's opening up a huge new bnb industry, provides a large flow of new revenue for tourism businesses in the cities, greatly expands the amount of tourists/business visitors who can afford to visit.
I'm curious which of the externalities you think can't be addressed by property owners? For example, they can have a no-airbnb policy in the rental agreements. Or liability safety waivers. Or security policies to limit flow of non-tenants. Or handled via disputes between property owners or police such as sound violations.
Besides, the incentives mentioned in the article are a) the market incumbents "Montreal’s Bed and Breakfast Association" want protection and b) the government wants to protect existing tax revenue/regulation fines.
At this point, it's not about externalities. It's about protecting current revenue streams. While ignoring the potential for far greater tax revenue and social benefit.
Very weak evidence presented in the article. Airbnb is surely a factor in rental price increases, but if it were in fact a leading causative factor, how come municipalities that ban airbnb do not see rental prices drop materially?
The focus clearly needs to be put on adding substantial supply, and in Canada at least, reigning in the demand from new immigration.
Yeah, it went from just the founders couldn't afford rent to a lot of people couldn't afford rent.
Lots of property management companies basically stick a human face on AirBNB and then rent them out for short term for far more cash. Has been happening for the Toronto area for sure.
It's funny there's a spate of complaints about how fees have crept up to the point that AirBnB is not longer a deal, all the municipalities that have ruled against allowing them to operate outside hotel regulations and yet they also announced a massive increase in revenue in profits.
I personally don't get this business at all. Staying in a stranger's house is even more disconcerting that renting out a house to strangers. I'm mind-boggled at home much business they get.
The local government puts taxes on hotels to get money from visitors who don't have a vote. In some cases they put regulations on hotels that limit competition or make them more expensive to operate. Then they have regulations that limit the production of new housing, artificially raising the price by preventing the supply from growing. Then they have to implement rent control to control the damage caused by that, which horribly harms the market as well.
And then all anyone complains about is how their neighbor is doing something they don't like with their own home.
If it really was to protect the turism economy and the people of Quebec, they should evaluate how many more people can visit Quebec now that there are options like $25-40/night rooms.
I know AirBnB was a big reason I visited NYC since it made the trip significantly more affordable.
I think I get all points of the debate but the key question for me is...why are there so many airbnb rentals. Clearly there's some sort of demand, clearly the hotel econsystem doesn't handle it well enough. That's the root issue that needs investigation. Tighter regulations of airbnb are more of a hotfix than a long term solution imo
My uninformed gut instinct without doing any research is that the hotel market is probably over regulated and the prices are artificially high or there are simply not enough available rooms (lobby mini-monopolies or whatever you want to call it) and that's the reason why people flock to lower priced/other available options.
I guess a study on residential to short term rent demand would be helpful.
Depends on what counts as "protecting the lodging industry". There are deliberate, long-instated taxes and regulations on it, usually as a means to capture, for the government, some of the surplus value generated by tourism. It's especially popular because of the (relatively correct) belief that the taxes are borne by non-residents. [2]
It's eminently understandable why governments would want all providers of lodging to play by the same rules[1] so that people can't circumvent such "tourism taxes".
There are likewise considerations of zoning/deed restrictions/HOAs/condo boards to think about. You generally do not have the (legal, and usually moral) right to run arbitrary businesses in "your" unit. There are things that people expect out of their home unit's community, and which they all deliberately accepted as a condition, like "not having a major stream of randos going in and out".
Communities also generally have an interest in regulating the percentage and location of buildings for permanent residents vs visitors. Generally speaking, permanents take better care of the surroundings, albeit at a "cost" of paying less for the space per unit time, and there's a quick ramp-up in social ills and livability problems when you let the ratios go out whack, or concentrate the visitors in areas not prepared for them.
To the extent that Airbnb is breaking that whole model, it's reasononable to either throttle it or research ways that they can share in the burden they're bringing on without losing the upside.
[1] modulo scale, of course -- it's fair to expect some exemption for sporadic, one-off arrangements, and it's fair for Airbnb to facilitate that
[2] I say "relatively" because the economic incidence will never be fully on visitors, but will partially be shared by the lodging industry, in having to charge less to remain competitive with other destinations.
Couldn't those cities move to tax the vacation rental industry, though? In developed markets like Paris, a majority vacation rentals are done through agencies (who manage cleanings, checkins checkouts, quality control, etc.). It would be fairly straightforward for the cities to pass laws to force agencies to get licenses and pay a tourism tax, much like hotels do.
Most vacation rental agencies I've dealt with wish they were taxed as opposed to being de jure illegal but de facto tolerated. That uncertainty has made acquiring new properties and investing capital in the business quite risky.
That's not to say that the deck isn't somewhat stacked against vacation rentals. There is a hotel lobbie that's dead-set to kill the industry. Unlike the agencies, the hotel people are quite organized (although that's changing in my experience).
And there's an even greater threat from the fact that most vacation-rental properties are owned by foreigners who are seen as driving the price up of longer-term rentals because of the new emphasis on the short-term market. I do think that rising rental prices in many urban centers is the biggest short-term danger -- PR and real.
At the same time, vacation rentals are becoming more and more necessary to tourism in big cities. E.g., Paris has more than 75+k apartments rented by the week, with occupation rates above 50%. If you made it illegal, there wouldn't be nearly enough hotels to cover those millions of travelers. And enforcing a ban on a per-property basis would be extremely expensive in terms of man-power.
My prognosis is that the market matures, the cities find a way to benefit through taxation, vacation rentals become a bit less price-competitive versus hotels because of that taxation, and it grows from an $80b a year market to a $200b a year market [see http://software.homeaway.com/Media/Files/pdf/RezFest2012-Bre...].
I know next to nothing about Uber and that business, and I am sure the taxi lobby will do its best to kill it, but in the end one should never underestimate gov't ability to be clever when it comes to finding new revenue through taxation, especially during these times.
[I have invested in a couple of companies in Europe in the vacation rental market]
>Business groups like Montreal’s Bed and Breakfast Association have been pushing for the government to crackdown on home rentals for years.
Yeah. I sure wonder why.
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