Thousands of short-term rentals in B.C. still operating illegally, new data shows

Nearly half of the 22,405 short-term rental listings reviewed by the B.C. Ministry of Housing were found to be operating illegally, according to a preliminary analysis of newly released data from short-term rental platforms that the province says it will use to step up enforcement of new restrictions.

That includes more than 900 listings in Victoria and thousands more in other B.C. municipalities, according to the Ministry of Housing, which recently received the data from major short-term rental booking platforms.

In an interview with CBC News, Housing Minister Ravi Kahlon said the data — which includes long sought-after information by municipalities such as the locations of short-term rental units and the identities of hosts — will allow government officials to step up the next phase of enforcement around short-term rental regulations that came into effect on May 1.

"We've had about 1,000 listings that we've already taken down through the [short-term rental] platforms, and more investigations are underway," the minister said.

"Over the next coming months, we're going to see that shift to more of a heavier enforcement, given that people now have had plenty of time to make the adjustments."

WATCH | New short-term rental rules go into effect in B.C.: 

B.C.'s new short-term rental rules now in effect

7 months ago

Duration 3:17

New provincial rules are now in effect in many parts of B.C. limiting services like Airbnb to an owner's principal property. Some advocates are concerned about the impact this will have on tourism in places where they say there already aren’t enough hotels.

That "heavier enforcement" includes fining hosts and platforms thousands of dollars per day, with the province currently employing eight investigators and municipalities also having their own enforcement teams. 

Data shared with the province by Airbnb, VRBO, and Booking.com — in accordance with provincial regulations — showed 10,771 listings from Vancouver, Whistler, Kelowna, Victoria, Richmond, Burnaby and Sun Peaks are not licensed businesses.

B.C.'s analysis only includes the seven communities that the province currently has business licence data for, alongside listings from June 2024.

The new regulations banned most short-term rentals that are not the owner's principal residence, in a crackdown described by industry experts as among the most comprehensive in North America. 

The owners of some short-term rentals have responded with legal challenges, arguing that the regulations interfere with their property rights and business investments. Those who spoke with CBC News said they've stopped booking stays, but some other operators have continued to evade provincial laws.

Black market bookings

Some hosts are continuing to operate outside of B.C. laws by asking visitors who attempt to book stays on rental platforms to book privately instead.

"We are no longer able to take short-term rental bookings from the Airbnb platform after May 1, 2024, for less than 90 days.… However, I can still take private bookings with FRIENDS & FAMILY according to the government guidelines," one host told a potential customer in direct messages on Airbnb obtained by CBC News.

"Please send me an IG PM message if you can be my friend and book with a lower price!" added the host, who has three downtown Victoria listings on their profile.

These types of messages from hosts are "inappropriate," Nathan Rotman, Airbnb's regional lead for the northeastern U.S. and Canada, told CBC News. 

"We do find in these kinds of situations, where a law has been put in place that has significant restrictions, is that some of the market will go underground to unregulated platforms," he said. 

"This is certainly a concern and we've seen that in other cities like Toronto, like New York."

Rotman added that the new restrictions are not something he feels will make a difference for housing in B.C. He said Airbnb has shared data with the City of Vancouver and the City of New York on illegal listings — but high rent prices and low vacancy rates continue to be an issue for many seeking housing. 

Eric Swanson with Third Space Planning also said it's not unusual to see illicit bookings appear in places with short-term rental regulations. Third Space Planning, which consults on such regulations, lists the City of Victoria among its clients.

"Enforcing short-term rentals has always been a gigantic game of cat-and-mouse," Swanson said.

"There is a super strong financial incentive to dodge regulations.… The work we've done shows that it's usually around two to three times more profitable to operate a home as a short-term rental versus a long-term rental."

The City of Victoria and the province are currently involved in separate legal battles with short-term rental owners, including legal action brought by the city against a local property management company for operating several Airbnb properties without proper licensing.

Enforcement in many municipalities, including Victoria, is operated largely on a complaint basis. The city says it has received more than 100 complaints and inquiries a month related to short-term rentals since the law took effect, and that complaints have been on the rise since the legislation was announced last fall.

The new data from rental platforms will enable the province and municipalities to compare business licences and the primary residences of British Columbians and will make the enforcement process more proactive, Kahlon said.

B.C. received the long-awaited data two weeks ago, and it was shared with local governments last week, he said.

Warnings issued to short-term rental owners operating illegally will soon be followed by fines of up to $5,000 a day for hosts, and $10,000 a day for platforms that do not remove illegal listings, he said.

Later this year, the province plans to release a registry of short-term rentals to aid in enforcement.

Clash between hosts, governments

Suzanne Little bought a condo in Victoria to rent out as a short-term rental 16 years ago, as an investment toward retirement. The one-bedroom apartment with a den garnered her $2,200 a month profit last year after expenses, and is located in a building zoned for short-term rentals.

The loss of her ability to rent out the unit short term — and the value that placed on her property — has threatened the stable income source she had planned for her retirement, she said.

This prompted her to join a group opposing the new legislation, Property Rights B.C., as its secretary.

"In some cases, people put all their eggs in that basket. It's very stressful for them. They've been doing everything by the book … and now their financial plans are crushed," said Little.

"We're collateral damage in this legislation."

Another owner, Debra Sheets, says she's lost out on about $15,000 of annual income, which has made it difficult to shoulder the costs of mortgages, licences, insurance and other costs associated with her four units, she said. 

Her investment properties are located in the Janion building in downtown Victoria, which is zoned for short-term rentals and hosted many such units prior to the new regulations.

Even if the legal action to oppose the law currently underway by a group of owners is decided in their favour, Sheets said she will likely still sell her investment properties because she is "disenchanted" by the barriers set by the B.C. government.

"I don't know how much longer I can hold on if we don't get a positive decision, quite honestly. I might just be forced into taking a big loss," she said, referring to selling her properties.

Both Little and Sheets said they would not consider putting their units on the long-term rental market, as they believe it's not financially feasible and they've heard negative experiences from others.

While Victoria Mayor Marianne Alto is sympathetic to the challenges faced by short-term rental owners, she feels it's a necessary step to address the housing crisis that has pushed many to take extreme measures, or to leave the city altogether. 

Victoria's vacancy rate at 1.6 per cent, according to a Canada Mortgage and Housing Corporation report in January, is one of the lowest in the country.

"The situation around housing — not just in Victoria, but generally in municipalities across the country — is so dire, that it behooves us to try just about anything," said Alto.

Kahlon said he has started to see positive impacts from the new regulations, including personal anecdotes from people who he says have found long-term housing in units that were once Airbnbs.

It's not necessarily the end of standalone, short-term rentals for communities like Victoria, he added: If a municipality can achieve a three per cent vacancy rate, the local government can decide to drop the restrictions — something that has already happened in West Kelowna.

"Fundamentally, this is about getting homes for people," said Kahlon. "So, if we can get more housing back into the market for people in communities, that's a positive step that we're happy to take for it."