Federal housing minister floats Airbnb crackdown to boost long-term rental supply

Housing Minister Sean Fraser said Monday the federal government is considering a series of measures to curb the number of Airbnb and other short-term rental units on offer to boost the supply of homes available to rent for a longer stretch.

Fraser said a crackdown on the proliferation of these units is part of a broader Liberal government plan to help build and finance more housing units to deal with an acute shortage of affordable homes.

The fall economic statement, set to be tabled tomorrow, is expected to include billions of dollars worth of new measures to help Canada cope with a severe housing crunch, including low-cost loans for home construction.

But Fraser said there’s another way to address the supply crunch: make existing properties tied up on short-term rental platforms available to prospective long-term renters and buyers.

“We believe there’s likely tens of thousands of homes that could be made available to Canadians by addressing this particular challenge,” Fraser said of Airbnb units, which typically are rented out a few nights at a time to travellers.

“If there’s tens of thousands of units we can turn into not a competitor for a hotel for a few nights but a home for a family in a community, it’s incumbent on us to do everything we can to use those properties for homes.”

Fraser said Ottawa could use its taxation powers to make owning an Airbnb less lucrative to “bring on new pockets of supply.”

The government’s theory is that if it’s less financially advantageous to put a property up for rent on a platform like Airbnb or VRBO, many owners will instead sell their units or rent them out for longer stretches to locals and newcomers.

Housing minister floats Airbnb crackdown

Sean Fraser says he believes ‘tens of thousands’ of homes could be made available to Canadians by curbing the number of short-term rental units.

The Toronto Star reported Monday that Ottawa will soon block people from deducting expenses on short-term rentals in areas where those services are already limited by other levels of government.

Radio-Canada, CBC’s French-language service, has also confirmed that reporting.

That tax measure, which would come into effect on Jan. 1, is meant to crack down on property owners who flout local regulations.

But Fraser said there may be other levers Ottawa can pull beyond tax measures to rein in the number of short-term rental units. He didn’t offer any specifics.

“We do have the authority to make changes through the federal system of taxation,” he said. “This is one of the areas we’re looking at but it’s not necessarily the only one.”

Fraser also said B.C.’s recent overhaul of the short-term rental market may be something to emulate elsewhere.

Under B.C.’s new law, short-term rentals that aren’t in an operator’s principal residence will soon be banned outright — a restriction that will take thousands of units off vacation rental platforms.

People or companies with multiple Airbnbs will have to list them for long-term rentals or face an onerous fine of $3,000 a day.

It’s difficult to say just how many short-term rental units there are in Canada.

A recent McGill University report found there were 28,510 short-term rental listings active each day in B.C. alone in June 2023.

The report, prepared by David Wachsmuth, a professor in the school of urban planning, found that short-term rentals were taking 16,810 housing units off of B.C.’s long-term market.

Finance Minister Chrystia Freeland signalled last month that Ottawa is intent on curbing the number of short-term rentals on offer. She praised B.C.’s legislation.

“We know that short-term rentals through sites like Airbnb and VRBO mean fewer homes for Canadians to rent, especially in urban and populated areas of our country,” Freeland told an October press conference.

Freeland said she has seen estimates suggesting that as many as 30,000 more homes could be made available for rent in Toronto, Montreal and Vancouver, if those platforms were restricted.

“It is so important that we are examining whether there are any tools in federal jurisdiction that we could use that would make a difference in this space,” she said.

In a statement, Airbnb said it’s “not the cause of Canada’s housing crisis.”

Pointing to a research report from the Conference Board of Canada think-tank, the company said “the number of Airbnbs in Canada is too small to make a tangible dent in Canada’s low housing stock.”

The company said the Conference Board “found no compelling evidence that the level of Airbnb activity in Canada had a meaningful impact on housing affordability across 19 of the largest Canadian cities.”

The report also found that in cities which already have strict short-term rental restrictions, such as Toronto and Vancouver, the price of homes marched higher even after the regulations came into effect.

The report was written by the Conference Board “in collaboration” with Airbnb.

“We’re waiting to see the details of the federal government’s suggested changes. Many Canadians earn extra income through home sharing to make ends meet at a time of increasing inflation, interest rates and cost of living. Taking income away from everyday Canadians during an affordability crisis is not a solution to Canada’s housing crisis,” said Nathan Rotman, Airbnb’s policy lead in Canada.

The Canada Mortgage and Housing Corporation (CMHC) estimates the country needs to build 3.5 million more housing units by 2030 to meet explosive demand as the country’s population expands, thanks in part to record immigration.

Total housing starts numbered about 260,000 units last year, according to CMHC data. That suggests construction will have to meaningfully accelerate to meet the demand for affordable homes.