Too much flexibility a prescription for more ghost hotels

Housing market will lose long-term rentals, write Lis Pimentel and Ulrike Rodrigues.

If you could run a pharmacy in the basement of a single-family home, it’d probably help you pay down the mortgage. Ditto a car dealership, or a diner, or cocktail lounge. But you can’t. Not in Vancouver, or in most other Canadian cities. So why should you be allowed to run a ghost hotel in a basement zoned for residential housing?

Twice this month, The Vancouver Sun has published editorials critiquing Vancouver’s proposed short-term rental bylaw. An editorial called for “a light touch” when regulating Airbnb. Then, Toronto-based Airbnb lobbyist Alex Dagg had her own editorial published, calling for “flexibility.”

Flexibility is one of the new talking points for Airbnb lobbyists. But here’s the thing: cities are already flexible. Airbnb is doing best in markets where rental accommodation is scarce and housing prices are sky-high. Excessive flexibility is what allowed the short-term rental industry to grow in cities with housing crises in the first place.

Flexibility meant that investors were allowed to buy up multiple condos, renting them out as “ghost hotels” to guests they’d never meet in buildings that were supposed to be secure for long-term residents. Flexibility meant that landlords have got away with evicting longterm tenants so that they could earn more renting to visitors. Flexibility meant cities didn’t hold short-term rental sites accountable for a litany of preventable problems that are always blamed on overzealous “hosts” instead.

Despite all this, Vancouver is considering a bylaw to legalize the short-term rental business, as long as it happens in a person’s principal residence. Under the circumstances, that’s flexible.

Too often, this debate is framed as being open to new technology. But as Airbnb itself admits, bed-and-breakfast tourism has been around for centuries. Long before Airbnb arrived in Vancouver, this city had a thriving B&B industry, with licences, inspections, proper zoning and online bookings.

The technology hasn’t changed. What has changed: corporate chutzpah, financed by commodification. As Mayor Gregor Robertson rightly noted, by distributing its hotel rooms through residential areas, Airbnb has become the largest hotel in Vancouver, as it is in many other cities. You can be sure how we’d react if the second-, the fifth-, or the 15th-largest hotels asked for a “light touch” to expand without legal review or permission into condo towers or quiet streets simply because a few residents invited them in.

Which brings us to the most controversial part of Vancouver’s draft bylaw: the proposal to restrict short-term rentals in secondary suites. In her editorial, Dagg argues it’s no loss to the rental market to let a secondary suite owner rent it on Airbnb if they never intended to rent to a long-term tenant. She insists doing so will help residents pay high mortgage costs. It’s a clever effort to reframe Airbnb from an enemy of home renters into a friend of home buyers.

There are two problems with these claims. First, secondary suites (and their laneway home cousins) are separate units, with certain rights attached. A key reason the city made them legal in traditional neighbourhoods in the first place was to add affordable long-term rental housing supply. If the goal had been to make it easier for people to run home-based businesses, the city would have legalized a dozen other disruptive commercial uses in homes, too. They didn’t.

If Vancouver exempts secondary suites from the new bylaw, homeowners will face the same temptation they face in other cities already. Owners will all claim they no longer want to rent in the long-term market. And why would they, when they can make three times as much churning tourists through their suite instead? Investors will sweep in to buy homes with suites for their hotel value, not their housing value, driving up the cost of housing even more.

The City of Vancouver should flip Airbnb’s argument around. Since these suites were legalized to increase the stock of affordable long-term rental housing, if the owner wants to take their unit out of that market, then the suite should lose its status completely, and all the privileges that come with it.

The proposed Vancouver bylaw is already flexible — and that’s fair. But let’s not make it so flexible that it reorganizes the legal, residential foundation of entire neighbourhoods simply to help one giant multinational to attract a few more customers.