TorontoRealtyBlog

What does it mean to be free?

I know, I know, you’re thinking, “Oh geez, what’s David about to go on about this time?”

Is this going to be a lecture on libertarianism?

Not quite.

But I would like to introduce the concept of “freedom” as we delve into the debate about how and if the prevalence of AirBnB rentals is exacerbating the housing crisis in Canada.

I believe in many freedoms.

Freedom of choice.  Freedom of thought.  Freedom of speech.  Freedom of information.  Freedom of movement.  Political freedom.  Personal freedom.  Economic freedom.  Educational freedom.  Religious freedom.  Intellectual freedom.  And that’s just to name a few.

I believe in “rights” as a type of freedom as well, and that introduces the concept of property rights.

I have often stated that Canadians, over the last several years, have been so quick to give up their rights and freedoms, that I remain shocked and confused as to why.  That, folks, is a topic for another day.

But when it comes to property rights, I have also expressed my displeasure with the government’s interference with our “freedoms,” notably the idea that we now are required to sign a sworn declaration that we reside in our own house, and the failure to do so results in punitive damages.  How we allowed this to happen, I can’t figure out.

This, of course, is deemed necessary as the government fights to somehow “solve” the housing crisis that we are all, apparently, collectively responsible for.

The government has also decided, unilaterally, that property owners who do not reside in the homes that they own for a certain percentage of the year shall pay a tax.  Well, alrighty-then.

All this is necessary, apparently, in the government’s quest to solve the housing crisis.

But what comes next?

Oh, I have to think we already know.

It’s the right and freedom of a property owner to lease or rent the property that they themselves own, the way they see fit.

Those rights and freedoms have already been infringed upon, and there’s a growing sentiment that the rights will continue to be diminished.

We have talked a lot on TRB this year about “problem tenants.”

We have talked, and will continue to do so, about the unimaginable rights that tenants in the Province of Ontario enjoy, much to the detriment and often bankruptcy of landlords.  Not all landlords are evil, deep-pocketed corporations that print money from a large machine, running day and night.  In fact, the downtown condo rental pool is primarily comprised of individual investors, many of whom are exiting the space because they can’t wait twelve months for hearings at the LTB for their tenants who aren’t paying rent, or who aren’t allowed to sell their condos because the tenants refuse to move out.

The public sector seems to be relying on the private sector more and more to assist with the housing crisis, often against their will.

Consider the plight of a condo owner who sells his property, provides the month-to-month tenant with an N12 and the requisite one-month’s rent, only for the tenant to say, “I’m not leaving; let me know when my LTB hearing is.”  Then eight months later at the LTB hearing, when the judge says, “Where’s your buyer?” and the condo owner answers, “The buyer left because it’s been eight months,” the judge replies, “Come back when you have another buyer.”

Oh, the insanity.

Follow the bouncing ball here; the condo owner is now being forced to be a landlord, against his will.

Maybe this is why more and more people are looking to rent their apartments, condos, and bedrooms on AirBnB?

Short-term renters through AirBnB don’t benefit from the same outlandish protections that long-term renters do, via the Residential Tenancies Act.

Not only that, a well-manged AirBnB can provide double the return.

So let me ask again:

How long until the government comes for this right and freedom?

When will the government decide, for the good of the residents of the country, who can’t find housing, that short-term rentals such as AirBnB shall be banned from now until eternity?

It’s not that crazy a suggestion if you think about it.

We have a vacant housing tax, we have an underused housing tax, and if you do want to rent your property out on a short-term basis, there’s a “registry” you need to be a part of.

It was only a matter of time, right?  Before the city wanted you to ask their permission?  “Sign up here!”

I mean, there’s Pet Licensing in Toronto, you know.  For real; did you know?

From the City of Toronto website:

“All dogs and cats owned in Toronto must be licensed and wear a tag.”

Uh-huh.

I’ll get right on that…

There is a growing sentiment among housing critics, would-be renters, and market onlookers alike that to allow a unit of housing to be rented on a short-term basis, on a platform like AirBnB or otherwise, is to “take a unit of housing out of the long-term accommodation pool.”

Yeah, okay.

But that’s like saying that the Jets won the game, so now the Giants can’t.

No kidding.

The theory behind this novel realization, of course, is that “short-term housing is therefore bad.”

Forget the fact that there’s a need for both short-term and long-term housing, but rather the sentiment goes that if there were 100,000 listings in the country for short-term rentals then these represent 100,000 dwellings that are not available to individuals looking for a long-term arrangement.

My cynical side is going to now explain, as I already have above, that the government is increasingly looking to rely upon the private sector to help, at least in part, “solve” the housing crisis.

So what will become of the “Freedom of Choice?”

What will become of the property rights afforded to an owner who may decide to rent to a short-term tenant but also may elect to rent to a long-term tenant?

An article appeared in the Globe & Mail earlier this month which I think a lot of people likely read.

The headline is extremely unfair since it not only blames AirBnb for the “housing crisis” but also the people who use it…

“AirBnB’s Ravenous Appetite For Residential Units Is Contributing To Canada’s Housing Crisis”
The Globe & Mail
October 2nd, 2023

The article was written by the executive director of Fairbnb Canada Network, so take it with a grain of salt, or a slant, if you’d like.

From the article:

Short-term rental platforms such as Airbnb have helped convert tens if not hundreds of thousands of residential units into dedicated, ghost hotel suites. Units once planned, zoned, approved and built as residential have been converted to commercial space to accommodate the travelling public. Last week, a report by McGill University researchers estimated that roughly 17,000 housing units had been lost to short-term rental platforms in B.C. this summer alone.

The problem is the short-term rental operators, not the people who occasionally rent their properties.

Studies have shown repeatedly that a minority of hosts control the majority of Airbnb’s inventory and are responsible for most of the company’s revenue. In B.C., the McGill report states, 20 per cent of the hosts are responsible for 48.8 per cent of total revenue generated, while the top 1 per cent of hosts – just 1,930 operators – accounted for 20.7 per cent. In Winnipeg, according to watchdog InsideAirbnb, an operator hidden behind the profile name “New Host” operates 87 entire homes in that city alone.

In short, commercial operators are systematically buying up or leasing housing stock and converting it into dedicated, short-term rental use, with platforms providing anonymity. So if we agree that housing is in short supply, why don’t we rein in this home-devouring activity?

Note the last sentence in that quote:

“Why don’t we rein in this home-devouring activity?”

Exactly.

Why don’t we eliminate an individual’s right to lease or rent his or her own condo, house, or apartment, the way that he or she sees fit?

That person, after all, only pays property tax to the municipality for the right to own the property, only saved after-tax dollars to provide the down-payment for the property, only took the financial and personal risk and liability associated with purchasing the property – in order to provide a unit of housing to the public, only pays income tax on the revenue generated, and only pays a capital gain to the federal government on any profits made on the venture.

That’s clearly not enough!

Why not limit the person’s ability to do what they want with the property?

Hell, why doesn’t the government just take the goddam keys?

“Oh, David, here you go, gaslighting again.”

Well, I believe in hyperbole as an effective medium of demonstration, what can I say?

Now, on the flip side of the McGill report, which is probably written with a bias from the other side, is this article from the website www.biv.com.

“AirBnB’s Don’t Cause Residential Rent Increases”
BIV: Business Intelligence For B.C.
October 11th, 2023

From the article:

Rents in Canada have gone up, along with the growth of Airbnb businesses, but there’s little evidence that the two are connected, a new survey from the Conference Board of Canada finds.

The survey appears to contradict others, including one from from McGill that drew direct links between higher rents and increased conversion of rental properties to commercial short-term rentals.

As BIV reported last month, the Urban Politics and Governance research group at McGill’s School of Urban Planning concluded that short-term rentals took 16,810 housing units off of B.C.’s long-term rental market in June 2023, “signifying a 19.1 per cent decline in housing availability over 2022.”

It concluded that, for every addition of one dedicated short-term rental per 100 rental units in a neighbourhood, rents increased an average of $49 for that neighbourhood.

But the Conference Board of Canada has also looked into the rise in both Airbnb-style short-term rentals and long-term rents, and found little correlation.

“We tested for a causal link between Airbnb activity and rent increases between 2016 and 2022 across 330 neighborhoods in 19 Canadian cities,” the Conference Board study states.

“We find no compelling evidence that the level of Airbnb activity had a meaningful impact on rents. Out of the 30 per cent increase in rents observed in our sample of neighbourhoods between 2016 and 2022, at most less than 1 percentage point, or just under $10, can be attributed to increased Airbnb activity.”

The Conference Board study zeroed in on Airbnbs that are likely to offer short-term rentals on a full-time basis, as it was assumed these would be most likely to affect the long-term residential rental market. It then compared that data to the number of households across 330 neighbourhoods in 19 of the largest cities in Canada.

“Rents and Airbnb activity are positively correlated — neighbourhoods that have higher concentrations of Airbnb tend to also have higher rents,” the report acknowledges.

“The key question is whether higher Airbnb activity is causing higher rents in Canada and contributing to a worsening of rental  affordability, or if both higher rents and higher Airbnb activity are driven by other factors, such as proximity to amenities like restaurants, public transit, and parks, which would increase desirability for both long- and short-term renters.”

The study used a “difference-in-difference” analysis model, “which compares how rents evolved in different neighbourhoods within cities and how this was affected by the level of Airbnb activity in each neighbourhood.”

“Airbnb activity, at its current levels, has not resulted in an economically meaningful increase in rents across 19 of the largest Canadian cities,” the Conference Board study concludes.

“At the provincial level there is evidence that Airbnb activity has put some upward pressure on rents in Quebec. Policies introduced by municipalities and provinces regulating Airbnb activity have not been successful in reducing rents, though they were associated with a significant reduction in Airbnb activity.”

My father was a criminal lawyer for almost forty years.

He told me that the only thing as amazing as the prosecution’s ability to always produce an “expert witness” that would testify on their behalf was the defense’s ability to produce a different “expert witness” that would testify to the complete opposite finding.

Yeah.  There are two sides to every coin.  Likewise, there are two sides to every argument.

Let me say this since I’ve already been cynical enough in this post to come off as completely unsympathetic: even if a study, or multiple studies, concludes that the presence of short-term rental accommodations in a city, province, our country has a net effect of fewer residences in the long-term rental pool, and this increases rents over the long-term, I still think that the property owner should be afforded the freedom of choice.

FairBnB won’t agree.

Tenant rights advocates won’t agree.

But if all else fails, we should simply hand home ownership over to the government and let them decide who lives there.

Ugh.  More gaslighting.  David, David, if you’re able, keep your elbows off the table…

So why then am I suggesting that after already stripping away multiple property rights and interfering with a property owner’s simple and quiet enjoyment of their homes, that the government could “come for” the right to lease out a property as one sees fit?

Well, because of this:

“Ottawa Looks At Limiting Number Of AirBnBs To Free Up Rentals”
The Globe & Mail
October 5th, 2023

From the article:

The Liberal government is planning limits to Airbnbs to free up more rental units as part of a broader political strategy to counter Conservative Leader Pierre Poilievre’s campaign to win over Canadians who are upset about the rising cost of living, federal officials say.

Oh, well, I mean, it’s a good thing that this isn’t a knee-jerk reaction by Justin Trudeau to combat the momentum that his political rival is enjoying.

(gulp!)

Who ever said that politics was about serving the best interests of the people, anyway?

This is not part of some well-thought-out, heavily-researched “strategy” by the federal government to solve, cure, or eliminate the housing crisis.

This is the sign of a government that not only has no plan but also has no clue.

If it is, indeed, the responsibility of a government to provide its citizens with housing, then so be it.

But I do not believe that a government should do so, in part or in whole, by firstly infringing upon private property owners’ rights…

The post Is AirBnB Exacerbating The Housing Crisis? appeared first on Toronto Realty Blog.