GLEN KORSTROM (BUSINESS IN VANCOUVER) - The City of Vancouver is touting its enforcement for helping its year-old short-term rental program run effectively.
While the city believes that 73%, or 4,266 of the 5,866 active short-term rental hosts are abiding by the rules, its staff has flagged 27% of all short-term rental addresses for audits to confirm compliance with city regulations that went into effect on September 1, 2018.
Those new rules made it legal for residents to rent their primary residences for stays that were less than 30 days – something that was technically illegal before but was a law that was rampantly flouted with no enforcement.
Renting non-primary residences remains illegal, and Business in Vancouver has documented in past stories how there are workarounds that enabled hosts to skirt the city’s licensing requirements.
The intent of the city’s new rules were to protect rental stock and eliminate unfair competition for bed-and-breakfast businesses.
There were some irregularities with the city’s statistics.
It was not immediately clear, for example, how the city could have listings at 4,366 addresses that staff believe to be in compliance if the city has only issued 4,025 short-term business licences. That would logically mean that 341 hosts have more than one primary residence, which would not be allowed.
Regardless, city data released September 5 showed that city staff has issued:
“The audit program has also resulted in a tenfold increase in licence suspensions and voluntary licence cancellations since the spring,” the city said in a news release.
“Short-term rental licenses are suspended as result of operators not meeting principal-residence requirements, failing to have strata or landlord permission to operate, operating illegal, unsafe or nuisance dwellings or failing to provide the requested documentation.”
The city said that it continues to escalate legal action against commercial operators who are violating regulations.
In August, a commercial operator who had a combined 35 short-term rental listings at two properties, and who was previously fined $20,000 in provincial court, was fined two additional charges of $10,000 by the courts for unauthorized short-term rental activity at their second property. Total fines issued against this operator are $40,000.
Two other commercial operators have been found guilty in BC Provincial Court for operating and marketing without a business licence.
“Since day one, the goals of our short-term rental regulations have been to protect long term rental housing, ensure public safety and bring operators into compliance with our bylaws,” said the city’s chief licence inspector, Kathryn Holm.
“This is a dynamic market with operators and listings continually shifting. Our approach over the last year, and in particular the adaptations we’ve made in the last five months, reinforce that our efforts are working and will continue to evolve as we go forward.”
Holm and her team plan to bring a review of the short-term rentals program to council this fall.
ELANA SHEPERT (VANCOUVER IS AWESOME) - Rentals.ca has released its National Rent Rankings report for August, and Vancouver was ranked the most unaffordable city again.
The average monthly rent for a two-bedroom apartment in Vancouver costs a staggering $3,049, while a one-bedroom costs a steep $2,208. In May, the average two-bedroom cost $2,915.
Vancouver also had the second-highest average rent per square foot for condo and apartment rentals in July at $3.40, with a unit size of 746 square feet. Toronto had the highest rents at $3.60 per square feet, with an average unit size of 750 square feet.
One of the projects with the highest rents on Rentals.ca in Vancouver is downtown at 1295 Richards St. at $4.69 per square feet.
The report also notes that, “affordability for low-income renters is getting worse, as 10th percentile rent inflation is very high.”
With this in mind, the average property listed on Rentals.ca across Canada in July was offered for rent for $1,928 per month, which was a decrease of 1.3 per cent month over month. However, the properties listed in Vancouver saw an increase of nine per cent over last month.
“As expected, changes to the mortgage stress test last year pushed everyone down a rung on the property ladder, resulting in the highest rent growth occurring at the 10th percentile,” said Ben Myers, president of Bullpen Research & Consulting.
“This means the people who can least afford an increase in their monthly housing costs are the ones being subjected to the highest rent inflation.”
Ontario had the highest rental rates on a provincial level. British Columbia was third, with an average asking rent of $1,889 per month. This figure represents an increase of two per cent month over month, following June’s three per cent monthly increase.
KENDRA MANGIONE / BEN MILJURE (CTV) - Changes may be coming to property taxes for Vancouver businesses as the city looks at how to best help small business owners struggling with tax bills.
A new tax structure could be in place by next year if council opts to approve a split assessment proposal.
Many business owners have seen their tax bills double or even triple in just a few years because of triple net leases, in which the business owner agrees to pay all of the landowner’s property tax costs.
The leases mean businesses have to pay taxes on the highest and best use of their buildings, including the potential of development, regardless of how much income they're pulling in.
For example, the owner of a business located on a property where a high-rise condo tower could be built overhead would have to pay a tax rate based on that possibility.
It's a policy that has forced some businesses to close.
"Development is good. We need, obviously, more residential and more densification," said Patricia Barnes of the Hastings North Business Improvement Association. "Our small, independent businesses are being charged as though they've got four, five, six stories of residential above them, at a commercial rate, which is basically driving a lot of our businesses out of the city."
The proposed split assessment would create a commercial subclass. It would essentially split up a property's existing and potential use.
"It gives council the flexibility to adjust the tax rate for the development potential so council can set an appropriate tax rate ranging from 'x' per cent lower than the business tax rate all the way to zero, depending on council policy," the City of Vancouver's Grace Cheng told CTV News Wednesday.
A working group was created last year between the province, BC Assessment, Metro Vancouver and several municipalities. The next steps are consultations, getting support from the province and figuring out important details including eligibility requirements and tax rates for potential development.
"In principle, this is a great proposal," said Aaron Aerts of the Federation of Independent Business.
"The devil's in the details. Staff has assured us they would work to develop policy to make sure unintended consequences are mitigated and it provides proper tax relief for those most impacted."
Vancouver Mayor Kennedy Stewart met with Premier John Horgan about the issue last week because the city needs the province to make regulatory changes before it can implement the new tax category.
"We've got to save small business. We have a lot of mom-and-pop and legacy businesses that are totally under stress from the way our tax system works in the province," said Mayor Kennedy Stewart.
"This is a complex and important issue and any changes to the assessment system would apply across the province, so it is important that we take the time to get it right," the Ministry of Municipal Affairs and Housing said in a statement.
But the city says it needs the province to move as quickly as possible to have the changes in place by the fall so they can be implemented in time for next year's tax assessments – something they say is necessary to prevent more small businesses from leaving the city or closing altogether.
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