Jack Mendes is already thinking about what he will do with his short-term rental unit in downtown Kelowna, B.C., if new legislation prohibits him from renting it to vacationers four months out of the year.
“I’m sure I will sell it,” Mendes said. “Right now we do long-term rentals in the winter for students. And then for the four months of the summer, we have short-term rentals.”
Mendes believes that many others who have entered the short-term rental market to earn an income will do the same as he has.
“They’re not going to put them into long-term rentals because you can’t make money with that kind of investment by getting market rents,” Mendes said.
On Monday, the provincial government announced that as of May 1, short-term rentals will not be allowed in secondary residences – only the host’s primary residence – in an effort to provide more housing options amid a housing crisis.
Kelowna realtor Brian Pedersen also owns several short-term rental units. He agrees with Mendes that many people will be forced to sell.
“They’re not going to be able to get the income that they need to actually … make their mortgage payments, pay their taxes, pay the strata fees, all the rest of it,” Pedersen said.
And that, he said, could lead to the market being flooded with condos and other types of properties, ultimately hurting all sellers.
“I would say yes, definitely. It’s going to drive values down. I mean, you know, real estate is all about supply and demand,” Pedersen said. “And of course, you know, it’s certainly going to create a lot more inventory.”
While the Association of Interior Realtors didn’t make anyone available for comment on the potential impact, they did issue a very brief statement in an email to Global News.
“We are currently reviewing the proposed changes and need time to understand the potential impact,” said Chelsea Mann, president of the Association of Interior Realtors.
“You can certainly imagine that there are some people for whom the business case that they made when they bought the property is no longer working, so it could take some amount out of the market,” McLaughlin said.
But he expects the increase to be marginal.
“I would doubt that it’s going to bring a lot of additional supply on stream,” McLaughlin said.
Whatever the increase, McLaughlin said it would be beneficial.
“I will be curious to see if that is the case, if we see an increase in active cases in, you know, the Okanagan. That would be fantastic. You know, that’s what we’ve wanted for a long time,” McLaughlin said.
“We’ve had a long-term downward trend in the number of active listings. They bottomed out about a year and a half ago, and they’ve kind of been going up since then with rising interest rates, but you know, for the longest time we’ve been saying we need more active listings.”
Mendes is waiting to see if his unit will be exempt from the new legislation because it’s in a building that was zoned for short-term rentals.
“I think it’s hard to take an entire business sector out of our province,” Mendes said.
He questions whether the sweeping changes will have the desired effect.
“It’s a short-sighted solution to a complex problem,” Mendes said. “I don’t think it’s going to solve what they’re trying to solve.”
