Numbers show no rush to sell short-term rentals –

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Many owners of whole-house short-term rental properties that will be banned in B.C. next year are still figuring out what to do with their properties, says a Penticton realtor.

Back in mid-October, the B.C. government announced new legislation – which passed into law just 10 days later by virtue of the NDP’s majority – that limits short-term rentals to an owner’s primary residence or secondary suite, effective May 1, 2024.

The law bans whole-house rentals and effectively ends the use of residential properties as mini hotels.

Absentee owners now have three choices: sell, put the property into the long-term rental pool, or let it sit empty and pay B.C.’s new speculation tax come 2025.

There doesn’t seem to have been a rush to the first option.

There was a total of 1,347 stratified condo units – apartments, townhomes and duplexes that are favoured for short-term rentals – on the market across the Okanagan in November 2023, up 20% from the same month of 2022, according to the most recently available data from the Association of Interior Realtors.

However, there was an overall 24% increase on a year-over-year basis in November in active listings for housing of all types across the Okanagan, meaning the owners of short-term rentals haven’t been rushing to the doors – yet.

“It’s kind of early to say right now” how the market will shake out, said Scarlett Barber, who runs a South Okanagan real estate office, in an interview this week.

Barber said some owners of short-term rentals are still taking a wait-and-see approach in hopes the B.C. government will reverse its decision, or they’re doing the calculations to determine if they can even afford to put their properties into the long-term rental pool.

“We might be able to see some homes coming on the market depending on the price range, but I don’t really see many, per se, turning into long-term rentals,” said Barber.

“Some of the homes are quite expensive or lavish and a lot of homeowners might risk not renting it out at all because the mortgage is not going to be covered by the rent from a long-term tenant, nor would the tenant potentially pay a fair market rate for rent,” she explained.

That leads her to question the B.C. government’s estimate that its new legislation will free up 16,000 homes for residents.

The other big unknown is interest rates, which are widely expected to begin falling next year and make the cost of property ownership more affordable.

For its part, the Opposition BC United Party says it won’t implement the government’s planned ban on short-term rental of homes that aren’t an owner’s principal residence if it wins next year’s provincial election.

Leader Kevin Falcon says people would be allowed to offer one secondary property for short-term rentals.

“There’s a small percentage of individuals who own a multitude of Airbnb units that are really the ones generating most of the revenue for Airbnb,” Falcon said in an interview earlier this month with The Kelowna Daily Courier.

“That’s where we suggested the government target their efforts as opposed to the small mom-and-pops that may own one unit that they’re Airbnb’ing,” said Falcon.

With files from Kelowna Daily Courier

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