The Blubber

An Airbnb, $ABNB, operator says he's facing losses of hundreds of thousands of dollars because of British Columbia, Canada's new short-term rental laws, per CBC.

Steve Nguyen manages two Airbnb units in a downtown Victoria apartment building, one of which is themed and pays homage to the TV show "Friends." He's still trying to come to terms with the news that he'll soon be unable to operate it as a short-term rental due to not residing there.

Nguyen expressed his shock, saying, “This news is a huge, huge shock. The equity that I’ve worked so hard for in these units has vanished in a day.”

Ravi Kahlon, B.C.’s housing minister, introduced the new law on Monday, imposing a principal residence requirement. He clarified that the rules won't take effect for a few months. “(The legislation) doesn’t come in until May 1, so individuals do have some time, whether they want to rent them out for long-term or whether they want to sell them,” Kahlon explained.

Nguyen mentioned that he generates enough income from renting his unit on Airbnb to cover the mortgage, even with the recent spike in interest rates. However, due to the unit's small size (less than 400 square feet), it isn't appealing for long-term rentals and wouldn't yield sufficient rent to cover his monthly mortgage, which exceeds $3,000. As a result, he feels compelled to sell the loft unit and plans to list it for $150,000 less than what he paid for it a year ago. The unit's value has been impacted because it will no longer be viable for most Airbnb use in a matter of months.

“The revenue stream dictates the value,” Nguyen stated, highlighting that the revenue from short-term rentals, which had been averaging between $80 and $225 per night, will soon vanish due to the new rules.

These regulations, designed to increase the availability of long-term rentals, have also raised concerns in the hospitality industry. Ian Tostenson, head of the BC Restaurant and Foodservices Association, is concerned about the potential shortage of hotel rooms in Victoria and Vancouver once many short-term rentals are no longer available.

“In the worst-case scenario, it would mean fewer people – fewer tourists – coming to British Columbia, in the big regions because they can’t get accommodation,” Tostenson noted.

The government recognizes the potential tourism impacts of the proposed legislation but describes it as a balancing act, taking into account the spillover effects of the housing crisis on tourism itself.

“Restaurants can’t find employees because they can’t afford to live in a community,” Kahlon pointed out.