‘I just hope my investment doesn’t come crashing down on me.’

Critics worry proposed changes that only allow short-term rentals in people’s primary residences will push listings to the black market.

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Many Airbnb operators and property managers say the B.C. NDP government’s proposed crackdown on short-term rentals will kill their business or wipe out their retirement investment.

“I just hope my investment doesn’t come crashing down on me,” said Debra Sheets, who operates an Airbnb in the Janion building, which overlooks the Johnson Street Bridge in downtown Victoria.

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She was responding to the B.C. NDP’s Short-Term Rental Accommodations Act, introduced by Housing Minister Ravi Kahlon Monday, which will ban most short-term rentals that aren’t in the operator’s principal residence, increase fines and creates a new enforcement unit to crack down on rule-breakers.

If passed, short-term rentals in B.C. can only be offered in the host’s principal residence, which includes one laneway house or basement suite on someone’s property. The new rules would impact municipalities with a population of 10,000 people or more and in smaller communities within 15 kilometres of a larger municipality.

It will effectively wipe out the business model for real estate investors and property management companies with dozens of short-term rental listings. Under the new rules, they will have to convert those units to long-term rentals or face hefty fines.

Sheets, whose principal residence is in a rental home in James Bay, purchased the 250-square-foot unit in 2017 with the intent of renting it on Airbnb to fund her retirement.

The Janion building is specifically zoned for short-term rentals and so isn’t subject to a City of Victoria bylaw that, like similar laws in Vancouver and Kelowna, already restricts short-term rentals to one’s principal residence.

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The legislation would end the current “legal nonconforming use principle,” which exempts short-term rentals from local bylaws because the rentals were allowed in a building before the bylaw took effect.

Victoria Mayor Marianne Alto said there are about 1,600 units the city can’t regulate because they existed before the bylaw restricting short-term rentals.

“They are operating literally as unregulated hotels and certainly we hear from the long-term residents of those … buildings their frustration around the lack of enforcement, the lack of regulation,” Alto said Monday.

Sheets estimates 90 out of the 120 microlofts in the Janion building are short-term rentals. She said the tiny studio apartments aren’t well-suited to long-term rentals.

Kahlon expressed little sympathy for investors who will no longer be able to rent their properties to tourists and short-term visitors.

“There’s a lot of ways for investors to make money, and what we’re saying is that our valuable housing stock is not the place you should be doing it,” he said Monday. “You should probably be thinking about a new profit scheme in the very near future.”

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Sheets called that response “callous.”

“I don’t have deep pockets,” said the 66-year-old, who recently retired as a professor at the University of Victoria’s school of nursing. “It’s going to be quite a hardship.”

Laura Klein, owner of a Victoria-based property management company called Co-Hosts, said the proposed legislation will wipe out her business, which employs 20 people.

Debra Sheets in front of where she owns short-term rental units in Victoria on Oct. 17. She bought units to serve as retirement investment and now is shocked to see the province’s plans concerning short-term rentals. Photo by DARREN STONE /TIMES COLONIST

The company has 65 units in its portfolio, the majority of which are short-term rentals and several of which are located in the Janion.

In the last 24 hours, she’s been inundated with calls from her clients, all of whom would be impacted by the proposed rules that would come into effect May 1.

“It’s total panic,” she said. “It’s just absolutely financially devastating to them.”

Klein, a former realtor who doesn’t own any short-term rentals, said all of her clients are individual owners and she doesn’t represent any major real estate companies.

Both Klein and Sheets said short-term rental operators are being scapegoated as the cause of B.C.’s affordability crisis.

Jordan Deyrmenjian, who runs Vancouver-based Artin properties that manages 160 short-term rentals in the Metro Vancouver area, said while he supports the legislation, his one concern is that the province’s definition of short-term rentals — any accommodation rented out for less than 90 consecutive days — is more restrictive than the City of Vancouver’s definition of 30 days or less.

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Deyrmenjian said a large number of his properties rent for 30 days and serve people coming to Vancouver for medical appointments, business travellers, people displaced from their homes due to fire or flood, or newcomers to Vancouver looking for long-term accommodation.

During the interview with Postmedia News, Deyrmenjian said he received an email from an American man looking to rent a pet-friendly home while their son is undergoing major surgery in Vancouver.

Deyrmenjian worries the province’s definition of short-term rentals will limit the market for 30-day rentals, forcing people to opt for hotels instead.

Klein also worries about the tourism hit if people who previously opted for short-term rentals — which rent for about $150 a night in the low-season in the Janion building, for example — stay home because they can’t afford the steep price of a hotel.

“These are guests that are pouring a lot of money into our local economy,” she said. “They’re supporting our restaurants, our boutiques.”

Asked about whether the legislation will hurt B.C.’s tourism economy, Premier David Eby said tourism operators are having trouble finding staff largely because they can’t find housing they can afford, “which is exacerbated by losing that long-term rental housing to short-term rentals.”

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There are also concerns that the proposed rules — which once they take effect May 1 will be the toughest in Canada — will push short-term rental listings onto the black market.

“If we look at what has been happening with New York, for example, there’s been a very low compliance with their very strict ban,” said B.C. United party housing critic Karin Kirkpatrick, referring to the city’s tough short-term rental rules — limiting the number of people in a rental to two and requiring the host to live in the home being rented — which Airbnb has said amounts to a de-facto ban. Only two per cent of 20,000 short-term rental operators in N.Y. have reportedly registered under the new rules, and listings are popping up on Facebook Marketplace and Craigslist.

“So what this is going to do is you’re actually going to start to see some of these housing providers pushed into the black market,” Kirkpatrick said.

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