Airbnb and the Housing Crisis: Is there a Way to Proper Regulations?

In recent years, the rise of Airbnb and similar short-term rental platforms has not just transformed the travel industry but has also inadvertently fueled a growing housing crisis in many cities worldwide. This crisis is exacerbated by the conversion of potential long-term rental units into more profitable short-term vacation rentals.

In January, the federal government rolled out a whole new set of rules and regulation in the hopes of returning some of these units where they belong.

Airbnb, once a beacon of affordable travel accommodation, has become a contentious player in urban housing markets. The platform’s model, which incentivizes property owners to rent out their spaces for short-term stays, has led to a significant reduction in the number of properties available for long-term rental. And why? Greed.

Initially meant as an alternative to costly hotels, Airbnb is now a cash cow. Owners not only turn their existing properties into bed and breakfasts, they also buy condos and apartments for the sole purpose of raking the money in. Landlords opt to list on Airbnb rather than rent to long-term tenants. More money, less troubles. I can understand it. This is true for tourist-heavy cities, where the demand for short-term lodgings is high, but it’s also popping up on smaller cities such as ours.

The consequence of this shift is stark. As more and more units are siphoned off the long-term rental market, those remaining become scarce and expensive. This scarcity fuels a rise in rental prices, further exacerbating the housing crisis. Cities that were already grappling with limited housing are now facing intensified pressures, with lower and middle-income residents struggling to find affordable housing. The charm of thriving neighborhoods is overshadowed by the growing number of transient visitors, altering the fabric of communities and leaving permanent residents feeling alienated.

Recognizing the severity of the issue, many cities and countries are stepping up regulatory efforts. The new regulations are a testament to the growing acknowledgment of the problem.

New regulations could include measures such as capping the number of days a property can be rented out on short-term rental platforms, requiring hosts to obtain licenses, enforcing strict penalties for non-compliance, implementing new tax rules and, in larger cities, even restricting rentals to residences where the owner lives. The goal of these regulations is twofold: to rein in the runaway growth of short-term rentals and to alleviate the strain on the housing market.

However, regulating this sector is challenging. In a recent article published by Reuters, Airbnb’s policy lead for Canada, Nathan Rotman, argues that home-sharing regulations won’t solve Canada’s housing crisis, noting that most Airbnb hosts in Canada rent out one property to supplement their income and that Airbnb listings make up less than 1% of the country’s housing stock. Yet, a quick search for available units for rent in Toronto on Agoda or Expedia raises questions about this claim.

Striking the right balance is critical.

Effective regulation should aim to limit the negative impacts on housing availability while still allowing homeowners the flexibility to earn supplementary income, and therefore inject more money in our communities. The focus should be on finding sustainable solutions that address the housing crisis exacerbated by the proliferation of short-term rentals. These solutions should ensure that while tourism and economic opportunities continue to flourish, they do not do so at the expense of the availability and affordability of long-term housing. The upcoming regulations are a step in the right direction, signaling a move towards more responsible and community-conscious tourism and housing policies