The early findings of Penticton’s short-term rental review are in, and many people won’t be surprised about the impact they’re having on the city’s housing.
The preliminary results were presented to city council on Tuesday, Feb. 7, and the key finding that impacts most residents is the impact on the costs of rent across the board.
The city has hired EcoPlan International to do the study, and the consulting firm worked with David Wachsmuth, the Canadian research chair of urban governance and foremost expert on short-term rentals for the report.
He and his lab applied their model to estimate the impact of short-term rentals on Penticton, and the key finding is that they have increased local rent significantly.
According to the presentation to council, commercial short-term rentals made renters in Penticton pay an additional $47.9 million between 2016 to 2021.
“Compared to rents at the end of 2021, long-term rents in 2023 are estimated to be $332 per year higher because of the presence and growth of commercial short-term rentals,” said Odete Pinho, who presented on behalf of EcoPlan.
That is despite short-term rentals only making up for a relatively small portion of total rent in Penticton. In 2019, people paying for short-term rentals made up 12.5 per cent of total rent in the city.
However, with a 0.8 per cent vacancy rate in the city, even the relatively small number of short-term rentals can have a large impact.
According to the report, in 2022, there were 200 homes converted into short-term rentals, which is an increase of 3 per cent of rentals. That may not seem like much, but in Penticton, there is already an estimated shortfall of housing by about 1,400 residential units.
Wachsmuth also published a report in July of 2022 that looked at the impact of short-term rentals in other communities across the province, with Summerland and Kelowna among the nine communities studied.
In Summerland, they estimate that the average renter will pay an additional $2,060 a year because of the growth of commercial short-term rentals, while in Kelowna it will be an additional $950 per year.
And the impact doesn’t just hit renters. One of the pieces of feedback the study received was that a number of homeowners use short-term rentals to bring in additional income and offset higher costs of purchasing a house and the mortgage.
Short-term rentals are also driving up housing prices because they are buying up housing and converting it.
This is having knock-on effects impacting the ability of some businesses to get employees, and for prospective students considering whether they would attend the local Okanagan College campus or not.
According to city staff, 247 of the city’s 322 registered short-term rental operators in the city provided feedback for the study.
At least half of those that responded live on the property where they have the rental full-time, and another 26 per cent live there part-time.
Talking to the city, they expressed their belief that they provide an important option for tourists and a way to avoid a lack of protection for landlords who offer longer rentals.
Those issues were echoed by citizens who responded to the city’s requests for feedback.
The final report will be presented to council at a later date, with the plan of including recommendations for future short-term rental regulations and policies.
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