City weighs regulation of Airbnb operations

by Avery Zingel - July 18, 2018

The city is faced with a dilemma over if and how it could regulate short-term rental operations like Airbnb, where operators generate income without a business license.

Faith Embleton, co-owner of Yellowknife bed-and-breakfast Embleton house, pictured, says the city would be “foolish” not to regulate unlicensed short-term rentals, such as those advertised on Airbnb.
photo courtesy of Embleton House

In cities across the world, the sharing economy has generated any number of benefits, including unique travel accommodations, pairing travelers with local knowledge and a personalized experience, while filling the pockets of homeowners looking to generate income on their properties.

It’s also been a sore point for mainstream hoteliers and licensed bed and breakfast operations.

It’s lamented for driving up rental markets in niche neighbourhoods and removing what might otherwise be long-term affordable units for residents living and working in major cities.

Regulation of the sharing economy and Airbnb ranges from heavy restrictions to legislative levies collected by municipal authorities to no regulation at all.

In Yellowknife, there are approximately 141 rental units on the market, which users can rent for an average nightly price of $120.

One hundred of those homes are private bedrooms in a shared residence, while 42 are entire homes with anywhere from one to six bedrooms.

Yellowknife currently has 21 licensed bed and breakfasts in Yellowknife, but city legislation is silent on the subject of short-term rental units.

“We need to make sure we’re creating a level playing field” for short-term rentals and hotels, said senior administrative officer Sheila Bassi-Kellett.

The Municipal Services Committee discussed the matter Monday.

City councillors will have an opportunity to vote on administration’s recommendation that new regulations in Yellowknife allow owners and renters to obtain a business licence to rent part or all of their principal residence on a short‐term basis.

The city has a business licensing bylaw that was made before most people had internet access.

“Bylaws are silent on what a short-term rental is,” said Kerry Penney, the city’s director of policy, communications and economic development.

Anybody carrying business in the city is required to get a business license, but short-term rentals are in a grey area of what is considered a business.

Unlike Vancouver, Yellowknife has not seen a large number of foreign buyers purchasing homes and renting them out as short-term rentals, she said.

Short-term rentals are defined as stays fewer than 30 nights.

In response to a city survey, 59 per cent of residents said they were in favour of Airbnbs requiring a business licence.
“People who operate short term rentals say they want a business license so that they can be legitimate,” said Penney.
The city will consult with the public and short-term rental platforms to automatically remit a hotel levy on behalf of operators.

As for enforceability, the city could institute fines for operating without a license that are the same as fines for advertising without a business license, which is “easily enforced,” said Penney.

In the city of Toronto, city councillors pushed for the regulation of Airbnb to mitigate its impact on the rental market.

Housing advocate and Toronto Coun. Ana Bailao, whose ward is inhabited by a bulk of low-income residents suggested that 70,000 affordable rental housing units were at risk of being supplanted by Airbnb rentals.

In 2017, Toronto’s vacancy rate hit 1.1 per cent its lowest in 16 years, prompting concerns about an affordability crisis.

A 2018 report by the Canadian Mortgage and Housing Corporation pegs Yellowknife’s vacancy rate at 3.5 per cent.
In Spain’s bustling metropolis Barcelona, lawmakers instituted a licensing requirement.

The city told Airbnb to remove 2,577 listings that operated without a city license, and that it would face a substantial fine through court procedures.

Some cities limit the number of days per year that an entire home can be rented out.

For any potential regulation, the city’s capacity to enforce should be considered, say Yellowknife city councillors Neils Konge and Julian Morse.

Local BnB operator, Faith Embleton, was present for the meeting on short-term rentals.

In an interview with Yellowknifer, she said that licensed operators are held to standards that protect the health and safety of patrons, while Airbnb’s exist in a gray area.

Embleton’s bed and breakfast in the heart of Yellowknife follows fire inspections and invested upgrades for sprinklers and a hard-wired fire alarm.

Those same safety precautions aren’t mandated of Airbnb’s, said Embleton, who renews her business license annually.

Embleton has so far refused to host her business on the Airbnb platform in the interest of keeping any earnings within Yellowknife, rather than giving a cut to an intermediary.