As more cities enact short term rental (STR) regulations and take additional measures to enforce, there are early signs of success, that is if success is measured by the number of removed STR listings. If the goal is to return these STRs to the housing market, then it is unclear if the regulatory measures have accomplished that goal.

Denver and Vancouver are both finding early success with removing STRs that are not compliant.

Compliance with the city’s ordinances has been on the rise as word spread of the city’s clampdown on illegal short term rentals. Denver has one of the highest compliance rates according to Eric Escudero, spokesman for Denver’s excise and licenses department.

The Denver Post reported that the city declared that its housing market is no longer at risk due to short term rentals, based on a report the city issued this past April.

The Denver Office of Economic Development and Opportunity determined short-term rentals in Denver don’t appear to be negatively affecting the housing market or affordability mainly because of the primary residence requirement.

“This prevents investors from purchasing housing that would otherwise be used for normal, long term residential purposes, thereby decreasing the housing supply and inflating prices,” the report stated. “The enforcement of these regulations is critical to ensuring that short term rentals do not inflate housing prices in Denver.”

Denver Cracks Down on Fraudulent Short Term Rental Licensing Paperwork

Compliance is expected to remain high as Denver tightens short term rental enforcement. To ensure that rentals are not run illegally, the city has sent primary residence affidavits to short term rental owners to weed out those who may have lied on their licensing paperwork. Any owner found to have lied risk criminal prosecution. Denver is the first U.S. city to use this type of crackdown. The Denver Post reported that this tactic proved to be effective and has deterred new applicants.

As of early September, 154 people have surrendered their licenses and another 126 have withdrawn applications this year as four people faced felony criminal charges for falsifying documents related to their rental properties

The surge in surrenders and withdrawals has come as the city began asking property owners to sign affidavits, swearing they were in compliance with a rule that their short-term rental locations were also their primary residences. This summer, the Denver District Attorney’s Office, in cooperation with the excise and licenses department, began filing criminal charges against people who investigators say lied on their paperwork.

Vancouver’s Short Term Rental Listings Fell as Enforcement Increased

Vancouver is another city that has taken the extra measures to enforce fraudulent representation by short term rental owners. Since instituting short term rental regulations a year ago, Vancouver has seen short term rental listings decline, with about 30% of the listings removed. However, only 5% of the listings returned to the long term rental market. Airbnb accounts for 81% of the more than 5,000 short-term rental listings in Vancouver.

The Times Colonist reports:

Active short-term listings are down to around 5,000, compared to more than 6,600 before the regulations took full effect last September, the city said. More than 2,000 unauthorized units that were taken offline have not been re-listed.

The city is optimistic that these additional measures to crack down on operators who misrepresented during the licensing application process would further reduce short term rental listings. Effective Jan. 1, those who misrepresent could face prosecution.

Will Short Term Rentals Head into the Long Term Rental Pool?

It is not conclusive whether these stricter enforcement measures will help the long term housing market. 

Of the 2,000 unauthorized units taken offline in Vancouver, only 300 have returned to the long-term rental market, according to research by David Wachsmuth at McGill University’s School of Urban Planning.

There are many factors that affect long term housing affordability. One of the major factors is the rate of new housing supply and how they are allocated to different market segments. Other factors include urban planning and housing initiative fundings. The short term rental market is just one contributor to the housing affordability equation.

Brian Clifford, policy manager at the B.C. Non-Profit Housing Association told The Times Colonist, “We know that (short-term rentals) contribute to affordability problems. I’d say that there is a lot of focus on Airbnb, but it is not the silver bullet causing the affordability crisis. It is a contributing factor. It’s not the sole problem that we have.”

Then there is the question of how many of the STR listings that were removed go back into the long term rental market. This may vary from city to city. For Vancouver, only 5% of listings returned as long term housing.

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Categories: Regulations