Vancouver’s super-heated housing market was first faced with government intervention when it saw the introduction of the Foreign Buyers Tax back in June. This tax meant that overseas real-estate purchases would be slapped with an additional 15% tax, resulting in house prices costing hundreds of thousands more for overseas purchasers. The Vancouver real estate market is once again facing government intervention, this time addressing short term rent conflicts.

Unless one owns a hotel, motel, or bed and breakfast business licenses, one is not permitted to rent real estate to tenants for less than 30 days. The concern for short term renting arises when homeowners no longer rent to locals and resort to renting to tourists in order to maximize profits. “Housing is first and foremost about homes, not about operating a business” says Vancouver Mayor Gregor Robertson. To take action, Mayor Gregor Robertson wants those renting sections of their homes on Airbnb to attain a business license, and to ban Airbnb listings for users that do not live in the home they post.

Airbnb is a beautiful concept. It allows those who live in homes to rent out rooms in their homes to tourists culminating in both consumer surplus and producer surplus.  Homeowners are able to fully utilize all their resources in order to make extra money and tourists are able to live more inexpensively. The issue with Airbnb arises when homeowners exploit Airbnb’s business model of home sharing and stop renting to locals, limiting the number of available homes for Vancouverites. I do see the major exploitation flaws of home sharing businesses. Unethical participants in the home sharing businesses use Airbnb as a source of untaxed income, while those looking for long term homes to rent suffer as renting to them would be less profitable then to rent to Airbnb.

There is a pattern for the problems that arise in item sharing businesses. Uber, cannot enter Canadian cities because of difficulties obtaining proper business licensing as there are scarce numbers of taxi licensing available. We can see this licensing issue stem to home sharing businesses, where renting homes for a short amount of time requires proper hotel or bed and breakfast business licenses. I guess one of the biggest lingering questions is what actions will Mayor Gregor Robertson take to intercept illegal home sharing businesses, and will his actions set legal precedence across Canadian cities to deal with illegal Airbnb postings.

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