How BC’s Crackdown on Short-Term Rentals is Reshaping Tourism, Real Estate, and Property Values
Tags: BC housing policy, short-term rental regulations, Airbnb ban BC, BC tourism economy, real estate investment BC, property values, hotel prices Vancouver, BC NDP housing strategy
Over the past decade, British Columbia has become ground zero for housing policy experimentation. From vacancy taxes to foreign buyer restrictions, BC’s NDP government has implemented an increasingly hands-on approach to real estate. But few policies have had as far-reaching and immediate an impact as the 2023 Short-Term Rental Accommodations Act.Designed to return homes to the long-term rental pool, the law imposes tight restrictions on short-term rentals—like Airbnb and VRBO—in municipalities with over 10,000 residents. These include limiting rentals to a host’s primary residence, requiring municipal and provincial licensing, and issuing fines of up to $3,000 per day for non-compliance.While the stated goal is to improve housing affordability and stabilize the rental market, the broader effects have rippled through BC’s tourism sector, property values, hotel pricing, and the overall economy. Let’s break down what’s really happening.
1. The Disappearance of Airbnb Supply and the Rise of Hotel Prices
Before the new short-term rental rules took effect, cities like Vancouver, Victoria, Kelowna, and Tofino had vibrant short-term rental markets. Platforms like Airbnb provided flexible, affordable alternatives to traditional hotels and helped meet seasonal demand during festivals, conferences, and major events.Now, with most secondary suites, laneway houses, and investment properties banned from short-term rental use, that supply has evaporated in many communities. The results:
- Hotel room prices have surged in urban centers due to reduced competition. In peak season, travelers are now paying significantly more for accommodations that offer less flexibility and fewer amenities.
- Budget tourism has declined. BC has become a less viable destination for families, students, and international travelers who previously relied on short-term rentals to make trips affordable.
- Rural and resort towns are struggling to accommodate tourists. Communities like Ucluelet, Nelson, and Revelstoke don’t have the hotel infrastructure to meet seasonal demand, and now lack the short-term rentals that previously filled the gap.
Rather than supporting housing affordability, this shift has inflated visitor costs and strained BC’s tourism economy.
2. Tourism-Dependent Businesses Are Feeling the Pinch
Tourism is a major economic engine for BC, generating over $22 billion annually and supporting more than 160,000 jobs before the pandemic. Many small businesses—cafés, tour operators, bike rentals, boutique shops—depend on short-term rental guests for survival.Since the new Airbnb regulations came into effect:
- Small towns are seeing fewer overnight visitors, especially those traveling with families or large groups who previously relied on short-term rentals with kitchens and multiple bedrooms.
- Seasonal businesses are scaling back or closing, unable to maintain staffing or inventory levels without reliable visitor traffic.
- Ancillary industries like cleaning services, property managers, and maintenance companies have lost core income streams. Many of these are locally owned, family-run operations that built businesses around managing STR portfolios.
The real-world outcome: fewer tourists, higher prices, and shrinking margins for small businesses across British Columbia.
3. Property Values and Real Estate Investment Potential Have Shifted
One of the most overlooked consequences of BC’s Airbnb crackdown is its impact on property value growth and investment incentives—particularly in markets that previously thrived on short-term rental income.
Investment properties are now less attractive.
In many BC communities, detached homes with basement suites, condos in central locations, and townhouses near tourist zones were once prized for their ability to generate supplemental income. With that revenue potential stripped away, buyers are reassessing value. Properties that could once pay for themselves through STR income now require a full-time tenant—or must be sold.
Secondary markets are under pressure.
Places like Invermere, Pemberton, and the Gulf Islands have seen a flattening of value growth, with some properties sitting longer on the market. Investors and second-home buyers are pulling back, discouraged by the regulatory risk and declining income potential.
Developers are rethinking future projects.
Pre-sales and new construction projects that targeted STR investors are being retooled, often unsuccessfully, for long-term rental or primary-residence use. In some cases, planned developments have stalled entirely due to feasibility concerns and market uncertainty.Ultimately, the policy is redistributing demand—not increasing supply.
4. The Long-Term Rental Market Has Not Grown as Expected
One of the core justifications for BC’s Airbnb legislation was to return homes to the long-term rental market. But here’s the problem: many properties that operated as short-term rentals are not suitable for year-round tenancy.
- Some were illegal suites, non-conforming spaces, or seasonally vacant units that are not viable as full-time rentals.
- Others were owned by part-time residents or retirees who do not want the legal responsibilities or permanence of long-term tenancy.
- A portion of these properties are now simply sitting empty, while others have been listed for sale, adding more inventory to an already cautious housing market.
Rather than meaningfully expanding rental supply, the regulation has shifted how properties are used—without solving affordability.
5. The Broader Economic Picture
It’s important to recognize that short-term rentals were not just about housing—they were part of a larger flexible income ecosystem. For homeowners, STRs helped cover rising mortgage costs, property taxes, and inflation-driven expenses. For travelers, they offered affordability and access to neighbourhoods outside the hotel district. For communities, they supported small business revenue, increased tax collection, and drove seasonal employment.By targeting this market with blanket restrictions, the BC government has:
- Diminished the entrepreneurial capacity of thousands of homeowners.
- Reduced economic activity in small towns and urban neighborhoods alike.
- Created a consolidated hotel economy where fewer players benefit, and prices are rising for all consumers.
While well-intentioned, BC’s short-term rental regulations have resulted in a complex web of consequences that extend far beyond the housing market. From increasing hotel prices and reducing tourism to slowing property value growth and hurting small businesses, these policies may have traded one set of economic challenges for another.
Housing affordability remains a crisis. But undermining flexibility, private property rights, and economic dynamism has not provided the simple solution policymakers promised.