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Victoria Looking to Regulate Vacation Rentals
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(Posted on Jun 13, 2016 at 06:13PM by Michelle Bogle)
The City of Victoria could soon be turning its magnifying glass towards short-term vacation rentals.The intent is to shine a light on the city’s “invisible†hotel industry and subject these rentals to the same provincial taxes and rules as traditional hotels, as well as ensuring that B.C. Assessment Authority designations reflect the commercial nature of the rental use.
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In British Columbia, an 8% provincial sales tax is applied on rentals by hotels, motels, cottages, inns or resorts with four or more rental units. In addition, many municipalities, including Victoria, charge a 2% tax that is used to promote local tourism.Â
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These undercover “stealth hotels†currently do not have to charge those taxes and their property taxes are far less than a commercial property. But, that could all change, as early as this fall.
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City officials estimate that 200 to 300 short-term vacation rentals are operating in Victoria. Many of these rentals are also operating in residential areas where commercial operations are not allowed. With websites that promote home sharing, like Airbnb and Expedia, this market of short-term vacation rentals is not going away anytime soon. Rather, it’s going to continue to grow.Â
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To date, there are approximately 27,000 rental-housing units in Victoria with a vacancy rate of 0.6%. If all of the estimated short-term vacation rentals found their way back into the market pool, city officials figure that the vacancy rate would increase to between 1.2 and 1.7%.
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At Marcus & Millichap Vancouver, our advisors are keeping a close watch on B.C.’s hospitality industry. For more information regarding this asset class, please contact us for the latest insight and commercial real estate listings.
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