In April, Canada’s finance minister announced a two-year ban on foreign home buying, as well as higher taxes for people who sell their homes within a year (with qualifying exceptions).
Also in April, the island of Oahu in Hawaii passed a law nearly eliminating short-term rentals, now requiring minimum stays of 90 days in all but a few situations.
Many local communities and even condo HOAs are passing similar regulations. The reason for these moves?
An attempt to stop investors from gobbling up entry-level housing, and to maintain higher-quality neighborhoods.
Will That Happen?
It’s likely that some short-term rental owners will start to divest, which will put more houses on the market. Others will shift to long-term rentals (if they can be profitable), which is good for renters.
All this action should stabilize communities that have been overrun by short-term rentals in recent years. But you know the Burns quote: “The best-laid plans of mice and men often go awry.” So, we’ll see.
The people who might be hurt most by laws limiting short-term rentals are owner-occupied buyers who planned to house-hack by renting out a portion of their house on Airbnb, or such, to cover part of their mortgage. I know a few retirees who were counting on that option. They’ll need a new strategy now.
Ember Realty is more focused on long-term rentals, our philosophy is centered around the idea of buying and holding for at least five years. This may not work for some, especially those with properties in tourist destination areas.
It looks like the hotel industry is going to see a huge bump in business in the years to come as more and more local and national governments start regulating or outright banning short-term rentals.
Do you have a short-term rental property that will be affected by local regulations? Contact us to discuss your options. Sometimes long-term or even selling your property will make more sense.
