Calgary is proposing a moratorium on new short-term rental licences in non-primary residences should rental vacancy drop below a certain rate, and they want to extend the short-term duration to 180 consecutive days.

But a report from the University of Calgary shows that while short-term rentals (STR) have risen significantly since 2017, curbing its growth is not a silver bullet to solving housing affordability.

Councillors will be asked at the Dec. 5 Executive Committee meeting to recommend that a full city council meeting give three readings to amendments to the Business Licence Bylaw around STRs.

Among the proposed changes is a moratorium on new short-term rental licences in non-primary residences if the city’s purpose-built rental vacancy rate is below 2.5 per cent, as shown in the Canada Mortgage and Housing Corporation’s annual rental market report. Currently, the City of Calgary website shows vacancies at record-low rates of around one per cent.

The bylaw changes also clarify the duration of an STR, making it any temporary accommodation for compensation for periods up to 180 consecutive days instead of just 30 days. 

The rules also propose two classes on licensing, one for non-primary residences and the other for primary residences, each with different licensing fees. Non-primary residence new licensing would jump to $510 from $172, and primary residence goes to $172 from $100.

There are also provisions outlining the role and responsibilities of STR companies – like Airbnb – through a licensing system. Further, there are restrictions around the use of non-market housing for STRs.

“The proposed policy tools and bylaw changes strike a balance between supporting housing affordability, enhancing the safety of guests, strengthening host accountability, minimizing negative impacts on communities and improving enforcement of regulations, while also supporting the accommodation sector and the economic benefits of short-term rentals,” read the City of Calgary admin report.

Balanced approach, says report co-author  

The changes come as the University of Calgary delivered its Short-Term Rental (STR) study, which was commissioned two years ago under the Urban Alliance partnership. The goal was to provide more data on Calgary’s STR landscape and provide a framework that included policy tools that could be deployed by the city to regulate the evolving industry.

The report provided 35 policy levers and their anticipated impact on a variety of areas, including local economy, tourism, and housing availability. The full report is included at the end of the story. It did not provide recommendations to the City of Calgary, but did include “quick wins” that could be applied to current regulations.

Among those was a dedicated 311 complaint stream for STRs, suspension of licences if hosts violate health or safety rules, work with STR digital platforms to enforce the rules and requiring the digital platforms to include a licence field in their listings.

Dr. Gillian Petit, one of the report co-authors and a senior research associate in the Department of Economics at UCalgary, agreed that the tools chosen in the city recommendations were fair.  

“I think, at this point, what’s being proposed strikes a nice balance between the different objectives,” she said.

The report drew from an evidence base of more than 500 pages, including an empirical look at the Calgary market, other markets, and doing surveys and talking with focus groups. The authors outlined the different potential policy options and the impact they would have on different objectives, including things like economy, housing, or tourism.

“Say your objective, with your short-term regulation, is to address housing affordability – it might have a negative impact on tourism, and we felt that’s up to the elected officials of the city to make the choices when it comes to the objectives of short term rental regulation,” Dr. Petit said.

During recent debate on Calgary’s housing strategy and on citywide upzoning, short-term rentals were often brought up as a major problem in Calgary, significantly impacting housing availability.

At the top of the report, it shows that regulations would likely curb the number of new listings, but would only be part of helping Calgary housing supply issues.

“If the City of Calgary wishes to restrict STRs with the objective of improving housing affordability, our review suggests that while restricting STRs will likely reduce STR listings, reduce LTR rents, and reduce housing prices, it will not solve the problem of housing affordability on its own, but it has the potential to be part of the solution,” the report read.

The report showed a peak of 5,657 active Airbnb/VRBO listings in July 2023, dropping to 4,950 listings by September 2023. Dr. Petit said current data (Sept. 2024) has the number around 5,000 listings or roughly one per cent of Calgary’s housing stock. There are peak times, generally in the summer, specifically around the Calgary Stampede.

It’s good timing to revise regulations, Dr. Petit said.

“(One per cent) is less than what Toronto had before they brought a very restrictive short-term rental regulation because the market got out of control,” she said.

“We are on the cusp of, if the market keeps growing at this rate, it has the potential to grow out of control.”

Ward 8 Coun. Courtney Walcott said that he was interested to see where Calgary stood in comparison with Canadian cities like Toronto and Vancouver. He said after seeing what was happening in those markets, largely due to a scarcity of housing options, he wanted to ascertain what an end state might look like.

“It verified that we’re not on that drastic scale,” he said.

“It’s a small number (of listings) that can be adjusted through regulations right now before we (have) a crisis.”

Addressing gaps in short-term rental regulation

Walcott said the recommendations before them help close gaps in the rules, particularly around the definition of a short-term stay. Previously, rules defined an STR as accommodations up to 30 days. Provincial rules under the Residential Tenancies Act come into play after 180 days. 

“It’s meant to look at that gap, like, we’re not allowing people to use this rental service for these periods of time. Rather, we want to make it economical for people to just go back to traditional leases,” he said.

“If you want to do long-term rental, there’s a method that tried and tested. If you want to do long-term rentals with a short-term rental, that’s clearly just a cash grab.”

Dr. Petit said aside from the regulatory gap in duration, the 180 days also has a tax meaning. To be a tax resident you have to have worked for 180 days in Canada.

Overall, she said that the new rules aren’t too restrictive. She also appreciates the commitment by the City of Calgary to continue collecting data through this process, including regular updates from Short-Term Rental Companies, like Airbnb.

“If it continues to grow out of control, now the city is going to have that data and the resources they need to be able to enforce more restrictive regulations if they’re needed,” she said.

Airbnb said they look forward to working with the City of Calgary on any changes to short-term rental bylaws.

“Airbnb supports practical evidence-based decisions that respond to the community’s needs,” read an email statement attributed to Alex Howell, policy lead, Canada, Airbnb.

“Short-term rentals make up a tiny fraction of Calgary’s housing supply and some of the recommendations provided to council will unintentionally impact Calgary’s economy and hurt Calgarians without effectively addressing the root causes of housing challenges.”

They cited a Statistics Canada report that showed only a small percentage of short-term rentals would move to the long-term housing market. They noted that the CMHC also said that STRs “are not a pivotal factor on the long-term rental market.”

Dr. Petit said that STRs are a necessary part of the accommodation mix in any city. They don’t just serve tourists, she said. STRs serve people between long-term housing, those people in the city for business or to study.

“We do need short-term rentals. The problem becomes when we have a lot of short-term rentals by these very commercialized hosts,” she said.

“When we see a whole bunch of properties being bought up as investment properties to be solely listed as short-term rentals, and the demand for short-term rentals isn’t necessarily there either, then we’ve got a problem. We’ve got a mix that’s not working.”

The City of Calgary said they would also develop strategies to inform short-term rental hosts of best practices and the licence requirements.

If approved, these regulations would take effect on Jan. 1, 2025.