No Airbnb is better than an unregulated Airbnb

Winnipeg considering home-share regulations is a win for locals

Airbnb is often hailed as one of the first technology platforms to revolutionize the hospitality sector, by giving homeowners the ability to share their property when they are away. For cities, home-sharing platforms like Airbnb, in their ideal form, are a win-win scenario: families that leave their properties in the winter or for vacations are replaced with tourists to support local businesses and maintain regular density levels. But the popular home-sharing app is producing shortages in the housing market and inflating the long-term rental market for locals.

Due to this concern, Winnipeg’s municipal government is considering regulating its short-term rental market. At the beginning of 2016, Airbnb listed just 478 Winnipeg properties on its platform, but today, the app has 1,104 active rentals in the Winnipeg area. In the eyes of tenants competing with profit-hungry landlords for the most affordable rent, that’s 1,104 properties that could have brought down their rent. If every dollar counts in today’s economy, every property certainly does, too.

Although Winnipeg is far from the tourist attraction other Canadian cities like Toronto, Vancouver or Montreal are, the city council is taking note of the increasingly worrying problem that short-term rentals pose to metropolitan areas. Airbnb markets itself as a middleman that brings tourists to neighbourhoods that don’t have the hospitality infrastructure to host them. As a result, the app claims it draws billions of dollars to local businesses that regularly wouldn’t get a piece of the tourist industry’s pie. However, this ignores the prices locals are paying to have an array of hosts in their neighbourhood, and it also makes the blanket assumption that all Airbnb hosts are locals renting out their only property.

In reality, the corporate world has tapped into the home-sharing profit stream and many of them aren’t locals. This is creating a manic gentrification gold-rush in large Canadian cities. Corporate bodies and landlords are buying up properties for the sole purpose of marketing them on short-term rental platforms.

For example, approximately 600,000 of the 1.1 million Airbnb listings in the U.S. are owned by hosts that have multiple properties advertised on Airbnb. Further, 600,000 listings are advertised for longer than six months each year, indicating that these properties are commercialized. Due to this heavy commercialization, local revenue is being lost, not gained.

Critics have called this commercialization process the “Airbnb effect.” The more houses that are pulled from the long-term rental market, the more local tenants are paying for rents. This growth continues until locals a gradually priced out of their neighbourhoods.

A study from the U.S. showed “a one per cent increase in Airbnb listings is causally associated with a 0.018 per cent increase in rental rates and a 0.026 per cent increase in house prices.” Although these numbers appear small, the study noted that Airbnb’s average yearly growth rate is roughly 44 per cent.

Winnipeg must curb corporate incursions into home-sharing platforms before it becomes a victim of commercialization like other major North American cities. Home-sharing is a great idea, but when unregulated it is a chance for the rich to get richer, which will subsequently make the poor poorer. To ensure Airbnb is managed by locals for the benefit of locals, Winnipeg should implement a “one host, one rental” policy. Landlords shouldn’t be able to buy up properties to market them on short-term home-sharing platforms — this does nothing but encourage gentrification.

Further, the number of days hosts are permitted to rent their property out should be limited to incentivize locals to rent out their primary residences — this will have the added benefit of discouraging commercialization, considering it places a cap on profit margins that are likely much slimmer than long-term rental markets. Finally, since platforms have the data and capacity to regulate the previous suggestions with a simple algorithm, Winnipeg should make them responsible for limiting accounts and listings.  

Although Airbnb and other home-sharing platforms have the potential to do a lot of good for the city, unchecked and unregulated Airbnbs are a loophole for landlords who don’t want to deal with the long-term rental market’s red tape, which cities and provinces have established to protect tenants from fundamentally predatory and unproductive landlords. Winnipeg is better off with no Airbnb if the alternative is an unregulated Airbnb.