Ottawa looks at limiting number of Airbnbs to free up rentals

Open this photo in gallery:

The Liberal government is planning limits to Airbnbs to free up more rental units as part of a broader political strategy to counter Conservative Leader Pierre Poilievre’s campaign to win over Canadians who are upset about the rising cost of living, federal officials say.

Two government sources told The Globe and Mail that the government is determined to get back on track with a plan approved by cabinet in August to make housing affordability and cost of living the central issues over the coming months with targeted announcements by Prime Minister Justin Trudeau and key ministers. The Globe is not naming the sources because they aren’t authorized to discuss matters before cabinet.

One initiative under active consideration by the federal cabinet is a plan to induce municipalities to limit the number of Airbnb units through bylaw changes to boost long-term rentals, according to the two officials. One of the officials said this could alleviate rental shortages in big cities but also in communities such as Whistler, B.C., and Banff, Alta., where there aren’t enough homes for staff working in tourism.

The price of housing and groceries is a pressing concern for voters because of high inflation and all parties are trying to position themselves as having the best policies to reduce cost-of-living pressures.

Tyler Meredith, a former senior economic adviser to the Prime Minister and Finance Minister Chrystia Freeland, said Ottawa could use the $4-billion housing accelerator fund to encourage municipalities to limit the number of short-term rentals.

“Whatever tool the federal government has is going to be fairly indirect. There is not a ton of federal levers that you have at your disposal,” he said. “To the extent that a municipality wants to address this issue, they could use an application through the housing accelerator fund in order to convert short-term rentals into longer-term rentals.”

Economist Mike Moffatt, senior director of the Smart Prosperity Institute at the University of Ottawa, said the federal government could also use the tax system to discourage owners from listing properties for short-term rentals.

“The federal government could have some kind of tax increase on Airbnbs through the GST but that wouldn’t necessarily stop Airbnbs but it may make it a little more expensive,” he said. “They are clearly trying to take leadership of this issue but truly a lot of the policy tools are not within their jurisdiction.”

On Thursday, the Prime Minister announced a $59-million deal with the city of Vaughan, Ont., to use the national accelerator fund to fast-track 1,700 new housing units. In September, Mr. Trudeau announced 2,000 new housing units could be built in London over the next three years, using $74-million from the housing accelerator fund. More of these announcements are expected in the coming months that will feature the Prime Minister in a bid to get maximum local exposure for the Liberals.

Airbnb’s ravenous appetite for residential units is contributing to Canada’s housing crisis

The government relied on the housing accelerator fund, first announced in spring 2022, as one of its main tools to spur cities to build more high-density housing, with a target of building 100,000 new middle-class homes by 2024-25.

“We need more homes across the country and that is why we launched the housing accelerator fund to build more homes faster in partnership with municipal leaders,” Mr. Trudeau told reporters.

However, the fund is heavily delayed, money has been slow to roll out and so far falls well short of spending projections.

The government is also under domestic pressure to lower the cost of groceries.

Innovation Minister François-Philippe Champagne held a news conference Thursday to say Ottawa continues to closely scrutinize the grocery market and bring more transparency to pricing.

But the proposals released so far will not change the trajectory of prices and include nothing new to help consumers, said Sylvain Charlebois, a Dalhousie University professor who studies the grocery market and food supply chain.

“The announcement is business as usual,” he said.

Last month the government said it would force the country’s biggest grocery store chains to submit plans to Ottawa on how they will stabilize prices by Thanksgiving.

Ahead of that Monday deadline, Mr. Champagne outlined a plan from grocery stores which is in line with what they already do. The minister told reporters in Ottawa that the grocery chains had pledged to freeze prices, price-match and roll out discounts.

“I’ve been looking at some flyers this morning and you already see action,” Mr. Champagne told reporters.

“Discounts come out on Thursday, so no,” said Prof. Charlebois in response to the Minister.

The professor, who is also the director of Dalhousie’s Agri-Food Analytics Lab, said the prices in this week’s flyers are no lower than usual and are not affected by what Ottawa has announced since last month.

“I fail to see anything which can help consumers, right now, beyond what was already being done,” Mr. Charlebois said.

In September the government tabled what it called the Affordable Housing and Groceries Act that included a measure to waive the GST on new rental housing and changes to competition laws.

The government introduced the bill one day after Mr. Poilievre tabled a housing bill of his own. The Conservatives say they would also remove the GST from new rental construction, but only when the average rent on the property is below market rate. The NDP, meanwhile, said the government should also focus on non-profit and co-op housing to help those most in need.

Builders have said that with current high interest rates, a sales-tax break could make the difference in deciding to go ahead with a residential project. Qualifying new residential units would be defined as buildings with at least four private apartment units or at least 10 private rooms or suites. Also, 90 per cent of residential units must be designated as long-term rental.