Unbeknown to many Canadians, Halifax is facing one of the worst housing crises in the country. With a vacancy rate at one per cent, the city is on par with Vancouver (0.9 per cent) and worse off than cities like Toronto (1.7 per cent), Montreal (2 per cent) or Calgary (2.7 per cent).

“If you look at the census data, we have the fastest growing downtown of any city in Canada,” explains Shawn Cleary, Councillor for Halifax West Armdale. But housing has not followed suit.

With fewer and fewer affordable housing options, deputy mayor Sam Austin says people are getting desperate. “We have people living in our parks, living in vehicles.”

Recently, governments have been taking steps to address the issue and, as in many other areas around the country and the world, Halifax has decided to focus on short-term rentals (STRs).

In 2020, Nova Scotia introduced a registry for short-term rentals, and now the province has recently announced that higher registration fees are on their way. In a public statement, John Lohr, Minister of Municipal Affairs and Housing, affirmed that the province wants “more of these properties used for the long-term housing our communities desperately need.”

Meanwhile, at the municipal level, a new set of regulations came into effect on September 1 in the Halifax Regional Municipality, restricting short-term rentals to commercial zones across the region. “We knew that in some parts of the city short-term rentals are a problem and we wanted to move to rectify it,” affirms Mayor Mike Savage, who voted in favour of the amendments.

Now, in residential zones, STRs, defined as rentals of 28 days or less, are only allowed in primary residences, allowing citizens to rent an extra room or, in case they are not there for a short period of time, the whole residence.

Basement apartments or backyard suites must now be rented out for more than 28 days. In mixed or commercial areas, where hotels and tourist accommodations are also allowed, no limitation applies.

Austin says STRs should not have been allowed in residential areas in the first place, since they are considered tourist accommodations and those were already subject to the zoning bylaws. “When the bylaws were created, short-term rentals did not exist.”

Long-awaited restrictions

This mix of provincial and municipal regulation comes as good news to Bill Stewart, one of the founders of Neighbours Speak Up, a group of citizens formed four years ago due to the lack of regulation around short-term rentals in Halifax and across Nova Scotia. “The Halifax Regional Municipality didn’t really have tools to deal with short-term rentals and now they have two very effective tools,” he says.

Neighbours Speak Up played a significant role in this transition. “We began really as a small neighbourhood group, we had a short-term rental in our neighbourhood and it was causing a fair amount of disruption,” says Stewart. Another neighbour, Mary Readon, jumps in, “my concern right from the beginning was that we were losing our neighbourhood.”

But, Stewarts adds that, once they realized the impact of STRs on the broader community, in terms of “neighbourhood disruption, hollowing out neighbourhoods and taking housing,” they started a website and a campaign to advocate against STRs. It did not take long for them to attract attention.

What is interesting, observes Stewart, is that some of the people who contact them have lower incomes, but “we also have people that are earning good incomes that are having real challenges in finding homes. It’s a widespread issue.”

That STRs can have a detrimental effect on the local rental market is not surprising, and (Ricochet explores the phenomenon in more depth here).

McGill professor David Wachsmuth found that STRs were playing a significant role in the housing crisis affecting the city, taking “740 housing units from Halifax’s long-term housing market,” according to his 2019 study. The report adds that converting such STRs to long-term housing would raise the vacancy rate and bring down rents.

The situation has only gotten worse since then. According to AirDNA, a platform collecting data on STRs across the country, there are currently 2177 available listings in Halifax, an 11 per cent increase from last year, and 79 per cent of them (1720 listings) are for entire homes. Only 3.2 per cent of them are for 30 nights or longer. Most of them are listed on Airbnb or Vrbo.

On average, the daily rate for a STR is $210 per night, representing an annual profit of $47,600 for the homeowner, in a province where, per the last census, the median household income is $71,500.

And, in addition to the impact on housing availability and prices, these STRs are more often than not the source of noise complaints, disruption, increased gentrification, and the “hollowing out” of neighborhoods — meaning fewer people and families stick around to plant roots. Stewart says he’s watched his neighbourhood change from families and retirees to temporary and short-term stays.

Brendan Smith experienced it himself. Now involved with Neighbours Speak Up, Smith moved to Halifax in 2020 and found an apartment in a triplex he shared with two other long-term couples. Less than a year later, however, his landlord sold the building and the new owner converted the two units into Airbnbs. “I was the only long term tenant remaining in the building,” he says. His landlord did not hide his wish to turn Smith’s unit into an additional STR.

But since he lives in what is considered a residential area, the new bylaws apply to his building. “Just recently, I was notified that the units are actually listed now as long-term rentals. So the regulations have been effective in this case,” he says.

The rest of the city seems to agree with him. Indeed, a city survey of 4330 residents conducted this spring found 67.9 per cent agreed that it is a good idea to restrict STRs in residential areas.

An unclear impact

While the bylaws seem to be popular with everyone except STR operators, the expected impact seems unclear, even among those who voted in favour of the amendments. “We don’t know how many will come back to the market,” explains Austin, when discussing whether they expect STRs will now become available to long-term tenants. He adds that the city does not know the exact number of STRs nor their address, making it impossible to confirm the zone they are in.

For Cleary, who voted against the amendments until more information was available, this lack of knowledge was pivotal. “The province has only recently begun collecting registration for short-term rentals and they have not yet shared that information with the city,” he says, “so we don’t know what our starting point is and therefore we don’t know how much progress we will have made.”

This lack of information also impacts the bylaws enforcement, which “is still a bit of a work in progress,” says Austin. Typically, with the exception of traffic fines, enforcement of municipal bylaws relies on citizens reporting infractions. But in this case, the impact of a STR goes beyond possible noise complaints, affecting the whole housing market. “I don’t know how proactive we’re being about it,” explains Austin, adding that he has asked the municipal staff to prepare a report on the topic.

Concerns have been raised that these regulations seem to impact individuals with a spare apartment, more so than commercial STR operators, managing dozens of properties.

“We weren’t the ones who were impacted,” explained Avery Birch, founder and director of 365 Experience, the largest STR operator in Halifax, in a podcast recorded in March. “There’s going to be some adjusting that we have to do, but we have momentum.”

This adjusting will take two forms, and neither of them will increase the supply of long-term housing. First, it means turning units in residential areas into mid-term rentals, from one to three months, targeting international students and other temporary residents. According to Cleary, who says he’s spoken with several companies, “they have no plans on converting any of their short-term rentals, regardless of zoning, because of our definition of short-term, which is 28 days.”

Second, it will result in an increase of STRs in commercial and residential areas. “The commercial zone, we just see it as ‘this is where we play,’ we are coming in and we will answer that call,” said Birch during the podcast. This will require approaching owners of existing apartment buildings, “pretty much walking in with a suitcase of cash, saying ‘would you like to make a shit ton of money?’ Because the city has allowed this.”

Austin explains these caveats in the bylaws by comparing STRs to hotels: “if you’re allowing tourist accommodation, you should allow any tourist accommodation. That said, if we see the whole downtown switching over to all being hotels and short-term rentals that would be problematic.”

A housing crisis beyond Airbnbs

The main issue, however, on which everyone agrees, is that STRs represent just one part of the housing crisis in the city.

There are many variables to be considered, according to Cleary, including the booming population (through immigration and resettlement from rural to urban areas), “the commoditization and the financialization of housing” and the marked absence of any new social housing projects.

With a population growth of four per cent in 2022, “our need for residential units is about 10,000 per year for the next several years, to bring our vacancy rate from one to about two per cent,” explains Cleary. “Last year and the year before we had record levels of building, we only had 3200 units built last year and 3500 the year before that. We are not even getting half of the units we need built.”

Who is to blame? While inflation, supply chain issues, and lack of construction workers don’t help matters, the crisis is the result of decades of austerity by all levels of government.

Indeed, in Nova Scotia, social housing is the responsibility of the provincial government, but, says Austin, “it hasn’t built any public housing in basically 30 years.” Recently, Nova Scotia announced an $83 million investment to build 222 social housing units: “it’s a good start, but it’s very much a start,” believes Austin, adding that “the waitlist is years-long to get into a public housing unit.”

The province also introduced a rent cap during the pandemic: initially at two per cent, the limit is set to increase to five per cent starting January. Cap notwithstanding, Halifax saw the highest year-over-year spike in residential rent across the country between 2021 and 2022, with the average for a two-bedroom unit jumping 9.3 per cent, according to the latest rental market report from the Canada Mortgage and Housing Corporation.

With this in mind, Savage says that the city “has been focused on housing for a number of years”.

One of the steps the city has taken is introducing a development tax, called the density bonus, whose profits have been donated to housing nonprofits for renovation and building purposes. In addition, “we’ve given land to be used for affordable housing and we have reduced and eliminated planning and development fees for affordable housing,” says the Mayor. The city has also taken steps to increase the density of the city, for example by allowing secondary backyard units and encouraging the development of suburban areas.

And, of course, there is the new regulation concerning STR. “Is it going to suddenly solve our housing crisis?” wonders Austin. “No. The reality of our housing crisis is that it’s the result of many things all coming together. This is just one part of it.”

Investigating Airbnb is a bilingual, multi-outlet investigative journalism project focused on short-term rentals and their impact on the housing market. If you want to see more journalism like this, please make a donation right now, to fund more journalism like this.