How a Small City Preserved Housing With Host Compliance

Affordable housing is a significant issue for the City of Nelson, where the vacancy rate fluctuates between zero and 0.06%. An estimated 39% of Nelson households are rentals, and low residential vacancy rates present a real challenge for housing.

Issues related to housing availability became more urgent for Nelson after the Council received complaints from citizens. Long-term residents indicated they had been evicted from their homes by landowners, who had chosen to offer their properties as short-term vacation rentals (STRs). Investors were also buying properties to list on rental platforms like Airbnb.

The City also began hearing from local businesses, such as hotels and traditional bed and breakfasts. These businesses are required to pay specific taxes to operate, such as a compulsory tourist tax and sales tax. Illegal STRs were not paying these taxes, which was seen as unfair. STRs were benefiting from the tourist tax, which is used to promote Nelson tourism, yet they were not contributing to it.

After an extensive consultation process that gathered input from different stakeholders — local businesses, STR hosts, and residents — the City established fair regulations for STRs. Limits were set on the total number of STRs allowed in the City, and they established a quota for how many could exist on a given block to preserve local character and prevent investors from converting too many properties into STRs.

However, the City still needed a way to identify illegal STRs for enforcement and compliance. Nelson had a small department, which ranged from three to five people, to manage monitoring and enforcement. The City identified Host Compliance software as the most cost-effective solution to identify illegal STRs and achieve higher levels of compliance.

The software helped Nelson identify STRs operating in their area, which would have been impossible to do manually, as there were too many different vacation rental sites to monitor. Some hosts operating illegally were even trying to avoid being caught by removing and reposting their listings, which is something Host Compliance software monitors.

According to the City, Host Compliance has helped them achieve almost 100% compliance with their short-term rentals bylaw.

Additionally, business licensing is required to be revenue neutral in British Columbia, and Nelson did not want to pass the financial burden associated with STRs to taxpayers. By identifying rentals and bringing them into compliance, they were able to recoup project costs and remain revenue neutral. The additional revenue from business licensing fees has helped pay for enforcement, and City inspections have been helpful bringing more units into compliance with regulations created to preserve housing.