The West End Vancouver condo owned by Janko and Bojana Jerinic. Unbeknownst to them, the tenant they rented the apartment to in turn rented it out as a short-term rental space on Airbnb, charging $777 a night, for up to 10 people.Bojana Jerinic
In the past, it was marijuana grow operations that posed a costly nuisance for landlords. Today, it’s people who are willing to flout the law to make easy cash on a site like Airbnb, willing to risk the consequences of fines – if they face any consequences at all.
“Unfortunately, I think there’s a huge group that are [saying], ‘just giving me the slap on the wrist. I’ll make my money and I’ll pay my fine.’ It’s the cost of doing business, of [saying] ‘I’m going to go bump the rules and I know all the ways around it, and there’s so much protection for tenants that I’m going to use it now to my benefit,’” says Mark Teasdale, chief operations officer for Vancouver property management company Unique Real Estate Accommodations.
Screencap of the Airbnb listing for the Jerinics' unit.Bojana Jerinic
The brokers had found what they thought was a good tenant for a tastefully furnished condo in the historic Queen Charlotte building at 1101 Nicola St. Owners Janko and Bojana Jerinic had temporarily relocated to Barcelona for work. The tenant said he had a young son and needed a place to live while renovating his house. The furnished apartment was rented for $5,500 a month and the property managers collected $2,250 as a damage deposit. Because the Jerinics wanted to return one day, and it was all their furniture, it was important to them to find someone who’d take good care of the place. They met with the tenant and felt reassured because he was a realtor and property manager well-established in the local real estate community.
However, not long after they settled in Barcelona, they began receiving complaints from their former neighbours in the building that strangers were coming and going, that there were parties and that people were smoking in the unit. Ms. Jerinic searched and found their two-bedroom home listed on Airbnb under an alias host, renting for $777 a night, for up to 10 people, with air mattresses.
“Our take-away is definitely the fact that this person, who is a well-respected, and a licensed individual in the real estate and property management world in Vancouver … is able to perform this kind of activity without any consequences,” says Ms. Jerinic.
They were also taken aback that Airbnb did not take immediate action to remove the listing after they informed the platform that they had not given the tenant permission to rent their home.
Unique Real Estate Accommodations president Nina Ferentinos says she was shocked that the tenant would have been so brazen as to rent the unit out on Airbnb. Ms. Ferentinos asked city staff who give out short-term rental business licences how they ensure tenants who apply for licences have permission from their landlords to use their apartments for short-term rental use. She was told that the tenants must supply a landlord phone number, and the city calls to verify that the landlord gives their permission. In an e-mail, the city responded that they also require a letter of authorization provided by a landlord.
As of May 1, new provincial short-term rental rules came into effect, requiring platforms such as Airbnb and VRBO to remove listings that don’t have business licences quickly. Only primary residences plus a spare suite are allowed to be rented for the short term, in communities with more than 10,000 people. Premier David Eby said in April that the problem has been those people who are effectively operating “a private hotel chain” through the platforms.
Airbnb responded that strict short-term rental laws are risking billions of tourism dollars.
The Jerinics and their property managers say Airbnb failed to help them deal with the problem. The Queen Charlotte condo building is small and does not allow short-term rentals, and the agreement the tenant signed prohibited such use. But even after this was made clear to Airbnb, the platform did not remove the listing. The host had bookings lined up throughout the summer and could have continued taking them, say the owners. As well, he did not appear to have a business licence.
Airbnb responded in an e-mail: “We encourage parties to resolve private disputes directly with each other, and we require hosts to follow rules set in place.”
The tenant failed to pay his rent for May, says Unique property manager Ian Zendejas. Mr. Zendejas posted a notice for eviction and after the required 10 days, he knocked on the door and some guests from California answered. He informed them that the apartment was not legally rented, and he would be taking it over that day. The angry guests, in town for their daughter’s graduation, said they’d need to contact the host and Airbnb and they would go out and come back later. A few hours later, the strata council changed the locks to the front door entrance because of security concerns. All the residents received new keys. When the guests returned that evening, they couldn’t get in, and with Mr. Zendejas’s encouragement, they called the police to settle the matter. By this time, a small crowd had gathered outside the building. The police arrived, Mr. Zendejas explained the situation, and an officer escorted the guests into the unit to gather their belongings and leave. The property manager has applied for a notice of possession, and once that’s received, the owners will have their unit back again. Mr. Zendejas hopes to have it re-rented by mid-June.
“This is a new system, it only just came into play,” says Hunter Boucher, vice president of operations for Landlord BC. “I think both on Airbnb and for municipalities, this is new territory. How they are going to do this enforcement, and how they are going to shut down these businesses, is still yet to be seen, because it is early days and because there is a glut of those listings, so getting through it is not an easy task.”
The Jerinics say the damage deposit will be eaten up by costs associated with the debacle and they are also out of pocket for rent.
Ms. Ferentinos and Mr. Teasdale believe that, for some, it’s worth the risk of cheating. It’s time consuming to evict tenants for doing short-term rental, and if there are fines, it’s the owners who could be stuck with them, they say. The city says they review online listings and investigate complaints, and enforce with audits, warning letters, tickets and suspension of licences. Offenders face fines up to $1,000 per offence, and potential legal action. City data show 82 licences have been suspended so far this year and 157 tickets issued.
Mr. Teasdale, who is also a computer programmer, did his own data search and found 213 cases of Airbnb listings in Vancouver that do not have a valid licence with the city. He says that is a conservative figure.
He is also aware that there are desperate owners who’ve been hit hard by the change in rules – people who’d invested in properties who can no longer count on short-term rental incomes that had been thousands of dollars a month. Properties that might have brought in $8,000 a month as short-term rentals may only get $3,000 a month on long-term rental contracts.
“There’s a lot of people that have a lot invested and they’re going bankrupt. And they’re just saying, ‘Screw it. I’m going to continue doing it the way I am.’
“They’re not making the numbers work, and they’re very upset and very bitter.”