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Frustrated landlords converting homes to vacation rentals

More homeowners owners in Bermuda are making their properties vacation rental units, Consumer Affairs staff found (File photograph)

Landlords have increasingly asked to switch their residential properties to vacation units in the past two years, Consumer Affairs staff found.

It was thought the changes were made so that owners could limit the risk of long periods of overdue rent and more easily evict people who breached tenancy agreements.

An annual report from the CA that covered January 2019 to December 2021 also showed how shopping habits changed in the coronavirus pandemic as consumers spent more time at home.

It highlighted that since a temporary amendment to legislation that covers rent increase controls for domestic premises was introduced in March 2021, there was “a continuous uptake of residential landlords seeking to have their residential units certified as vacation rental units”.

In 2019 there were 283 certificates issued, rising to 307 in 2020 and 337 in 2021, according to the report, which was tabled in the House of Assembly on Friday.

The report said: “Although the number of tourists visiting Bermuda has fallen following the onset of the pandemic, the CA is of the view that the continued increase in certification of residential units as vacation rentals is a direct result of landlords seeking to obtain greater control over their property and mitigate the commercial risks commonly experienced when renting their residential units to permanent Bermudian residents.

“Following discussions with various landlords, the CA is of the understanding that landlords are not confident in their ability to obtain adequate legal recourse through Bermuda’s courts in the event they are faced with a tenant acting in contravention of their signed tenancy agreements (ie timely payment of overdue rent, damage to property, ability to pursue eviction and possession of the residential unit).

“Given the difficulties experienced by landlords when trying to evict tenants, rather than rent their residential units to Bermudian residents, landlords are incentivised to obtain a vacation rental unit certification and make their residential unit publicly available to rent on a short-term basis.”

It explained that short-term lets allowed landlords to “limit their exposure to the risk of prolonged periods of overdue rent” and “expediently evict tenants acting in contravention of any tenancy agreement”.

The report added: “The CA is concerned that the increased uptake of vacation rental certification may negatively impact the hotel industry of Bermuda as tourists will seek to obtain cheaper accommodation options, while limiting the number of affordable residential units available to residents of Bermuda.

“Consequently, the CA intends to closely monitor and regulate the issuance of vacation rental certificates to ensure that residents of Bermuda continue to have access to affordable housing and that the issuance of vacation rental certificates does not undermine the commercial efforts of Bermuda’s hotel industry.”

The report also said that financial uncertainty caused by the pandemic meant some tenants invited “unapproved” sub-tenants to share their homes so that limited resources could be pooled together.

It added: “Such consumer behaviour has led to the illegal overcrowding of residential accommodations at the detriment of their landlord.”

The report highlighted that although many higher income households were “largely unscathed financially” by the pandemic, low and middle-income households were disproportionately affected.

It said: “While there is reason to be optimistic for economic recovery in a post-pandemic economy, the CA is concerned that the consumer protection landscape of Bermuda has experienced a seismic change.”

The report showed how the heightened demand for internet shopping meant that businesses without an online presence before the onset of Covid-19 were “severely disadvantaged”, and were supported by the CA to offer stopgap measures while e-commerce platforms were introduced.

It added: “In addition to the increased reliance of online shopping, consumer behaviour and spending habits shifted away from luxury items, travel and hospitality, and towards ‘nesting’ as consumers began spending on items such as home gyms, backyard gardens, gaming equipment and home renovations.

“Consumer Affairs observed that long-standing consumer habits, such as physically browsing store locations, have been dramatically interrupted and continue to be negatively impacted.”

The report said that the CA team had helped disadvantaged consumers to schedule vaccination appointments, to register for the Government’s SafeKey app and distributed face masks and hand sanitisers to people who were homeless.

It added: “The CA further appreciates that the expenses associated with providing the homeless with pandemic-related supplies were borne by the CA’s staff.”

A business and community liaison officer has been hired by the organisation to increase public communication and education.

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Published July 04, 2022 at 6:12 pm (Updated July 04, 2022 at 6:12 pm)

Frustrated landlords converting homes to vacation rentals

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