This article is posted here on our website with permission from the writer Kerry Gold.
Kerry Gold is a Vancouver-based real estate journalist whose work appears in the Globe and Mail. She has written for The Walrus magazine, Variety, LA Weekly, BC Business, MSN.com, Best Health, Yahoo!, CTV News, the Toronto Star, and numerous other publications over her 20 year career. She worked for 11 years as a music critic for the Vancouver Sun, and she has co-written several books, including Michael Bublé’s bestselling memoir, Onstage, Offstage.
Kerry writes on a range of topics, including the business of real estate, social trends, food, and popular culture. She is a born and bred Vancouverite, and knows her city well. She was once referred to in a New York Times story as “the city’s unofficial night owl.”
When residents of a downtown condo tower in Vancouver recently discovered security keys had been copied and distributed to non-residents, they hired a round-the-clock security guard to check everyone entering the building.
There’d already been efforts to deter short-term rentals that were clearly happening at 1252 Hornby St., but concerns peaked when resident Peter Hankins had an altercation with one difficult visitor in the elevator.
Mr. Hankins, who is retired, believes the woman was a prostitute who was trying to make her way into one of the units that was illegally being used for nightly rentals. The strata bylaw prohibits rentals for fewer than six months. When Mr. Hankins told her she couldn’t get to the floor without a proper key fob, she grew irate and called him a litany of offensive names. She then got off at one of the floors and disappeared. The altercation was caught on video.
Mr. Hankins did a bit of sleuthing. He searched Airbnb and found the unit renting for $328 a night. It is one of several short-term rentals in the 16-storey building. He also discovered that guests were accessing the building with key fobs that had been duplicated by one of the many new key-fob duplicating businesses that have sprung up in recent years. The online business owners often arrange to meet with customers at a coffee shop and are able to make a copy within minutes.
Now, the new security guard for the building asks to see everyone’s key fob and confiscates the ones that have been copied without strata permission.
Mr. Hankins says he’s had the unpleasant task of informing confused looking tourists who show up with their luggage, and an unpermitted key fob, that the unit they’d rented on Airbnb was rented illegally. Once they arrived at the building, they were able to use the fob to gain access to a floor that is accessible to the whole building, because it has communal amenities. From there, the visitors had to walk up several flights to the floor with the rental unit, because the copied fob they were given didn’t allow access to that floor. He’s encountered these travellers in the elevator and he’s felt sorry for them when they realize that they’re without a place to stay. But the young woman who blew up at him was another matter.
“The worst part was she called me an ‘old man,’” he said jokingly. “But it does make me feel really creepy that people have access to our building.
“We are thinking of changing our fob system, but do we want to go through the cost of changing it because we have people who don’t take responsibility?”
Management of key fobs is the new reality, says Tony Gioventu, executive director of the Condominium Home Owners Association of B.C. The group that holds educational seminars for condo owners. Mr. Gioventu says that with the prolific copying of key fobs for short-term rental use, stratas must now do inventories of all their fobs and strictly manage them. As well, stratas need to weigh whether allowing short-term rentals in their buildings is worth the cost in money and time when things go wrong. He’s seen fraudulent short-term renters who’ve gained access to buildings for the purpose of breaking into storage lockers, as well as using units for prostitution. As well, he says, realtors who need access to units are copying fobs when buildings don’t allow lock boxes for security reasons.
“I’ve probably come across about 20 different stratas in the downtown area where they’ve discovered that people are getting fobs reproduced. Whether it’s a property manager or a council member or if the building is lucky enough to have a concierge, someone has to manage the security of the fobs – and it’s a lot of work to manage it. And stratas need to write ironclad bylaws that explicitly prohibit copying key fobs for guests.
“Most stratas don’t have bylaws that deal with keys or fobs or security access,” he added. “The other problem is, which stratas don’t realize – and this is partly the property manager’s fault, too – that if you issue fobs or keys and charge a user fee, even if it’s a deposit, you need a bylaw that authorizes you to charge that user fee. Stratas can’t just charge fees.”
Eric Lam is a 24-year-old entrepreneur who claims to be one of the first key-fob-copying businesses in Vancouver, with operations also in Toronto, Ottawa, Sydney, Australia, and another starting in Montreal. He has plans to move into the Calgary and Edmonton markets. His business model works wherever there is high density and a lot of buildings more than five storeys, he says.
“I was one of the first in Vancouver. There were others doing it on Craigslist before, but I really commercialized it and brought a lot of my digital marketing experience, and brought it more into the light,” Mr. Lam said.
For the past three or so years, Mr. Lam has run fobcouver.ca, where customers can get a fob copied within minutes, for $50 for a single one or $200 for 10 fobs. He has a business licence and he says he’s not required by law to ask what the copy is to be used for. But he makes a point of asking, as part of his market research.
“Most of my clients are property managers who run like 50 apartment buildings for landlords not living here, and rent them out to other people,” Mr. Lam said.
A big part of his market are the students attending English-language schools, who live in crammed quarters owing to the affordable housing shortage.
“I once went into a place on Howe Street and there were four people [living] in the living room and four people [living] in one of the bedrooms. A lot of my customers are students and there aren’t a lot of places for them to live, especially since all the schools for them are downtown.”
If he does get a request for a key from an Airbnb host, he will copy it, but he says the demand for that market has slowed.
“I still help them, but I find that’s really winding down with all the new bylaws being put into place.”
And that’s okay, he says, because his best customers are the longer-term renters. Short-term hosts tend to keep track of their key fobs, while managers of long-term rentals tend to lose them and become repeat customers.
“With long-term tenants, the property manager at the beginning of the lease will grab an extra key fob or two and then pass it off to maybe cleaners or handymen and then they’ll lose it. So the next year, they’ll need another one.”
One customer needed several key fobs because her mother had had a stroke and family members needed to access her apartment. The strata had said no to her request, so she went to Mr. Lam.
“Within a day, we had 10 new sets for her.”
Mr. Lam gets calls from strata council members, but he tells them they only need to deactivate any fobs they want to take out of circulation.
“People think they are high tech pieces of equipment, but they just send out a signal. That’s all they do, essentially it’s a radio wave that’s a key. There’s no difference between my copy and the original frequency-wise, which means in their system they can find the original owner easily. All my service does is let people access their building easier.”
Mr. Gioventu concurs that it’s easy to discover where the fob came from because each key has a dedicated code. In the case of 1252 Hornby St., the strata has deactivated access to the floor for the renter who is also an Airbnb host. Mr. Hankins, who’s been working with the strata council on the problem, says the offshore owner in Asia has been contacted through a lawyer, but they haven’t heard back. As well, they’ve complained to the city, but the city hasn’t yet taken action.
The city confirmed it had received “several complaints regarding short-term rentals at this building.”
As of Nov. 30, it could get tougher to operate an Airbnb unit. The province has amended strata regulations so that stratas will be able to pass bylaws that ban or restrict short-term rentals and fine non-compliant owners or renters up to $1,000 a day.
But stratas that don’t allow short-term rentals will have to state this change, and the amount of the fine, in their laws, Mr. Gioventu says. They can’t take the fine for granted. Stratas need to get every rule into the bylaws and have a lawyer on retainer for advice.
“We try to get everybody to be pro-active instead of reactive, because reactive always costs you 100 times more. When problems arise, it’s a substantial increase in cost and management for strata, which is not fair to the owners,” he said. “You live in a building, you pay your strata fees, your insurance in the building protects everybody, and then you turn around and there is an Airbnb disaster. Well, Airbnb covers the cost for the owner, but they don’t cover the fact that the rest of the building has been exposed to these liabilities, or they don’t cover the fact that the insurance deductible has now gone from $10,000 to $50,000, or that their insurance costs have increased dramatically, and all other types of costs have increased, so Airbnb doesn’t deal with any of the secondary costs, which are all burdened by the owners in these buildings.”
Mr. Gioventu’s own building has a strict rule against short-term rental, he says.
“I have nothing against Airbnb. The problems are the absentee investors who use Airbnb simply as a high-level cash flow.”