Due to the growing popularity of short-term rental platforms, Canadian provinces and cities are trying to regulate this new way of renting, often in the attempt to reduce the housing crisis. Read our update (as per December 2017) to see how you might be impacted as a current or future AirBnB® host. This is a summary for major cities, so always check with local authorities.
How to do short term rentals legally in Quebec
Quebec is the champion of AirBnB® in Canada with 22,300 active hosts. It is actually the only province who has adopted a law: Bill 67 since December 2015. It’s targeting hosts who are regularly renting their home on a short-term basis (i.e. 31 days or less). Since October 1st 2017, AirBnB® collects automatically the lodging tax from guests (3.5% nightly) and remits it to Quebec government. However, the other short-term rental platforms don’t, so remember to collect the tax yourself and remit it.
A few points before renting your home on a platform like AirBnB®:
- Check your city’s zoning.
- Property owner, ask for a permit to Tourisme Québec ($250) if you’re renting your home “regularly”. If this word isn’t clearly defined, it refers to “frequent, recurring or constant” rentals. So, if you’re hosting only incidentally, you can rent your property without any permit.
- Tenant, you must get your landlord’s approval first.
- Get appropriate insurance, including civil liability of $2 million, it’s mandatory.
- Declare your rental income.
- If you’re making more than $30,000 of rental income per year, you must collect GST and QST. AirBnB® will send you a reminder when you reach the $20,000 mark.
If you’re still not compliant with the law after an infraction notice sent via mail, and a report given by one of the 25 inspectors in charge of implementing the Bill 67, you’re running the risk of getting a fine between $2,500 and $50,000. Montreal has noted their intent to look into short term rentals to ensure affordable housing in the city.
New regulations in Ontario
The city counted nearly 11,000 AirBnB® hosts in 2016, which is 3 times more than in 2014. But in a context of tight rental market, the city has voted the following regulation on December 7th 2017:
- The creation of a new zoning category for short-term rentals (i.e. less than 28 consecutive days).
- An annual licence for $50 for property owners.
- Only principal residences can be rented – either entirely for a maximum of 180 nights per year or up to 3 rooms as much as the homeowners would like.
- Short term rentals in secondary suites will be illegal (even though the initial proposal allowed it). About 700 of AirBnB® listings in Toronto should therefore disappear. The city council certainly wishes most of those affordable housing units to go back to the long-term rental market.
- Proof of the primary address thanks to government-issued ID.
In a nutshell, this means that no investment properties can be used for short-term rentals. It would be effective in June 2018.
The regulation is not only impacting directly the property owners but also the short-term accommodations companies themselves with:
- A $1 fee for each night booked on their platform.
- One-time registration fee of $5,000.
- Records keeping of every listing so they’ll be able to provide them to the city’s licensing and standards department at agreed upon intervals.
- A valid registration number.
- Procedures to be developped to mitigate neighbourhood nuisances such as noise.
The city is also thinking of taxing short term rentals (i.e. fewer than 30 consecutive nights). This new tax of 4% per night will replace the current voluntary 3% charge that hotels and B&Bs are paying. It should come into effect January 1st 2018 and would most likely be collected directly by AirBnB®. However, if you are renting through another platform, you will be responsible for collecting and paying the tax yourself. Ottawa hopes to collect $12 million annually to promote and attract tourists.
While Mississauga (about 650 active hosts) is considering following Ottawa’s example with a 4% tax and amending its Zoning By-law; smaller cities like Kitchener and Waterloo (about 300 listings) don’t feel the need to regulate short-term rentals.
Nothing to report in Alberta
With the economic slowdown of the past few years, the vacancy rate of rentals is still well above its historic standard (close to 7.5%). Therefore there is little pressure for the province’s cities to regulate short term rentals. For the moment, they remain in a legal black-hole in Alberta because they’re not part of the « Business licence bylaw 32M98 » (for lodging houses) nor « Land use bylaw 1 P2007» (for B&Bs). The 4% lodging tax isn’t applicable to short term rentals like it is for other accommodations. That being said, Calgary is studying short term rentals and will propose recommendations by the end of 2018.
B.C. housing crisis speeds up the regulation
The rental market is extremely tight in British Columbia where the main cities have vacancy rates below 1%.
To avoid speculation and reduce the housing crisis, Vancouver just voted a new bylaw. The city hopes that out of the 6,000 units rented on a short term basis (i.e. less than 30 consecutive days), 1,000 would come back to the long-term rental market. This new bylaw will be effective as from April 1st, 2018. Here are the main points you should know:
- Only principal residences are available for short term rentals.
- It’s now illegal to rent on a short term basis secondary suites unless it’s the long-term tenants who are renting out (as this is their primary residence) with their landlord’s approval.
- An annual $49 license is needed on top of a $54 one-time registration.
- A valid license number to display on all listings.
- A $1,000 fine for any violation.
With 60% tenanted households and a housing crisis, the city council had to implement certain changes to its bylaws. Other points are currently under review. What has changed since September 2017:
- Short term rentals (i.e. less than 30 days) are authorized only in maximum 2 rooms of a primary residence.
- Renting entire suites on a short term basis is forbidden in secondary and garden suites which aren’t principal residences.
Here’s what is being discussed :
- Obtention of a licence and notice of its reference number on each advertisement
- Payment of the applicable fees (not yet determined).
- Respect of the city’s bylaws, including nuisance and parking.
- Proof of principal residence.
- Proof from the condo strata that short term rentals aren’t against the strata bylaw or proof of the landlord’s agreement for tenants.
- Fine between $100 and $10,000 for any infraction.
The city is reviewing its bylaw to limit the legal number of days for short term rentals as well as other conditions. A survey was opened up until December 3rd 2017 to citizens. The current regulation forbids short term rentals (i.e. less than 30 days) in residential zoning. The vast majority of the city’s 800 AirBnB® listings are probably illegal.
In conclusion, checking that your short-term rental activity is legal must be your first step when you want to become a host. Read here the 35 things you should do, to avoid a misfortune like one of these Canadian hosts; including making sure you have the right insurance.