Short term rentals are a good way to get more income out of a property.
If you’re thinking about buying a short-term rental property (e.g. AirBnB, VRBO) in Ottawa, you need to keep up to date with Council’s efforts to develop by-laws governing short-term rentals.
In mid-May Council began a rental accommodation study with the aim of regulating short-term rentals. Council is reviewing the short-term rental policies that other cities have implemented. For good reasons, the policies of Toronto, Montreal, and Vancouver will likely bear special weight on the council’s decision. So what policies have been implemented in these cities?
In Vancouver, a property owner can rent only his/her principal residence as a short-term rental. In Vancouver (and most of Canada) the quick-and easy definition of a principal residence is the place where you reside for the greater part of the year. Usually that’s six months or more. If you have more than two homes, authorities will look at other things. But the bottom line is this, during any given year, you can have only one principal residence, and for Vancouverites, that means you can have only one property that you can rent out on a short-term basis. Accordingly, investors who purchased properties to rent out as short-term rentals were left to decide between, renting to long-term tenants, or selling. Would Council adopt a similar policy in Ottawa? The official vacancy rate is 1.6% and most of the council is on board with Jim Watson’s effort to make housing more accessible. Vancouver’s policy would immediately add rental housing to the market. Council is going to appreciate that.
In Montreal, property owners are prohibited from “consistently” (neither, the city, nor the province, precisely define “consistently”) renting out a home that has not obtained hotel licensing from the city. Montreal does not enforce this law. To date, no tickets are known to have been issued under this by-law. Ottawa’s city council is putting in the effort to make a good decision on their short-term rental policy. To me, it seems unlikely that they’ll settle for a mere gesture.
Toronto’s council passed a by-law that limited rentals to 180 days/year/property. The decision was appealed to the Local Planning Appeal Tribunal (LPAT). Some Ottawa AirBnB enthusiasts believe that success at the LAPT will set a precedent that Ottawa will need to abide. This is false. Generally, the LAPT can send a by-law back for adjustment only if the by-law does not accord with one of the city’s governing documents (typically, its official plan). Ottawa and Toronto have different official plans. As such, a decision in favour of the appellant wouldn’t have the favourable precedent setting effect that many Ottawa AirBnB operators hope it might. Ottawa’s master plan includes
The decision will be made in late August 2019. Likely in favour of Toronto’s council. However, the LPAT rules in favour of the appellants, Toronto will have the option to re-write the regulations. In any event, LPAT appeals are argued based on the city’s official plan. As such, what happens in Toronto doesn’t set a precedent for Ottawa. Moreover, Ottawa began development of its new official plan (due for adoption in early 2021) and it’s rental accommodation study simultaneously. Undoubtedly, the results of the study will inform the new official plan and an accordant set of short-term rental by-laws that the LAPT would uphold.
In summary, if you’re planning on buying an investment property to rent as a short-term rental, you should be sure that the numbers would still make sense if it were rented out on a long-term basis.
