Websites such as Airbnb and Vacation Rentals By Owner (VRBO) help property owners “share” their extra space by renting homes, apartments, and spare rooms.
Known as part of the “sharing economy,” property owners and tenants, called “hosts,” give strangers keys, front door codes, and gate openers. This can bring parking problems, noise, and crime into previously quiet residential communities.
If neighbours complain or police are called, strata councils and municipalities can take action.
Who has authority over short-term rentals?
Strata corporations and the local municipality both have authority.
- Under the Strata Property Act, Part 8 – Rentals, a strata corporation has the power to establish and enforce rental bylaws, which may include forbidding rentals or limiting the number of rentals. This is because property owners don’t want to share their pool, exercise equipment, gardens, and visitor parking with short-term renters.
- Municipalities. In BC, short-term rentals are under municipal jurisdiction. Rental periods of less than 30 consecutive days are typically considered tourist accommodation.
Depending on the municipality, short-term rentals may be:
- allowed under a specific bylaw (for example, Whistler through its Zoning and Parking Bylaw;
- allowed under a residential zoning bylaw, for example, Vancouver if the property owner is on site and runs a legal bed and breakfast (B&B);
- not allowed; or
- not dealt with.
Property owners must comply with bylaws
If a municipality permits short-term rentals, property owners have to comply with local zoning and business licensing requirements, strata bylaws, and insurance requirements.
Property owners must understand:
- the tax implications set out by Canada Revenue Agency and the BC government;
- the financial risks and liability involved in renting a home or room(s); and
- the insurance coverage required.
If property owners are renting their apartment, a room, or their entire home, they must notify their insurance company.
“The key is disclosure,” says Trudy Lancelyn, Deputy Executive Director of the Insurance Brokers Association of BC. “Talk with your insurance broker because short-term rentals may affect coverage.”
Renting is a material change of use and home owners will typically be required to:
- change their insurance to rented dwelling coverage;
- remove all valuables, breakables, and jewellery; and
- pay a surcharge of as much as 25 per cent on the premium.
A policy may include a “mysterious disappearance restriction.” This covers any items that go missing, and typically requires that there are signs of forced entry.
Airbnb in Metro Vancouver – just how big is it?
As of June 1, 2015, there were 4,268 Airbnb listings, an increase of 19 per cent from 3,888 listings on January 1, 2015.
More than three-quarters (77 per cent) of these listings were in the City of Vancouver.
How many Airbnb listings were in Vancouver?
- Downtown had 648 listings (19 per cent of the Vancouver total).
- The West End had 474 listings (14 per cent of total).
- Kitsilano had 380 listings (11 per cent of total).
- Mount Pleasant had 317 (9 per cent of total).
- Grandview-Woodland had 218 (6 per cent of total).
What types of units were listed?
In Metro Vancouver
- 66 per cent of all listings were for “entire homes/apts” (this includes condos).
- 32 per cent were for private rooms.
- 2 per cent were for shared rooms.
- 71 per cent of all Vancouver Airbnb listings were for “entire homes/apts” (this includes condos).
- 27 per cent were for private rooms.
- 2 per cent were for shared rooms.
Source: Karen Sawatzky, Airbnb listings in Vancouver: How many? What type? Where? University of British Columbia, Urban Studies master’s thesis research, 2015.
A strata council can fine the strata owner as long as the maximum amount of the fine ($500) is set out in the strata’s bylaws.
The municipality may also issue fines or prosecute for municipal bylaw violations.
Legislation and regulations affecting short-term rentals
Property owners renting short-term must also comply with the following:
- Goods and Services Tax (GST). If rental income exceeds $30,000 per year, the GST must be paid. Contact: 1.800.959.5525. To register for the GST, complete form RC1, Request for a Business Number or phone 1.800.959.5525.
- Health Act and Regulation. Maintains public health by preventing/removing health hazards. The Swimming Pool, Spray Pool and Wading Pool Regulations govern construction and maintenance of swimming pools, including permits and operation.
- Hotel Keepers Act and Hotel Guest Registration Act. Oversees short-term rentals to overnight guests, including Airbnbs, B&Bs, boarding houses, homes, privately owned vacation homes, motels, hotels, and resorts of four or more units.
- Income Tax Act. Applies to property owners receiving rental income from the rental of a property. If owners provide services, such as cleaning and meals, they may be considered to be carrying on a business and different rules apply. Non-residents earning rental income from property in Canada must pay a 25 per cent withholding tax.
- Provincial Sales Tax Act. If a property owner sells goods at a B&B, such as toiletries or souvenirs, they must register and collect PST. Here is more information.
- Provincial Sales Tax Act – Accommodation. Sections 122-125 of the Act regulate the charging of PST on short-term/overnight accommodation including Airbnbs, B&Bs, boarding houses, cabins, hotels, and motels of 4+ units. This function used to be included in the Hotel Room Tax Act, which has been repealed. Information on the collection of the accommodation PST and the municipal and regional district tax (MRDT) is found in this recently updated government bulletin.
- Residential Tenancy Act. Covers rentals of 28+ days. Landlords cannot evict tenants to rent suites on a short-term basis. Tenants cannot rent suites without the landlord’s permission.
- Strata Property Act. Covers strata property in BC, including bylaws and rules, and rentals.