An Update on Short-Term Rentals - LawNow Magazine

An Update on Short-Term Rentals

I’ve been waiting for years to write this article. In the housing sphere, short-term rentals have been an issue for quite a while. Typically transacted through on-line platforms such as Airbnb, a short-term rental is a type of rental accommodation where a person (often referred to as a “host”) rents out a premises or part of a premises for a short duration. For example, the rental accommodation can be an entire home, a condominium, a private room, a shared room or a space in a home where the “host” lives.

Photo from Pexels

The short-term rental market in Canada has grown rapidly. Here are a few fast facts:

  • The short-term rental market in Canada was estimated to be worth $2.8 billion in 2018.
  • From 2015 to 2018, the market in Canada grew nearly tenfold.
  • The largest markets for short-term accommodations in Canada are Ontario, British Columbia and Quebec (in that order). These three provinces account for nearly 90% of total short-term accommodation revenue in 2018. Alberta trails as the fourth largest market, accounting for about 5.5% of total revenue.
  • There are over 200,000 short-term rental listings in Canada, with most listings concentrated in three cities: Toronto, Vancouver and Montreal.
  • There are 2,239 active short-term rental listings in Edmonton (as of 2019) and 3,364 active short-term rental units in Calgary (as of 2018), posted across various on-line platforms.

Short-term rentals have largely operated in a legally grey area. With the rapid growth of the market, there have been increasing concerns about consistent standards and safety shared by guests, owners and communities. In larger cities such as Montreal, Toronto and Vancouver, there have been additional concerns about short-term rentals impacting housing affordability.

That said, whenever we receive questions about information or resources on short-term rentals in Alberta, my default response has been a wait and see approach. What can you do when there was no legislation, regulations or bylaws directly addressing the issue of short-term rentals? Really, I didn’t think there was much to write or talk about. Until now.

Alberta’s short-term rental (and related) regulations

In Alberta, we have provincial legislation and regulations relating to specific types of accommodation. For instance, the Residential Tenancies Act applies to tenancies of residential premises while the Innkeeper’s Act applies to hotels/motels, boarding houses and lodges. There is legislation on public health and safety codes for housing. Municipalities have bylaws relating to certain types of concerns related to short-term rentals such as noise and parking. While Alberta’s regulatory environment addresses some concerns related to short-term rental housing, bed and breakfasts and lodging houses, nothing has directly regulated short-term rental housing.

This year, both the City of Edmonton and City of Calgary proposed bylaws licencing short-term rentals. The City of Edmonton voted to amend its bylaw on August 27, 2019. On September 30, 2019, the City of Calgary passed a bylaw, and it will come into effect on February 1, 2020.

Edmonton’s short-term rental bylaw

*The information below is based on the proposed wording for the bylaw (current as of October 2019)

In Edmonton, a short-term rental is defined as rental accommodation in a private residence that lasts for 30 consecutive days or less. To operate a short-term rental in Edmonton, a person must apply for and have a valid City of Edmonton Business Licence, which costs $92. If the City issues a licence to a person, it then notifies Alberta Health Services to follow up regarding compliance with health regulations. Presumably, this may include an inspection of the property. A person cannot operate another business in a premises used as a short-term rental without a licence for that other business.

There are some conditions that people with a valid licence for a short-term rental (the “licensee”) must meet under the City’s bylaw. For example, licensees must:

  • Make sure that they provide guests with an updated copy of the information guide on the City of Edmonton’s bylaws. The guide contains information on rules relating to garbage collection and disposal, noise and parking.
  • Post their phone number in the rental property.

This year, both the City of Edmonton and City of Calgary passed bylaws licencing short-term rentals.Under the bylaw, there are fines for operating a short-term rental without a licence and for operating a business in a premises used as a short-term rental. For example, the fine is $400 or two times the licence fee for each business operated without a licence, whichever is greater. Based on our reading of the bylaw, a $2000 fine presumably applies to any other short-term rental bylaw offence—for example, when short-term rental licencees do not follow the conditions under the bylaw.

Calgary’s short-term rental bylaw

*The information below is based on the proposed wording for the bylaw (current as of October 2019)

In Calgary, a short-term rental is the business of providing temporary accommodation for compensation for periods of up to 30 consecutive days. It can be a dwelling unit or portion of a dwelling unit. Unlike the City of Edmonton, the City of Calgary has a two tier classification for short-term rentals: Short Term Rental Tier 1 “STR One” (1 to 4 rooms offered for rent) and Short Term Rental Tier 2 “STR Two” (5 or more rooms offered for rent). Depending on the short-term rental class, business licencing fees, renewal fees and necessary consultations/approvals vary.

To operate a short-term rental in Calgary, a person must apply for and have a valid City of Calgary Business Licence. For STR One, it will cost $100 to apply for a new business licence and $100 for a business licence renewal. On the other hand, for STR Two, it will cost $191 to apply for a new business licence and $146 for a business licence renewal in 2020.

Under the proposed Schedule A of Calgary’s bylaw, a fire inspection is required for STR Two. While the proposed schedule says that no consultation or approval is required for STR One, the wording of Calgary’s existing business licencing bylaw suggests that the Chief Licence Inspector may consult with other bodies (such as Alberta Health Services) before issuing/renewing any business licence.

There are a number of conditions that short-term rental licencees in Calgary must follow, for example:

  • They cannot offer to provide temporary accommodation or allow a guest to sleep in a room that does not have one or more windows (providing an exit to the exterior of the unit).
  • No more than two guests (not including minors) per room.
  • No overlapping bookings, where 2 or more unrelated or unassociated persons are accommodated in the unit at the same time.
  • The short-term rental advertisement must include the valid business licence number for the rental.
  • The name, phone number and e-mail address of an emergency contact person who can be reached 24 hours per day during rental periods must be posted in the unit.
  • They must keep a record of information (in English and in a form satisfactory to the Chief Licence Inspector) including:
    • the full name of any person who is a paid guest in the rental (and their e-mail address)
    • the room of the short-term rental in which the person is a tenant
    • the duration of the person’s tenancy
  • They must provide the Licence Inspector with the guest record upon demand.

There is a $1000 penalty if a licencee does not follow any of the conditions in the bylaw.

Out of the legal grey area?

… a short-term rental is a type of rental accommodation where a person (often referred to as a “host”) rents out a premises or part of a premises for a short duration.In recent years, we’ve seen some expansion in the regulatory environment across Canada to address concerns with short-term rentals. In 2016, Quebec took the lead in regulating short-term rentals by implementing a tiered tax system to recover tax revenues. In 2018, the City of Vancouver implemented a business licencing program for people operating short-term rentals. In 2017/2018, the City of Toronto also approved the regulation of short-term rentals through a business licensing system (the regulations are pending a tribunal hearing decision and are not yet in effect, as of October 2019).

As we see some short-term rental regulations or bylaws emerging in other Canadian jurisdictions, we now have some proposed bylaws on short-term rentals in Alberta –well, at least in Calgary and Edmonton. One development to keep an eye out for in Alberta is a tourism levy on short-term rentals. With the recent release of the Government of Alberta’s 2019 fiscal plan on October 24, 2019, the provincial government indicated that it plans to implement a tourism levy on short-term rental operators by spring 2020. With the continued growth of short-term rentals, we can expect further changes in the regulatory environment to go along with it.

Tips:
  • If you have concerns about a short-term rental unit in Edmonton (such as licencing, noise, parking, garbage collection/disposal, maintenance), you can call 311 or file a complaint on the City of Edmonton’s website.
  • To sign up for news about short-term rental regulation in Calgary, go to the City of Calgary’s website.
  • If you are in Alberta and have questions or concerns about short-term rentals outside of Edmonton or Calgary, you should contact your local municipality.
  • Tenants should get permission from their landlords before operating a short-term rental. Be aware that landlords may restrict business operations in their property or short-term rentals through the lease. For more information on residential tenancies law in Alberta, go to CPLEA’s website: landlordandtenant.org
  • Some condominiums do not allow short-term rentals. For example, some condominiums may have bylaws or rules restricting business operations in units or short-term rentals. For more information on condominium law in Alberta, go to CPLEA’s website: condolawalberta.ca
Authors:

Judy Feng
Judy Feng
Judy Feng, BCom, JD, is a staff lawyer at the Centre for Public Legal Education Alberta. The views expressed do not necessarily reflect those of the Centre.
 


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