Understanding Vancouver’s Short-Term Rental Regulations

Regulations for short-term rentals in Vancouver were put in place in 2018, creating a framework for homeowners to legally participate in the sharing economy with home sharing sites such as Airbnb, Booking.com and Homeaway. Here is what you need to know to start hosting in Vancouver.

How Vancouver Defines a Short-Term Rental

Vancouver has been facing an affordable housing issue due to the high demand for homes, and the city has established a framework for legally operating a short-term rental to balance the interests of homeowners and renters.

Short-term rentals are permitted in Vancouver to “allow residents to use their principal residence to earn additional income to offset their housing costs”, making it very clear that short-term rentals are meant to help supplement income, rather than to be the sole source of income for someone living in or outside of Vancouver. The city of Vancouver has taken the revolution of the “sharing economy” at face value, insisting that when using services like Airbnb or Homeaway, owners truly share their primary residence with their guests or tenants. To ensure that those providing short-term rentals are doing so properly, the city of Vancouver implemented a mandatory short-term rentals business licence on September 1st, 2018.

As defined by the city of Vancouver, a short-term rental can be an entire home, or a bedroom within that home, that is rented for less than 30 consecutive days at a time. Bylaws specify that bed and breakfast accommodations and hotels are considered separate and different from short-term rentals, and none of them can be operated at the same address as each other. A short-term rental can only be operated from one’s principal residence unit — defined as the dwelling where an individual lives as an owner or tenant, and is the residential address for bills, identification, taxes, and insurance for this person. There are a few other specific bylaws that help define what a short-term rental accommodation is: primarily that no more than two adults may occupy each bedroom and no more than one booking is permitted in each dwelling unit at a time. As for those looking to rent out their secondary or basement suites, the city of Vancouver outlines that short-term rentals are only permitted in secondary or basements suites if the operator lives there full time.

Summary:

• Have landlord or strata approval.
• Only rent out their principal residence.
• Only permitted to rent basement suites, laneway houses, and other secondary suites if the operator lives there full time.
• Have a short-term rental business licence that is displayed on all marketing and listings.
• Meet the requirements of a responsible operator.

Understanding Vancouver’s Short-Term Rental Business License

Vancouver’s short-term rental business licence has a $58 application fee for new licences, and an annual fee of $51 to renew the licence which expires on December 31st of each year (the fee is prorated in the first year depending on when the business is started). Short-term rental business licences can only be issued to a person, and cannot be issued to businesses, societies, or commercial operations. If one is a tenant, they must have permission from their landlord or ensure they are abiding by their strata’s bylaws before applying for a licence.

The short-term rental business licence must be conspicuously visible on all marketing or advertising for the accommodation, no matter the medium or material. When adding a Vancouver accommodation to Airbnb, hosts will be asked to enter their short-term rental business licence number in order to place the accommodation as available on the Airbnb platform. Short-term rental accommodation operators also have to abide by basic fire-safety requirements which include: posting a fire safety plan by all entrances and exits, having or installing interconnected smoke alarms on each floor and in each bedroom, having or installing fire extinguishers on each floor, and having or installing carbon monoxide detectors on every floor with gas appliances. All fire-safety equipment and alarms must be regularly checked and inspected to be fully functional and in date, with the short-term rental business licence owner maintaining records of these checks. The city of Vancouver has provided a useful PDF file that breaks down the requirements for those looking to prepare their property before applying for the short-term rentals business licence.

Penalties

The city of Vancouver has emphasized their proactiveness in ensuring and enforcing that short-term rentals in Vancouver are licenced and adhering to the outlined standards. Actions taken by the city include fining operators up to $1,000 per offence, or subjecting offenders to legal action for: operating without a valid licence, listing or advertising without displaying a valid licence, operating a short-term rental in a home that is not their primary residence, operating a commercial short-term rental, and operating in an unsafe or nuisance property. Commercial operators or repeat offenders may be subject to prosecution and face fines of up to $10,000.

You can also be penalised for renewing your short-term rental business licence late (a late fee applies to all payments received after December 31st), paying a penalty of 10% of the licence fee or $40, whichever is higher. If you’re not seeking to offer short-term rentals at your property anymore, be sure to contact the city and close your business licence account in order to avoid receiving licence renewal notices.

The city of Vancouver is very clear in its desire to enforce the regulations, with active statistics on their webpage outlining the amount of active listings vs. business licenses issued, along with the amount of licenses flagged for investigation, warning letters written, legal orders issued, and much more. The city’s serious stance towards prosecution means that it’s best for homeowners to understand the short-term rental license, its requirements, and the punishments for when operating without one.

Step-by-Step of the Licence Registration Process

One is able to apply for a short-term rental business licence through the city’s webpage, with the process being guided and fairly straightforward. Below are the steps and information to complete Vancouver city’s short-term rental business licence registration.

1. Visit this page to start the application.
2. Enter your valid address in Vancouver and confirm that it is your primary residence.
3. Confirm what type of residence it is (apartment/condo unit, coach/lane house, duplex/triplex/fourplex, single/detached house, suite in a house, or townhouse) and whether you are renting or own the property.
4. If you are renting, you will be prompted with a follow-up question about whether your landlord allows short-term rentals. You will also be asked whether your strata bylaws allow short-term rentals, where you can again select yes or no, along with the option of “There is no strata council for this residence”
5. You will be shown the business owner requirements to read and agree to.
6. Fill out your first and last names, along with your co-applicant’s name if you have one (keep in mind the co-applicant must also live in the principal residence you previously entered).
7. Enter your phone and email contact information, with your email information only necessary if you’d like to receive your short-term rental business licence renewal notice by email.
8. You’ll be shown a review of the fees you need to pay (one-time application fee and the yearly licence fee), along with some information about the fees (tax isn’t charged, and the annual licence fee is prorated from the date of purchase to December 31st).

Understanding Tax Implications for your Airbnb Income

If you’re looking to begin operating a short-term rental in Vancouver using sites such as Airbnb, Homeaway, booking.com, and Vrbo, it’s important to understand how it will affect your taxes. The Canadian Revenue Agency (CRA) has various rules regarding declaring your rental income, and you’ll need to know whether it goes on your personal tax return as rental income or if it is filed as a business tax return.

Offering services above and beyond a night’s stay, such as breakfast or room cleaning mid-stay can result in your Airbnb or short-term rental being classified as a business rather than simply as personal rental income. Claiming as a business lets you write-off many items such as a portion of relevant renovations, however, will likely trigger capital gains taxes when you sell your property in the future. As a rental income, you have less write-offs but you will likely not be subject to capital gains if the property is your primary residence.

If you earn more than $30,000 in a year, you need to register for a GST number and collect taxes. Airbnb collects PST (8%) and MRDT (up to 3%) from guests on top of your fees, and submits this to the government of the province of British Columbia on your behalf. You can find more details on this informative article from TurboTax, as well as directly on the CRA website that can help you better understand the Canadian government’s tax regulation around short-term rentals. Most importantly, seek out your tax advisor or accountant for definitive answers regarding how you should be filing your taxes.

Keycafe is not a licenced tax or financial advisor. Any writing in the above article should not be considered as legal, financial, or tax advice. Always do your own research and analysis in accordance with your personal circumstances.

Useful Links Related to Vancouver Short-Term Rentals, Airbnb, and Housing

While there’s a lot of information covered in this article, it’s still possible you might have some questions regarding short-term rental regulation in Vancouver. Below is a list of helpful links that you can follow to find out more information.

City of Vancouver Short-Term Rental Business Licence Page: https://vancouver.ca/doing-business/short-term-rentals.aspx

City of Vancouver Short-Term Rental Eligibility Questionnaire: https://vancouver.ca/doing-business/short-term-rentals-check-if-you-can-rent.aspx

City of Vancouver Short-Term Rental Business Licence Requirements: https://vancouver.ca/doing-business/short-term-rental-business-licence-requirements.aspx

City of Vancouver Apply for a Short-Term Rental Business Licence: https://vancouver.ca/doing-business/applying-for-short-term-rental-business-licence.aspx

Airbnb Vancouver’s Home Sharing FAQs: https://www.airbnb.ca/help/article/2239/vancouver-s-home-sharing-registration-process–frequently-asked-questions/

Airbnb Canada Occupancy Tax Collection and Remittance Information: https://www.airbnb.ca/help/article/2283/occupancy-tax-collection-and-remittance-by-airbnb-in-canada

We cannot guarantee the accuracy of the regulations discussed in this article. Regulations often change on a regular basis, and we advise you to research the current regulations for your location. While we do our best to keep the information updated, if you find an error, omission, or something that needs an update, please let us know.

About Keycafe

Keycafe is a technology company modernizing business key management with a cloud-connected SmartBox and accompanying key management software.

In addition to a global Public Network of over 1000 locations for Airbnb users, Keycafe’s Enterprise Solution enables businesses in any industry to manage key access for staff and customers.