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AirBnB from Hamilton to Niagara. Rules, Regulations and Should I buy a property for an AirBnB Investment?

December 29, 2019
AirBnB

AirBnB is growing more and more popular with private travelers, but you may be wondering; what is AirBnB? It’s quite similar to the concept of booking a hotel room. A small 3% fee is being paid to AirBnB, which is the “matchmaker” putting them together. When planning a trip to a foreign location, you can browse the website for homes, apartments, private room, etc. that are being rented out by the owner for a short amount of time. Once you find what you’re looking for, you can then make a private deal with the owner, which typically costs a lot less than you would pay to stay at a hotel. It’s clear to see why the hotel industry isn’t thrilled about this, as well as why private travelers are all for it! In many cases you get to stay in very quaint neighbourhoods in the city, and it can be a great alternative if you’re wanting to save money! There is no better way to experience a city and its culture, than to be practically living in someone’s residence, right in the middle of it! And that is exactly what AirBnB provides. 

Hotels are required to comply with all sorts of laws and regulations in order to meet health and safety standards  but no such standards and regulations currently exist for AirBnB.. When you’re walking into a home that is being rented out by the owner you really have no idea what to expect, and there are many other laws, especially here in Ontario that may apply. Hotel businesses also have fees that apply in order to be allowed to conduct their business, and the same applies if renting out your home on a long-term basis is something you’re interested in doing. Currently AirBnBis mostly unregulated and people are getting away with skipping these fees, and being able to run their business the way they want.

What Should I Consider Before Buying an AirBnB Investment

Many people are turning to AirBnB as an extra income source…even stay at home moms. A Mom is able to let out the main floor of her duplex on AirBnB which allows her to stay at home with toddler. It’s a great way to stay home with your kids and still make an income. An apartment near Gage Park and Tim Hortons Field can go for $64 a night. More money can be made from short term rentals than long term rentals. The benefits to investors are very clear. In today’s sharing economy, AirBnB has become extremely popular. Is it as easy as it looks though?

What are you getting in to?

What you need to understand is that AirBnB is fairly new and the rules and regulations surrounding this new home sharing service are not set in stone. You may potentially stand to lose money if you jump in blindly as many investors are finding out.

There’s much more involved in AirBnB than simply buying a property, putting your listing up on AirBnB and welcoming guests. Many people have already taken the plunge only to be shut down by local community laws and regulations. Every city has different rules and regulations surrounding AirBnB and many of these rules and regulations are changing. In some cities and towns, short term AirBnB rentals is currently an unregulated industry.

What questions should I be asking?

Is there a set amount of time you can rent it out without actually being present? How long will it be taxed? What you can do in Niagara, for example, might be very different from what you can do in Grimsby or Hamilton. It doesn’t stop with the city. If you have a homeowner’s association or if you are in a condo, what are their rules? Does your mortgage company allow you to sublet the property? What’s the impact on your homeowner’s insurance and property taxes? What is the difference between B&B and AirBnB?

What expenses can I expect?

Buying the property is only your first expense. You need to consider costs like cleaning services, utility bills, landscaping, pool service and repairs. Don’t forget that AirBnB takes a 3% service fee from the host for each reservation. What if you are not able to rent the property out for a period of time? Will you still be able to afford the property? What if your tenants do damage? Will your property decline in value? What if your tenant is injured in the home? What if you’re the victim of theft?

Fierce competition
AirBnB claims to operate in 65,000 cities. How will you differentiate your rental so that you stand out? You can become a superhost with AirBnB but now you have just added to your list of expenses. To really wow your renters, you may provide welcome gift baskets, a list of local vendors, attractions and other hot spots in the city/town. You may also opt to offer your personal time as a concierge. AirBnB operates through a review service so great services means great reviews which in turn results in less vacancies.

What is the difference between B&B and AirBnB?

In the eyes of local communities, there is a clear difference between B&B and AirBnB? The difference that matters to the city/town councils is the fact that with B&B, the rental is being managed by someone who lives on premises. With AirBnB, the owner or landlord are not present and therefore much more can go wrong. Many complaints come from the fact that the landlord or owner are not present. Renters are straying the neighborhoods looking for the property, noise complaints, theft complaints and destruction of property are not uncommon with AirBnB. These complaints are causing local communities to take a close look at this type of short term rental option and forming new rules and regulations to govern them. AirBnB also has a huge impact on the local hotel industry of all communities so it is understandable that hotel owners do not like the idea of AirBnB coming into their turf.

Bylaws and Regulations in the works

With this new “sharing economy,” short-term rentals are thriving on the fringes of municipal bylaws in all communities from Toronto to Niagara. AirBnB and similar web-based accommodation services have caught the attention of city and town halls across the whole region.

What is Happening with AirBnB in Hamilton?

Technically, you’re not supposed to rent out spaces for short periods in Hamilton unless you’re operating a motel, hotel or bed and breakfast. Currently AirBnB in Hamilton, Ontario is unregulated and unlicensed. B&B, however,  are considered hotels and they ARE currently licensed and regulated. What is the difference between B&B and AirBnB? AirBnB is on the radar with Hamilton Council for regulation and business licensing with the City of Hamilton in 2020.  These short term AirBnB rentals currently do not have bi-laws that they fall under. The city of Hamilton currently investigates complaints on a complaint to complaint basis.

What is Happening with AirBnB in Burlington?

Currently AirBnB in Burlington is NOT Regulated. The City of Burlington will be conducting a Study in the near future and will be looking at licencing and regulation surrounding the operation of AirBnB units.

Bed and Breakfasts are allowed under the bi-law in ALL zones however there are some restrictions…for example, the dwelling has to be a detached unit and NOT a condo or townhouse, for example. Only 3 guestrooms or suites are permitted and now external alterations are allowed ie multiple doors to the units and signage. The B&B must be operator by the owner and they cannot have external staff coming in to clean the rooms, etc. Bi-law 2020, Section 2.21

In Burlington, most of the noise and traffic complaints around AirBnB are coming from local residence. Currently AirBnB in Burlington is NOT Regulated however this may change after their study of AirBnB is complete.

What is Happening with AirBnB in Grimsby?

Currently AirBnB in Grimsby is NOT a permitted use.

Bed and Breakfasts are allowed under the bi-law in residential zones however there are some restriction. For example, the owner needs to live on premises, maximum of 3 guests

What is Happening with AirBnB in St Catharines?

The City of St Catharines is currently reviewing short-term rentals to gain a better understanding and answer some of the questions being asked by people wanting to operate a AirBnB. Staff are in the process of compiling a report that will be available early in the new year (2020).

The City of St Catharines is reviewing short-term rental use, impacts and permissions with the goal of ensuring the City has a clear approach and a process in place that is fair and easy to follow, implement, and enforce. Short-term rentals are currently permitted in St. Catharines only as a hotel or a bed and breakfast. A hotel is not permitted in residential zones and bed and breakfasts are only permitted in detached dwellings, with the occupant present and a maximum of 4 rooms for rent. Properties that offer short-term rentals as a hotel or bed and breakfast, meeting the requirements of the City’s zoning by-law, do exist and are permitted. It is likely that short-term rentals operate in the City that do not comply with the City’s zoning by-law. If a complaint or concern is received regarding a potential short-term rental operating contrary to the by-law, enforcement staff would investigate and work to gain compliance. There are many thoughts on the pros and cons of short-term rentals and many different ways that other municipalities have approached regulating them. The report that St Catharines staff are working on will provide more detail.  The City of St Catharines is looking for input, concerns or suggestions and they do have our survey open until January 10th, 2020. The City has not determined a process to move forward with. Part of our review is to assess the various options, have Council provide direction, and through that process, determine how any new regulations can/will be enforced.

What is Happening with AirBnB in Toronto?

Stricter rules governing AirBnBs and other short-term rentals in Toronto are coming following a decision handed down by the Local Planning and Appeal Tribunal (LPAT)

What is Happening with AirBnB in Welland?

The Planning department at the Welland City Hall are currently reviewing Zoning Provisions regarding AirbnB or short-term rentals as per Council direction.  They don’t currently regulate this type of use specifically. They do not get involved with the terms of apartment rental agreements or the length of time. They do allow the renting for up to four roomers/boarders in certain circumstances. Bed & Breakfast in some residential zones in Welland are permitted.

There are some short-terms rentals in the City of Welland but there are currently no licensing requirements and therefore it is hard to say how many exist. Also some of these may be classified as a Bed and Breakfast, Hotel, Boarding and Loding or just apartments being rented out.  Particularly, there is one on  King Street in Welland with three suites, however it is classified as a hotel use which is permitted in that location.

How will these new AirBnB Rules and Regulations be Enforced?

They operate on a complaint basis. If a complaint is made, bi-law enforcement visits the site, checks online bookings and processes a non-compliant letter to the owner of the property and the mortgage holder. There may be a fine issued depending on the length of time of the infraction, etc.

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