Starting a Short-Term Rental Business in Ottawa

Ottawa has implemented comprehensive regulations governing short-term rentals like Airbnb and Vrbo within city limits. These rules, known as the Short-Term Rental Bylaw, came into effect in July 2022 after extensive public consultation.

The key requirements for operating a legal short-term rental in Ottawa include:

• Obtaining a $110 bi-annual permit from the city for renting out your principal residence or part of it for periods under 30 days
• Limiting rentals to your principal residence only - investment properties cannot be used as dedicated short-term rentals
• Adhering to zoning rules that restrict whole-home rentals in residential areas but allow room rentals
• Collecting and remitting a 4% municipal accommodation tax on rental income
• Following rules around parking, occupancy limits, noise, garbage, etc.

Prior to these regulations, Ottawa had a largely unregulated short-term rental market. A 2019 city report estimated that over 1,200 dedicated STR properties were operating, many of which were in residential neighborhoods.

The new bylaw aims to strike a balance - allowing homeowners to rent out their principal residences for supplemental income while protecting housing stock and residential communities from investor-owned ghost hotels.

However, the rules have proven controversial. Some hosts feel the principal residence requirement is too restrictive, while housing advocates argue it still allows too many units to be removed from the long-term rental supply.

Enforcement has also been an issue, with bylaw officers relying heavily on community complaints to identify illegal operators. In the first year, only around 800 STR permits were issued despite an estimated 1,300 active Airbnb listings.

Before launching an STR, check with the city's Planning Department to understand zoning rules for your property type and area. Consulting a local landlord-tenant lawyer may also be wise, given the complexity of the regulations.

While Ottawa's short-term rental rules aim to balance different interests, ensuring full compliance remains an ongoing challenge for hosts and the city. As the market continues evolving, further tweaks to policies and enforcement may be needed.

Short-Term Rental Licensing Requirement in Ottawa

Ottawa has implemented a comprehensive licensing system for short-term rentals through its Short-Term Rental By-law. The key requirements for obtaining a short-term rental permit in the city include:

Hosts must apply for and obtain a bi-annual Short-Term Rental Host Permit from the city. This permit costs $110 and must be renewed every two years.

The rental property must be the host's principal residence. Investment properties or secondary homes cannot be used as dedicated short-term rentals under the by-law.

1. Hosts must provide proof of residency at the property, such as a driver's license or utility bill, as part of the permit application process.
2. A detailed floor plan of the rental unit must be submitted to the city, including square footage and number of bedrooms.
3. Proof of adequate insurance coverage for operating a short-term rental is required.
4. Consent from the property owner is needed if the host is a tenant renting the unit where the short-term rental will operate.
5. Condominium or housing cooperative owners may need to provide proof that short-term rentals are permitted under their building's rules.

Once all required documents are submitted and approved, the city will issue the Short-Term Rental Host Permit. This permit number must be prominently displayed in all rental listings for that property.

It's important to note that rural cottage or vacation home rentals require a separate Cottage Rental Permit from the city, which also costs $110 for a two-year period.

Failure to obtain the proper permit can result in significant fines under Ottawa's by-law, with penalties of up to $100,000 for zoning violations related to short-term rentals.

In addition to the host permit, short-term rental platforms like Airbnb must also register with the city and pay an annual fee based on their listing volume in Ottawa. This helps offset the city's costs for administering and enforcing the short-term rental regulations.

Overall, Ottawa's licensing system aims to balance allowing responsible short-term rental activity while addressing community concerns around housing affordability, neighborhood disruptions, and commercial operations in residential areas. Careful compliance with the permit requirements is essential for hosts looking to operate legally in the city.

Required Documents for Ottawa Short-Term Rentals

To obtain a Short-Term Rental Host Permit in Ottawa, hosts must submit several key documents as part of their application package. These include:

1. Proof of Principal Residence: Hosts must provide documentation proving that the property they wish to rent out is their principal residence. Acceptable forms of proof include a valid Ontario driver's license, Ontario photo card, or recent utility bill showing the applicant's name and address.
2. Floor Plan: A detailed floor plan of the rental unit must be submitted, clearly indicating the square footage, number of bedrooms, and any other relevant details about the layout and occupancy.
3. Proof of Insurance: Hosts must provide documentation showing they have adequate insurance coverage for operating a short-term rental. This may include a certificate of insurance or a letter from their insurance provider confirming coverage.
4. Owner Consent (if applicable): If the host is a tenant renting the unit where the short-term rental will operate, they must obtain written consent from the property owner or landlord.
5. Condominium/Co-op Rules (if applicable): Owners of condominium units or housing cooperative units may need to provide documentation showing that short-term rentals are permitted under their building's rules and regulations.
6. Payment of Permit Fee: A non-refundable fee of $110 must be paid to the City of Ottawa for the issuance of a Short-Term Rental Host Permit. This permit is valid for two years.
7. Completed Application Form: Hosts must fill out the city's official Short-Term Rental Host Permit application form in its entirety, providing accurate information about themselves, the rental property, and their proposed short-term rental operation.

It's important to note that the city may request additional documentation or information as part of the application review process. Failure to provide complete and accurate information can result in the denial or revocation of a Short-Term Rental Host Permit.

Once all required documents have been submitted and approved, the city will issue the permit, which must be prominently displayed in all online rental listings for that property. Hosts are also required to keep records of their short-term rental activity, including guest information and rental dates, for a period of three years.

By requiring this comprehensive set of documents, Ottawa aims to ensure that all short-term rental operators are properly identified, insured, and operating in compliance with the city's zoning and safety regulations. Careful attention to these documentation requirements is essential for hosts looking to operate legally and avoid potential fines or penalties.

Ottawa Short-Term Rental Taxes

Short-term rental operators in Ottawa are subject to several taxes at the municipal and provincial levels. Understanding and complying with these tax obligations is crucial for running a successful and legal vacation rental business.

At the municipal level, Ottawa imposes a 4% Municipal Accommodation Tax (MAT) on all short-term rentals of 30 consecutive days or less. This tax applies to the total rental amount, including any additional cleaning fees or charges.

For example, if a short-term rental in Ottawa charges $100 per night, the host would need to collect an additional $4 from the guest to cover the 4% MAT.

Short-term rental hosts are responsible for collecting the MAT from guests at the time of booking or check-in and then remitting the collected taxes to the City of Ottawa on a quarterly basis. Failure to register for the MAT, collect it from guests, or remit it to the city can result in fines and penalties.

In addition to the MAT, short-term rental operators in Ottawa must also collect and remit the 13% Harmonized Sales Tax (HST) on their rental income. The HST is a combined federal and provincial tax that applies to most goods and services in Ontario.

The HST rate of 13% is comprised of the 5% federal Goods and Services Tax (GST) and the 8% Ontario Provincial Sales Tax (PST). Hosts must register for an HST account with the Canada Revenue Agency (CRA) and file regular tax returns to report and remit the collected HST.

It's important to note that platforms like Airbnb and Vrbo do not currently collect or remit taxes on behalf of hosts in Ottawa. This means that individual short-term rental operators are solely responsible for registering with the appropriate tax authorities, collecting the required taxes from guests, and filing regular tax returns.

Failure to comply with tax requirements can result in significant penalties, interest charges, and potential legal action from the CRA or the City of Ottawa. Short-term rental hosts should keep detailed records of their rental income and taxes collected in case of an audit.

Given the complexity of the tax landscape, many short-term rental operators in Ottawa choose to work with local tax professionals or specialized vacation rental tax services to ensure compliance. These experts can assist with registration, tax collection, and filing requirements, helping hosts avoid potential pitfalls and penalties.

In summary, short-term rental hosts in Ottawa must collect and remit both the 4% Municipal Accommodation Tax and the 13% Harmonized Sales Tax on all rental income. Compliance with these tax obligations is essential for operating legally and avoiding potential fines or legal issues. As the short-term rental industry continues to evolve, hosts should stay informed and seek professional guidance to navigate the complex tax requirements in Ottawa.

Ontario Wide Short-Term Rental Rules

While many short-term rental regulations are implemented at the municipal level in Ontario, some province-wide laws and guidelines apply to vacation rental operations across the province.

One key piece of legislation is the Ontario Residential Tenancies Act (RTA), which governs the rights and responsibilities of landlords and tenants in residential rental properties. While the RTA primarily applies to long-term rentals, some of its provisions may also be relevant for short-term vacation rentals, such as requirements for security deposits, maintenance, and evictions.

The Ontario Building and Fire Code also establish minimum safety standards for all residential properties, including short-term rentals. These codes cover areas such as smoke alarms, fire extinguishers, emergency lighting, and accessibility requirements.

At the provincial level, short-term rental operators in Ontario are also required to collect and remit the 13% Harmonized Sales Tax (HST) on their rental income. The HST is a combined federal and provincial tax that applies to most goods and services in the province. Hosts must register for an HST account with the Canada Revenue Agency (CRA) and file regular tax returns.

It's important to note that while these provincial rules establish a baseline for short-term rental operations, they do not preempt municipalities from implementing their own additional regulations. In fact, the Ontario Municipal Act gives cities and towns the authority to regulate short-term rentals through zoning, licensing, and other bylaws.

As a result, many municipalities across Ontario have enacted their own specific rules for short-term rentals, often going beyond the provincial standards. These local regulations can include requirements for permits or licenses, zoning restrictions, occupancy limits, and other operational guidelines.

For example, cities like Toronto, Niagara Falls, and Barrie have implemented comprehensive short-term rental bylaws requiring hosts to obtain permits, pay fees, and comply with various parking, noise, and property standards.

In contrast, other municipalities have taken a more hands-off approach, relying primarily on existing zoning and nuisance bylaws to address any issues that arise from short-term rentals.

As the vacation rental industry continues to grow in Ontario, there have been ongoing discussions and debates around the need for a more consistent and comprehensive provincial framework for regulating short-term rentals. However, any such framework would likely still allow for some degree of local variation and control.

While Ontario has established some province-wide standards for short-term rentals, the regulatory landscape remains highly localized. Hosts must comply with provincial laws and carefully research and adhere to the specific bylaws and regulations in the municipality where their rental property is located. Staying informed about provincial and local changes is crucial for operating a compliant and successful short-term rental business in Ontario.

Does Ottawa Strictly Enforce STR Rules?

Based on discussions in real estate investing forums like BiggerPockets and Reddit, Ottawa appears to be taking a relatively strict approach to enforcing its short-term rental regulations compared to some other Ontario cities. While the city is not outright hostile to vacation rentals, many hosts report facing challenges in complying with the principal residence requirement and other operational rules.

One recurring theme in these online forums is frustration with Ottawa's restriction that only allows short-term rentals in a host's principal residence. Several users have complained that this rule unfairly limits their ability to operate investment properties or secondary homes as dedicated vacation rentals.

For example, a BiggerPockets user shared their experience of receiving a warning from the city for renting out a condo unit that was not their primary residence. Despite arguing that they were operating responsibly and not causing any disturbances, they were ultimately forced to cease short-term rental activity in that property.

Another common issue raised on these forums is the perceived complexity and cost of Ottawa's licensing and permitting process. Hosts must obtain a bi-annual permit, submit detailed floor plans, and provide proof of insurance, among other requirements. Some view this as an unnecessary barrier to entry, particularly for those just starting out with a single vacation rental property.

Despite these challenges, it's clear from the forum discussions that many hosts continue to operate short-term rentals in Ottawa, albeit with varying degrees of success in navigating the city's regulations. Some have found ways to work within the principal residence rule, while others have chosen to risk fines or warnings in the hopes of avoiding strict enforcement.

However, there is a general consensus that Ottawa is taking a more proactive approach to enforcing its short-term rental rules compared to some neighboring cities and municipalities. The city's bylaw officers are seen as being vigilant in responding to complaints and conducting inspections to ensure compliance.

This stricter enforcement stance is likely a result of Ottawa's efforts to balance the economic benefits of vacation rentals with concerns about their impacts on housing availability, neighborhood character, and quality of life. The city has faced pressure from some residents and community groups to crack down on issues like noise, parking congestion, and the conversion of long-term housing to short-term rentals.

Ultimately, while Ottawa is not an outright hostile environment for short-term rentals, the sentiment among hosts on BiggerPockets and Reddit is that the city's regulations and enforcement approach present significant challenges. Successful operation often requires a commitment to strict compliance with the principal residence rule, licensing process, and other operational requirements.

For those considering starting a vacation rental business in Ottawa, it's crucial to carefully review the city's bylaws, understand the potential costs and hurdles, and be prepared to operate within the established guidelines. While some hosts may choose to take a more lax approach, the consensus is that Ottawa is not a market where short-term rental operators can expect to fly completely under the radar or ignore the rules without consequence.

How to Start a Short-Term Rental Business in Ottawa

If you're considering starting a short-term rental business in Ottawa, here are the key steps to follow:

1. Ensure your property qualifies: Under Ottawa's bylaws, you can only operate a short-term rental from your principal residence. Investment properties or secondary homes are not permitted for dedicated vacation rentals.
2. Review zoning rules: Consult with the City of Ottawa's Planning Department to understand the zoning regulations for short-term rentals in your specific area and property type. Certain zones may have restrictions on whole-home rentals or occupancy limits.
3. Obtain a Short-Term Rental Host Permit: Apply for a bi-annual permit from the city by submitting a completed application form, proof of residency, floor plans, insurance documentation, and the $110 permit fee.
4. Register for taxes: Register with the Canada Revenue Agency (CRA) to obtain an HST account for collecting and remitting the 13% Harmonized Sales Tax on your rental income. Also, register with the City of Ottawa for the 4% Municipal Accommodation Tax.
5. Prepare your property: Ensure your rental meets all safety requirements, such as working smoke alarms, carbon monoxide detectors, and fire extinguishers. Make any necessary repairs or upgrades to create an attractive space for guests.
6. Choose a rental platform: Decide which vacation rental site you want to list your property on, such as Airbnb, Vrbo, or Booking.com. Create a detailed listing with accurate descriptions, high-quality photos, and competitive pricing.
7. Set up your business: Open a separate bank account for your rental business and obtain appropriate insurance coverage, such as a vacation rental policy or landlord insurance. Consult with a tax professional to understand your income reporting and tax payments obligations.
8. Establish policies and procedures: Create a comprehensive rental agreement outlining house rules, cancellation policies, check-in/out procedures, and guest expectations. Develop a system for managing bookings, communicating with guests, and handling maintenance issues.
9. Arrange cleaning and turnover: Decide whether you'll handle cleaning between guests yourself or hire a professional service. Establish a thorough cleaning checklist and ensure the property is well-maintained and fully stocked for each new guest.
10. Market your listing: In addition to the exposure from listing platforms, promote your rental through social media, local tourism websites, and online travel forums. Encourage satisfied guests to leave reviews and recommendations.
11. Provide excellent guest service: Respond promptly to inquiries and booking requests. Offer local recommendations and thoughtful amenities to create a memorable stay. Address any issues or concerns quickly and professionally to maintain a high rating and attract repeat guests.
12. Comply with operational requirements: Adhere to the city's rules around parking, noise, garbage, and occupancy limits. Keep detailed records of your short-term rental activity, including guest information and rental dates, for a period of three years.
13. Monitor and adapt: Regularly review your booking calendar, pricing strategy, and guest feedback to identify areas for improvement. Stay informed about any changes to local regulations or tax requirements that may affect your business.

By following these steps and prioritizing compliance with Ottawa's regulations, you can establish a successful short-term rental business in the city. While the requirements may seem extensive, they are designed to ensure the safety and well-being of guests and neighboring residents. Consulting with local officials, property managers, or legal professionals can help you navigate the process smoothly and avoid potential pitfalls.

Who to Contact in Ottawa about Short-Term Rental Regulations and Zoning?

If you're considering starting a short-term rental business in Ottawa, it's essential to understand and comply with the city's regulations. Here are the key contacts and departments to reach out to:

1. Ottawa Planning Department

This department oversees implementing and enforcing the city's Short-Term Rental By-law, including zoning regulations and operational requirements. They can provide guidance on whether short-term rentals are permitted in your specific area and property type.

Planning Department
110 Laurier Avenue West
Ottawa, ON K1P 1J1
Phone: 613-580-2424 ext. 24135
Email: planning@ottawa.ca

2. Ottawa By-law and Regulatory Services

The By-law and Regulatory Services branch is responsible for enforcing the city's short-term rental regulations, including responding to complaints and conducting inspections. They can address any questions or concerns related to compliance and enforcement.

By-law and Regulatory Services
110 Laurier Avenue West
Ottawa, ON K1P 1J1
Phone: 613-580-2424 ext. 29246
Email: bylaw@ottawa.ca

3. Ottawa Revenue Services

Short-term rental operators in Ottawa must register with the city's Revenue Services branch to collect and remit the 4% Municipal Accommodation Tax (MAT) on rental income.

Revenue Services
110 Laurier Avenue West
Ottawa, ON K1P 1J1
Phone: 613-580-2424 ext. 27555
Email: revenue@ottawa.ca

4. Canada Revenue Agency (CRA)

In addition to the MAT, hosts must register with the CRA to collect and remit the 13% Harmonized Sales Tax (HST) on short-term rental income.

Canada Revenue Agency
Ottawa Tax Services Office
305 Rideau Street
Ottawa, ON K1N 9J1
Phone: 1-800-959-5525

By reaching out to these key departments and agencies, you can ensure that you have the most up-to-date information on Ottawa's short-term rental regulations and guidance on obtaining the necessary permits, licenses, and tax registrations. Maintaining open communication with local authorities is crucial for operating a compliant and successful vacation rental business in the city.

What Do Airbnb Hosts in Ottawa on Reddit and Bigger Pockets Think about Local Regulations?

To gauge short-term rental operators' sentiment regarding local regulations in Ottawa, let's look at some discussions on popular real estate investing forums like BiggerPockets and Reddit.

BiggerPockets Forum - "Ottawa's Short-Term Rental Regulations: Too Restrictive?"

Several hosts in this thread express frustration with Ottawa's principal residence requirement for short-term rentals. Many argue that this rule unfairly limits their ability to operate investment properties or secondary homes as vacation rentals. Some users also criticize the perceived complexity and cost of the city's licensing and permitting process.

Reddit - r/AirbnbHosts - "Navigating Ottawa's STR Regulations as a New Host"

A new host seeking advice on Ottawa's short-term rental regulations is met with a mix of responses. Some users warn that the principal residence rule and licensing requirements can be challenging to navigate, while others note that compliance is essential to avoid potential fines or shutdowns from the city's bylaw enforcement officers.

BiggerPockets Forum - "Ottawa Cracking Down on Illegal STRs"

In this discussion, several hosts share their experiences with Ottawa's bylaw officers, who are described as being "vigilant" in responding to complaints and conducting inspections. Some users report receiving warnings or citations for operating short-term rentals in properties that were not their principal residences.

Reddit - r/OttawaRealEstate - "Ottawa vs. Toronto for Short-Term Rentals"

A user considering a short-term rental investment asks for opinions on whether Ottawa or Toronto is a better market, taking into account each city's regulations. Responses generally suggest that while Ottawa's rules are more restrictive in some ways, the city's enforcement efforts are also more consistent and focused on addressing specific issues or complaints.

BiggerPockets Forum - "Ottawa STR Regulations: Worth the Hassle?"

In this recent thread, a prospective host asks whether the potential returns from a short-term rental in Ottawa justify the "hassle" of complying with the city's regulations. Responses are mixed, with some experienced operators arguing that the rules are manageable if you're committed to doing things properly. Others, however, suggest looking at nearby municipalities with fewer restrictions.

Overall, the sentiment among Airbnb hosts on BiggerPockets and Reddit seems to be that Ottawa's short-term rental regulations are relatively strict compared to some other Ontario destinations. While some hosts have found ways to navigate the principal residence rule and licensing process successfully, many express frustration with these requirements and the perceived heavy-handedness of the city's enforcement efforts.

However, there is also an acknowledgment that Ottawa's approach is likely a response to concerns from residents about the impacts of vacation rentals on housing availability, neighborhood character, and quality of life. Some hosts argue that responsible operators who follow the rules should be able to find success in the market, while others suggest exploring opportunities in nearby municipalities with fewer restrictions.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.