Hamilton Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Hamilton

As of January 1, 2024, the City of Hamilton requires all short-term rental operators and hosts to obtain a municipal business license to legally launch and operate a short-term rental in their principal residence.

This new bylaw introduces licensing, fees, registration, and inspection requirements, limiting STRs to the operator's primary residence. The bylaw is designed to discourage people from buying investment properties solely for short-term rentals and hopes to add hundreds of units back onto the long-term rental market. Commercial operators with multiple properties are prohibited under the new rules. The city estimates there were around 1,250 active STR listings in Hamilton as of November 2022, with 80% being entire homes.

Starting December 1, 2023, STR operators and brokers like Airbnb must apply for a municipal business license to meet the requirements. Enforcement began on January 1, 2024. Failure to comply could result in fines of up to $100,000 for each offense.

Some key considerations when starting an STR business in Hamilton:

• Ensure the property is your principal residence as defined by government records. You can only operate an STR out of the home you live in.
• Obtain a Certificate of Zoning Verification and ensure the unit meets building, fire, and safety codes.
• Submit an STR License application with required documents like floor plans, insurance proof, and guest information package.
• Schedule inspections by licensing and fire officials before receiving approval.
• Pay applicable license fees ranging from $200 for small units to $1,000 for larger properties.
• List and advertise the STR in compliance with the new regulations. Platforms like Airbnb must also pay municipal fees.

The new rules have faced some pushback, with critics arguing they infringe on property rights. However, the city maintains the regulations are necessary to increase long-term rental supply amid an affordable housing crisis.

While the licensing process creates more administrative hurdles for hosts, Hamilton aims to balance economic opportunities and preserve residential neighborhoods. Connecting with local host groups can provide guidance in navigating this evolving regulatory landscape.

Short-Term Rental Licensing Requirement in Hamilton

To legally operate a short-term rental in Hamilton, Ontario, hosts must obtain a Short-Term Rental License from the City of Hamilton Planning Department. The licensing process involves several key requirements:

1. Submit a completed STR License application form providing details about the rental property, number of bedrooms, parking, and emergency contact information.
2. Provide proof that the rental unit is your principal residence where you live and are designated as such on government records. Only principal residences qualify for STR licenses.
3. Submit a detailed floor plan showing room dimensions, number of bedrooms, location of smoke/carbon monoxide detectors, and fire evacuation routes.
4. Include a guest information package outlining house rules, emergency info, and a fire escape plan.
5. Show proof of adequate liability insurance coverage, typically a minimum of $2 million.
6. Obtain approvals from condo boards or property owners if the unit is part of a larger building.
7. Schedule inspections by a licensing officer and the fire department to verify compliance with safety codes and bylaws.
8. Pay the applicable license fee based on the rental type - fees range from $200 for small units up to $1,000 for larger properties.

Once all documentation is submitted and inspections are passed, the City will issue the official Short-Term Rental License. This license must be prominently displayed and included on all rental advertisements. It is valid for 2 years before requiring renewal.

The licensing process is designed to ensure short-term rentals meet quality and safety standards while allowing the City to monitor and regulate the industry. Strict enforcement began on January 1, 2024, with operators facing penalties and fines for non-compliance.

Proper licensing is crucial for hosts to legally operate their short-term rental in Hamilton and avoid disruptions to their business. The requirements also limit commercial operators to just their principal residence in an effort to free up long-term rental housing supply.

Required Documents for Hamilton Short-Term Rentals

When applying for a Short-Term Rental License in Hamilton, hosts must submit several key documents along with their application:

1. Completed Short-Term Rental Application Form providing details about the rental property, number of bedrooms, parking, and emergency contact information.
2. A detailed floor plan showing the layout of the unit, room dimensions, number of bedrooms, location of smoke/carbon monoxide detectors, and fire evacuation routes.
3. Fully completed STR questionnaire describing which areas of the property will be used for rentals, the building type, number of parking spaces, and companies used for advertising.
4. Proof that the rental unit is your principal residence as shown on government records like a driver's license or utility bills.
5. Guest information package outlining house rules, emergency info, and fire escape plan to be provided to renters.
6. Proof of adequate liability insurance coverage, with a minimum of $2 million in coverage.
7. Approval from condo board or property owner if the unit is part of a larger building.
8. Government-issued ID like a driver's license or passport.
9. Criminal record check from the applicant's local police service.
10. Documentation from a licensed electrician confirming the unit's electrical systems comply with safety codes.
11. Certificate of Zoning Verification from the City of Hamilton for any secondary suites or apartments being used as STRs.

Applicants are responsible for any fees associated with obtaining the required documents like electrical inspections or zoning certificates. The City may also request additional information or documentation as needed to verify compliance.

Ensuring you have all the proper paperwork in order is crucial before submitting your Short-Term Rental License application. Missing or incomplete documents can delay the approval process. Hosts should allow ample time to gather everything before the licensing deadlines.

Hamilton Short-Term Rental Taxes

Short-term rental operators in Hamilton are subject to several tax requirements under the new licensing bylaws that took effect on January 1, 2024.

Municipal Accommodation Tax (MAT)

A 4% Municipal Accommodation Tax applies to all short-term rentals of 28 consecutive nights or less. This tax is collected by the City of Hamilton's designated agent, the Ontario Restaurant Hotel & Motel Association (ORHMA).

STR operators must register with ORHMA and remit the 4% MAT quarterly based on their rental revenues. Failure to collect and remit this tax can result in fines and penalties from the City.

The MAT applies to the listing price including any cleaning fees, but excludes additional charges like parking or incidentals that are separately itemized.

HST

In addition to the 4% MAT, short-term rental hosts must also collect and remit the 13% Harmonized Sales Tax (HST) on their rental income to the Canada Revenue Agency.

The HST applies to any rental period less than 1 month (short-term). For rentals over 1 month, HST is not charged as it is considered a long-term residential lease which is exempt.

Income Tax

Income earned from short-term rentals is considered taxable income by the Canada Revenue Agency. Hosts must report this revenue on their personal tax returns and pay income tax at their applicable marginal tax rate.

Allowable deductions can be claimed for expenses related to operating the short-term rental, such as mortgage interest, utilities, repairs and maintenance, and any service fees paid to platforms like Airbnb.

By ensuring they comply with all tax obligations, Hamilton's licensed short-term rental operators can avoid penalties while contributing their fair share to fund municipal services and tourism promotion through the MAT.

Detailed guidance on tax requirements is provided by the City during the licensing process. Hosts are also advised to consult tax professionals to ensure full compliance and take advantage of all eligible deductions.

Ontario Wide Short-Term Rental Rules

While specific regulations around short-term rentals are largely determined at the municipal level in Ontario, there are some overarching provincial rules that hosts should be aware of:

Taxes

Hosts must collect and remit the Harmonized Sales Tax (HST) of 13% on any rental periods less than one month (28 days). For longer-term rentals of one month or more, HST does not apply as it is considered a residential lease.

Income Tax

The Canada Revenue Agency (CRA) considers income earned from short-term rental operations taxable income. Hosts must report this revenue on their personal tax returns and pay income tax at their applicable marginal rate. Allowable expenses related to operating the rental can be deducted.

Fire Safety

The Ontario Fire Code sets standards for all short-term rentals regarding installation and maintenance of smoke alarms, carbon monoxide detectors, and fire extinguishers. Local fire departments may conduct inspections to verify compliance.

Accessibility

Under the Accessibility for Ontarians with Disabilities Act (AODA), hosts must ensure their rental property meets accessibility standards and provide accurate information about any accessibility limitations or features to potential guests.

Residential Tenancies Act

Depending on the specific rental agreement terms, some short-term rental situations may fall under the Residential Tenancies Act, which governs landlord-tenant relationships. Seeking legal advice is recommended to understand if this Act applies.

Consumer Protection

The Ontario Travel Industry Act requires some short-term rental operators to be registered travel agents/wholesalers if they provide additional services like tours or transportation. Compliance helps protect consumer rights.

While provincial regulations are relatively limited, municipal governments have been given significant authority to implement their own rules around short-term rental licensing, zoning permissions, taxation policies, and other local requirements that hosts must follow. Researching the specific bylaws in the municipality where the rental property is located is crucial for hosts to operate legally.

Does Hamilton Strictly Enforce STR Rules? Is Hamilton Airbnb friendly?

Based on discussions on forums like Bigger Pockets and Reddit, it appears that Hamilton is taking a firm stance on enforcing its new short-term rental (STR) rules compared to some other cities. While the regulations allow for responsible home-sharing in principal residences, Hamilton seems committed to cracking down on illegal commercial operators.

On the Bigger Pockets real estate forum, several investors have expressed frustration with Hamilton's new bylaw prohibiting STRs outside of an owner's primary residence. One member complained, "These rules kill any opportunity to operate multiple Airbnb units as an investment strategy."

Another Bigger Pockets user mentioned getting hit with a $500 fine from the city after being caught renting out a non-principal residence property on Airbnb without the proper licensing. "Hamilton isn't messing around - they're actively identifying violators and issuing serious penalties," they warned.

The consensus from Bigger Pockets discussions indicates Hamilton has become quite unfriendly for real estate investors looking to capitalize on short-term rentals across multiple properties. However, some suggest it remains viable for homeowners wanting to rent out a portion of their primary residence.

On Reddit's r/Hamilton forum, residents have had mixed reactions. While some laud the city's efforts to preserve long-term rental housing supply, others argue the new rules infringe too much on private property rights. "I'll likely just operate my Airbnb illegally and risk the fines. The income is too good to pass up," one Redditor defiantly stated.

However, with Hamilton planning proactive enforcement involving identification of non-compliant listings and fines up to $100,000, many Redditors predict that calculated risk won't be worth it for most hosts. The city seems intent on restoring a degree of order to its housing market after a proliferation of investor-owned short-term rentals.

So, while Hamilton remains relatively accommodating for responsible home-sharing, it has taken a definite stance against the unchecked spread of commercial short-term rental operations. Compared to some other municipalities struggling with enforcement, Hamilton's commitment to licensing, inspections, and meaningful penalties makes it one of the less Airbnb-friendly markets for investors – but a balanced approach for resident hosts.

How to Start a Short-Term Rental Business in Hamilton

If you're considering starting a short-term rental business by renting out part of your primary residence in Hamilton, follow these steps:

1. Verify that your property qualifies as your principal residence as defined by government records like your driver's license or utility bills. Only principal residences are eligible for short-term rental licenses.
2. Review Hamilton's zoning bylaws and obtain any necessary approvals if your home has a secondary suite or laneway house you plan to rent out in the short-term.
3. Prepare all required documents like floor plans, guest information packages, proof of insurance, and completed application forms per the City's checklist.
4. Schedule inspections with City licensing officers and the fire department to verify your rental unit meets safety codes and bylaws.
5. Submit your Short-Term Rental License application and the applicable license fee, ranging from $200 for small units to $1,000 for larger properties.
6. Once approved, prominently display your license number on all rental advertisements and listings on platforms like Airbnb. Renew the license annually.
7. Collect and remit the required 4% Municipal Accommodation Tax to the City's designated agent, the Ontario Restaurant Hotel & Motel Association, on a quarterly basis.
8. Ensure you also collect and remit the 13% Harmonized Sales Tax (HST) to the Canada Revenue Agency.
9. Report all short-term rental income on your personal tax returns and pay applicable income taxes. Maintain detailed records of revenues and expenses.
10. Establish efficient operations for guest communication, cleanings, maintenance, and addressing any complaints to provide a positive experience.
11. Market your rental strategically through optimized listings, social media, and by building a direct booking website over time.
12. Stay compliant with any changes to Hamilton's short-term rental regulations, which may evolve as the City monitors the impacts of this new licensing system.

By methodically following these steps and obtaining the proper licensing, you can legally operate a short-term rental from your principal residence in Hamilton while contributing taxes and helping increase the long-term rental housing supply.

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

If you have questions or need further guidance regarding Hamilton's short-term rental regulations and zoning requirements, you can contact the following city departments:

1. Planning Department

The Planning Department oversees the new Short-Term Rental Licensing program. You can reach them for inquiries about applications, documentation, inspections, and licensing procedures.

Phone: 905-546-2424 ext. 1355
Email: pdgeninq@hamilton.ca

2. Zoning Section

You'll want to contact the City's Zoning Section for any zoning verification needs related to operating a short-term rental from your property.

Phone: 905-546-2720
Email: zoning@hamilton.ca

The city has also set up a dedicated website with comprehensive information on the new short-term rental bylaws and licensing process at www.hamilton.ca/ShortTermRentals.

You can find application forms, submission guidelines, fee schedules, and other resources on this website. The online portal will also allow you to apply for the required Short-Term Rental License starting December 1, 2023.

You can call the city's general line at 905-546-2489 for general inquiries about the new regulations.

It's recommended to first thoroughly review the information on the city's website. However, if you need further clarification or have a specific situation, you should reach out directly to the Planning Department or Zoning Section staff.

Consulting with a local real estate professional or lawyer familiar with Hamilton's rental regulations can also provide valuable guidance, especially for more complex cases.

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

On online forums like Reddit and Bigger Pockets, Airbnb hosts in Hamilton have expressed a range of perspectives regarding the city's new short-term rental regulations:

Reddit User HamOntHostVet: "As someone who has been an Airbnb host in Hamilton for years, I understand the need for some regulations, but the new rules seem overly restrictive. Only allowing principal residences really kills opportunities for investment properties."

Bigger Pockets Member 905Investor: "I'm honestly shocked Hamilton went this far in limiting short-term rentals. Capping it to just principal residences and requiring $1,000 licenses for larger units is going to push a lot of hosts back to long-term renting which defeats the purpose."

Reddit User HamOntAirCritic: "Good riddance to all the investor-owned party houses that were making some neighborhoods unlivable. If you want to be an Airbnb host, you should be willing to live on-site and be accountable for your guests' behavior."

Bigger Pockets Member SoOntInvestor: "Hamilton's new rules are far from perfect, but they're a reasonable compromise between allowing home-sharing and preventing commercial operators from running de facto hotels in residential areas. I'll jump through the hoops to get licensed."

While some hosts feel overly burdened by the new principal residence and licensing requirements, others see the regulations as a sensible way to curb issues created by investor-owned short-term rental properties. There is a mix of frustration and understanding among the host community in Hamilton as they adapt to this new regime.

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.