Niagara Falls, Canada Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Niagara Falls

Niagara Falls, a popular tourist destination in Ontario, Canada, has specific regulations around short-term rentals that prospective hosts need to be aware of before starting an Airbnb or Vrbo business.

In Niagara Falls, short-term rentals are known as Vacation Rental Units (VRUs). VRUs are considered legally separate from bed and breakfasts (B&Bs). B&Bs have traditionally been permitted in residential areas, while VRUs are only allowed in certain commercial zones.

The areas where VRUs are permitted in Niagara Falls are the Tourist Commercial (TC), General Commercial (GC), and Central Business (CB) zones. A map of the permitted VRU areas is available on the City of Niagara Falls website. Hosts must verify their property is in an allowed zone before listing it as a short-term rental.

In addition to zoning restrictions, VRU operators in Niagara Falls must also:

• Obtain a VRU license from the city, which costs $500 initially and $250 to renew annually
• Collect and remit a Municipal Accommodation Tax (MAT) of $2 per night of occupancy
• Provide required application documents like proof of ownership, floor plans, and parking site plans
• Ensure the VRU meets building code and fire safety requirements

Hosts found operating an unlicensed VRU in a prohibited zone can face steep fines - up to $50,000 for a first offense and $100,000 for subsequent offenses. The city estimates there are over 1,000 illegal VRUs currently operating, often in residential neighborhoods.

On the Bigger Pockets real estate investing forums, one member noted that "Lake County has some upside potential considering the huge amount of growth in neighboring Orange County. However, the county requires 3 different licenses/permits, and you need to get a tax certificate. You also better make sure you abide by occupancy rules, noise regs, etc. The county requires a rental contract, drivers license on the guest that books, and they have the right to inspect your house at any time."

This suggests that while there may be opportunity in the Niagara Falls short-term rental market, the regulatory environment is fairly strict. Hosts need to do thorough due diligence to ensure they are in full compliance.

The City of Niagara Falls has developed a handbook for VRU operators outlining all the key rules and requirements. They also provide online resources for the licensing process and allow residents to report suspected illegal VRUs.

So, in summary, operating a successful and legal short-term rental business in Niagara Falls requires carefully adhering to the city's zoning restrictions and licensing requirements. With proper planning and compliance, hosts can tap into the strong tourism demand in this market. But attempting to skirt the rules comes with serious financial risks.

Short-Term Rental Licensing Requirement in Niagara Falls

The City of Niagara Falls requires all short-term rental operators to obtain a Vacation Rental Unit (VRU) license in order to legally operate. Here are the key licensing requirements based on information from the city's official website and VRU handbook:

To apply for a VRU license, operators must submit:

1. Completed VRU License Application Form
2. Proof of ownership (transfer/deed)
3. Copy of the owner's driver's license
4. Proof of insurance with $2,000,000 in commercial liability coverage, submitted on the city form
5. A copy of the standard rental agreement containing:
   1. Notification of the city's noise bylaw
   2. Maximum occupancy as provided by the Chief Building Official
   3. Renter's Code of Conduct
6. Confirmation from the Fire Chief dated within 60 days that the premises comply with the Fire Protection Act
7. If on a private water/sewage system, a certificate from the Medical Officer of Health that services are adequate
8. A site plan and floor plans outlining the VRU portion of the property, demonstrating:
   1. Compliance with the city's zoning bylaw
   2. Minimum of two on-site parking spaces
9. Electrical Safety Authority certificate dated within 2 years confirming compliance with the Electrical Safety Code

The VRU license application and all required documents must be submitted to:

City of Niagara Falls
City Clerk's Office
4310 Queen Street
Niagara Falls, ON L2E 6X5

The initial VRU license fee is $500, with a $250 annual renewal fee. Payments can be made via cash, debit, or cheque payable to the City of Niagara Falls.

The typical processing time for a VRU license application is up to 10 weeks from receipt of a complete application package. Licenses must be renewed annually and expire on April 30th each year.

Operating a short-term rental without a valid VRU license is strictly prohibited in Niagara Falls and can result in substantial penalties:

1. First offense: Fine of up to $50,000
2. Second and subsequent offenses: Fine of up to $100,000 each time

By-law enforcement officers actively investigate unlicensed short-term rentals, with over a dozen illegal VRUs currently before the courts as of August 2022. The city estimates there are over 1,000 unlicensed VRUs operating, often in residential areas where they are not permitted.

To avoid costly fines and ensure compliance, short-term rental operators in Niagara Falls must carefully review all VRU licensing requirements and submit a complete application with all mandatory documentation. The city provides resources like the VRU Handbook to help guide hosts through the licensing process. However, with the steep potential penalties, it's critical that hosts ensure they are fully licensed before listing their property for short-term rent.

Required Documents for Niagara Falls Short-Term Rentals

To apply for a Vacation Rental Unit (VRU) license in Niagara Falls, property owners must submit the following documents to the City Clerk's office:

1. Completed VRU License Application Form

This form collects key information about the rental property, owner, and 24/7 local contact person. Available on the city's website.

2. Proof of ownership (transfer/deed)

Demonstrates that the applicant owns the rental property. It can be obtained from the Land Registry Office.

3. Copy of the owner's driver's license

Verifies the identity of the rental property owner.

4. Proof of insurance with $2,000,000 in commercial liability coverage, submitted on the city form

Shows that the property has sufficient liability insurance for use as a short-term rental. Must be provided by the insurance company on the city's standard form.

5. A copy of the standard rental agreement containing:

1. Notification of the city's noise bylaw
2. Maximum occupancy as provided by the Chief Building Official
3. Renter's Code of Conduct
4. The rental agreement sets out the terms and rules for guests. These specific clauses are required by the city's VRU bylaw.

6. Confirmation from the Fire Chief dated within 60 days that the premises comply with the Fire Protection Act

Ensures the property meets fire safety standards. Requires an inspection from Niagara Falls Fire & Emergency Services.

7. If on a private water/sewage system, a certificate from the Medical Officer of Health that services are adequate

Confirms the safety of the property's drinking water and waste disposal, if not on municipal systems. Issued by Niagara Region Public Health.

8. A site plan and floor plans outlining the VRU portion of the property, demonstrating:

1. Compliance with the city's zoning bylaw
2. Minimum of two on-site parking spaces
3. These drawings show the layout and features of the short-term rental unit. They must prove the property is in an allowed zone and meets parking requirements.

9. Electrical Safety Authority certificate dated within 2 years confirming compliance with the Electrical Safety Code

Verifies the property's electrical systems are safe and up to code. Provided after an inspection by the Electrical Safety Authority.

By gathering these required documents and submitting them with their VRU License Application, short-term rental owners in Niagara Falls can demonstrate their property's suitability and safety for rental use. The city provides the VRU application form and detailed instructions on their website to guide owners through the licensing process.

Niagara Falls Short-Term Rental Taxes

Short-term rental operators in Niagara Falls are required to collect and remit several types of taxes on their rental income:

1. Municipal Accommodation Tax (MAT) ($2 per night)

1. As of January 1, 2019, the City of Niagara Falls implemented a mandatory $2 per night per room Municipal Accommodation Tax (MAT) on all short-term rentals, including hotels, motels, and Vacation Rental Units (VRUs).
2. This flat $2 per night tax is collected by the city, with the accommodation provider retaining 5% as an administrative fee.
3. The MAT is charged in addition to the nightly rental rate and is subject to HST.

2. Harmonized Sales Tax (HST) (13%)

1. The Harmonized Sales Tax (HST) is a consumption tax that combines the federal Goods and Services Tax (GST) and the provincial sales tax. In Ontario, the HST rate is 13%.
2. Short-term rental operators must collect and remit HST on their rental income, as well as on the Municipal Accommodation Tax collected.
3. To collect HST, hosts must register for a GST/HST account with the Canada Revenue Agency (CRA) and file regular HST returns.

3. Income Tax (Rate varies based on total income)

1. Any income earned from short-term rentals is subject to federal and provincial income tax. Rental income must be reported on the operator's personal tax return.
2. The amount of income tax owed will depend on the host's total taxable income and applicable tax bracket for the year. Federal tax rates range from 15% to 33%, while Ontario provincial tax rates range from 5.05% to 13.16%.

Fortunately, short-term rental operators can deduct many of their business expenses to reduce their taxable rental income. Some common deductible expenses include:

1. Advertising and platform fees
2. Insurance
3. Mortgage interest
4. Property management fees
5. Property taxes
6. Repairs and maintenance
7. Supplies for guests
8. Utilities

It's important to note that as of January 1, 2024, the Government of Canada has eliminated certain tax deductions for short-term rentals in areas where they are banned or restricted by local laws. This means that hosts operating illegally in Niagara Falls will no longer be able to claim rental expenses to offset their income.

Short-term rental operators should carefully track all revenue and expenses, and maintain detailed records to support their tax filings. Consulting with a qualified tax professional is recommended to ensure compliance with all tax obligations at the federal, provincial, and municipal levels.

By understanding and properly collecting the required taxes, short-term rental hosts in Niagara Falls can operate their businesses legally and contribute to the costs of municipal services and tourism promotion in the city. However, the added taxes and loss of some deductions for illegal operators may impact the profitability and viability of some short-term rentals going forward.

Ontario Wide Short-Term Rental Rules

In addition to local regulations in Niagara Falls, short-term rental hosts must also comply with provincial rules in Ontario. Here are some of the key requirements at the provincial level:

Taxation

Short-term rental operators in Ontario must collect and remit the 13% Harmonized Sales Tax (HST) on their rental income. This includes both the federal Goods and Services Tax (GST) and the provincial sales tax. Hosts must register for a GST/HST account with the Canada Revenue Agency (CRA) and file regular returns.

Additionally, any income earned from short-term rentals is subject to federal and provincial income tax. Rental income must be reported on the host's personal tax return, with the amount of tax owed depending on their total taxable income and tax bracket for the year.

Principal Residence Exemption Changes

Effective January 1, 2024, the Government of Canada has eliminated certain tax deductions for short-term rentals in areas where they are banned or restricted by local laws. This means that hosts operating illegally in Niagara Falls will no longer be able to claim rental expenses to offset their income.

The principal residence exemption, which allows homeowners to sell their primary home tax-free, will also not apply to years where the home was used to earn short-term rental income in violation of local rules. These tax changes aim to discourage illegal short-term rentals and return housing stock to the long-term market.

Accessibility

The Accessibility for Ontarians with Disabilities Act (AODA) requires businesses, including short-term rentals, to meet certain accessibility standards. Hosts should provide accurate information about the accessibility features and limitations of their property to allow guests with disabilities to determine if it meets their needs.

Consumer Protection

Ontario's Consumer Protection Act provides safeguards for guests booking short-term rentals, such as the right to truthful advertising, fair cancellation policies, and protection of their personal information. Hosts must ensure their listings and rental agreements comply with these consumer protection laws.

Insurance

While not legally required, short-term rental insurance is strongly recommended for hosts in Ontario. Standard homeowners or landlord insurance policies typically do not cover commercial rental activities. Platforms like Airbnb provide some host protection, but a comprehensive short-term rental policy offers more robust coverage for property damage, liability claims, and loss of rental income.

By understanding and adhering to these province-wide regulations, in addition to Niagara Falls' local short-term rental rules, hosts can ensure they are operating legally and responsibly. The Ontario government provides resources to assist short-term rental operators in meeting their tax and legal obligations. When in doubt, consulting with a local lawyer or tax professional is advised to ensure full compliance.

Does Niagara Falls Strictly Enforce STR Rules?

Based on discussions in real estate investing forums and local news articles, Niagara Falls appears to be actively enforcing its short-term rental regulations, with a focus on illegal units operating in residential zones where they are prohibited. The city is taking a balanced approach of educating hosts on the rules while also cracking down on problem properties generating complaints.

A recent article in the Niagara Falls Review noted that the city estimates there are over 1,000 illegal vacation rental units operating, many in residential neighborhoods. In June 2023, the city launched an online reporting tool allowing residents to file complaints about suspected illegal short-term rentals in their area.

The city's chief administrative officer stated "The City of Niagara Falls is committed to making our community a welcoming and inviting place for visitors. However, we remain dedicated to balancing the needs of visitors with the safety and comfort of residents as it pertains to vacation rental units."

This suggests that compared to some other Ontario cities that have taken a more hands-off approach, Niagara Falls is being proactive about enforcing its short-term rental bylaws and responding to residents' concerns about the impacts of illegal rentals on neighborhoods. The steep fines of up to $100,000 for repeat offenders operating without a license also indicate the city is taking enforcement seriously.

However, Niagara Falls did recently amend its zoning to allow owner-occupied short-term rentals in residential areas, recognizing that some hosts rely on the income to afford their homes. This shows the city is trying to strike a balance and is not outright anti-Airbnb.

On Reddit and other online forums, hosts and investors generally advise that operating a short-term rental in Niagara Falls requires carefully following the licensing rules and only operating in permitted zones. As one Redditor put it, "An 'educational' approach seems to imply that those people abusing the by-laws don't know they are doing it, which I find hard to believe."

So, in summary, while there are many short-term rentals available in Niagara Falls, the city is not turning a blind eye to illegal units and is actively enforcing its rules, especially in residential areas. Hosts cannot simply ignore the regulations and operate under the radar. Niagara Falls has a fairly strict approach compared to some other cities, but is not completely anti-Airbnb if hosts are properly licensed and in compliance with the zoning. Following the city's detailed vacation rental unit bylaws is essential for hosts wanting to avoid significant fines and operate successfully in this market.

How to Start a Short-Term Rental Business in Niagara Falls

If you've weighed the risks and rewards and decided to start a short-term rental business in Niagara Falls, here are the key steps to follow:

1. Research zoning and regulations

• Carefully review Niagara Falls' zoning bylaw and short-term rental regulations to ensure your property is eligible to operate as a Vacation Rental Unit (VRU). VRUs are only permitted in certain commercial zones, not residential areas.
• If your property is not zoned for VRUs, consider applying for a zoning amendment or focusing on long-term rentals instead.

2. Prepare your property

• Ensure your rental property meets all building code, fire safety, and health requirements. Address any issues before applying for a license.
• Develop a floor plan and site plan showing the layout of the VRU and parking arrangements. These must be submitted with your license application.

3. Obtain necessary licenses and permits

• Apply for a VRU license from the City of Niagara Falls. The initial license fee is $500, with a $250 annual renewal fee.
• Gather all required documents for the license application, including proof of ownership, insurance, floor plans, and safety certificates.
• Allow up to 10 weeks for the city to process your complete application.

4. Register with tax agencies

• Register for a GST/HST account with the Canada Revenue Agency to collect and remit the 13% Harmonized Sales Tax on your rental income.
• Understand your income tax obligations and keep detailed records of all rental revenue and expenses to report on your annual tax return.

5. Set up your rental listing

• Choose a platform like Airbnb or Vrbo to list your property. Ensure your listing accurately represents your property's features and amenities.
• Invest in high-quality photos and write a compelling description highlighting your rental's unique selling points and proximity to local attractions.
• Develop a comprehensive rental agreement that includes all required information like maximum occupancy, noise rules, and the city's Renter's Code of Conduct.

6. Implement a guest screening process

• To protect your property and avoid issues, carefully screen potential guests before accepting a booking. Look for verified ID, positive reviews from past hosts, and a completed rental agreement.
• Consider using a third-party guest screening service for added peace of mind.

7. Arrange cleaning and maintenance

• Develop a cleaning and sanitization protocol to ensure your rental is spotless and safe for each new guest. Hire a professional cleaning service if needed.
• Have a plan in place for regular maintenance, repairs, and supply restocking to keep your property in top condition.

8. Provide excellent customer service

• Respond promptly and professionally to all guest inquiries and booking requests. Provide clear check-in instructions and be available to answer questions during their stay.
• Go above and beyond to create a welcoming and memorable experience for your guests. Small touches like local recommendations or a welcome basket can make a big impression.

9. Comply with all regulations and taxes

• Ensure you are collecting and remitting the $2 per night Municipal Accommodation Tax (MAT) and 13% HST on all bookings.
• Maintain your VRU license and renew it annually. Comply with all city bylaws and provincial regulations around short-term rentals.
• Keep accurate records and consult with a tax professional to file your annual income taxes properly.

10. Adapt and improve

1. Regularly assess your short-term rental's performance and guest feedback. Make adjustments to your listing, pricing, and amenities as needed to stay competitive.
2. Stay up-to-date on any changes to Niagara Falls' short-term rental regulations or zoning that could impact your business. Join local host groups or industry associations for support and insights.

By following these steps and prioritizing compliance with Niagara Falls' short-term rental rules, you can build a successful and sustainable vacation rental business in this popular tourist destination. While the regulatory environment is strict, diligent hosts who provide an exceptional guest experience can thrive in this market.

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

If you have questions about short-term rental regulations, licensing requirements, or zoning in Niagara Falls, here are the key city departments and contacts to reach out to:

City of Niagara Falls Planning, Building & Development Department

Address: 4310 Queen Street, 2nd Floor, Niagara Falls, ON L2E 6X5
Phone: 905-356-7521 ext. 4238
Email: planning@niagarafalls.ca
Website: https://niagarafalls.ca/city-hall/planning/

Contact the Planning, Building & Development Department for questions about zoning, building permits, and VRU license applications.

City of Niagara Falls Licensing & Enforcement

Address: 4310 Queen Street, 2nd Floor, Niagara Falls, ON L2E 6X5
Phone: 905-356-7521 ext. 4818
Email: licensing@niagarafalls.ca
Website: https://niagarafalls.ca/city-hall/licensing-and-enforcement/

Contact Licensing & Enforcement for questions about VRU license requirements, inspections, and bylaw enforcement.

Niagara Falls Fire & Emergency Services

Address: 5809 Morrison Street, Niagara Falls, ON L2E 2E8
Phone: 905-356-1321 ext. 2206
Email: fire.department@niagarafalls.ca
Website: https://niagarafalls.ca/living/emergency-services/fire/

Contact Fire & Emergency Services to schedule a fire safety inspection, which is required for a VRU license application.

In addition to these city contacts, short-term rental hosts in Niagara Falls may find the following groups and resources helpful:

Niagara Falls Short-Term Rental Association (NFSTRA)

Website: https://www.nfstra.ca/

NFSTRA is a non-profit industry association representing short-term rental owners and property managers in Niagara Falls. They advocate for fair regulations and provide education and networking opportunities for members.

Niagara Region Bed & Breakfast Association

Website: https://www.niagarabb.ca/

While focused on traditional B&Bs, this association also welcomes short-term rental hosts in the Niagara region. They offer member resources, marketing support, and industry updates.

Airbnb Niagara Falls Host Forum

Link: https://community.withairbnb.com/t5/Hosting/ct-p/en-hosting

Airbnb's Community Center includes a forum where Niagara Falls hosts can connect, ask questions, and share experiences with local laws and regulations.

Canadian Vacation Rental Owners (CVRO) Facebook Group

Link: https://www.facebook.com/groups/canadianvacationrentalowners/

This active Facebook group is a place for vacation rental owners across Canada to network, share tips, and discuss industry trends and regulatory issues.

By reaching out to these key city departments and participating in local host associations and online forums, short-term rental operators in Niagara Falls can get the information and support they need to run compliant and successful businesses. Building positive relationships with city officials and fellow hosts is invaluable in navigating the complex and evolving regulatory landscape.

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

While there aren't a huge number of posts specifically from Niagara Falls hosts, there are some discussions on Reddit and other forums that provide insight into local hosts' experiences and opinions on the city's short-term rental regulations:

In a thread on the /r/AirBnB subreddit titled "Niagara Falls, ON - Licensing for Airbnb," one user shared their experience with the licensing process:

"I just went through the process of getting a license for my Airbnb in Niagara Falls. It was a bit of a hassle and took longer than I expected (about 2 months from start to finish), but I'm glad I did it. The city is really cracking down on unlicensed rentals, so it's not worth the risk of operating illegally. The fines are steep. Just make sure you have all your ducks in a row with zoning, fire safety, etc., before applying. And be patient with the city - they're dealing with a lot of applications."

In another Reddit thread about the profitability of Airbnb in Niagara Falls, a host commented:

"The new licensing fees and occupancy limits have definitely cut into profits compared to a few years ago. And the $2 per night tourism tax adds up. But I'm still able to make it work by providing a really unique experience and charging a premium rate. I think the regulations have actually helped weed out some of the less professional competition. As long as you're in a good location and offering a quality product, there's still money to be made."

On the Bigger Pockets forums, an investor considering purchasing a property in Niagara Falls to use as a short-term rental asked for advice. One response highlighted the importance of due diligence on zoning:

"Before you buy, make absolutely sure the property is zoned for vacation rentals. The city is really strict about this and has been shutting down illegal rentals in residential areas. Don't just assume you can Airbnb any property. Do your homework on the zoning first, or you could end up with a very expensive long-term rental instead."

In a Facebook group for Canadian Airbnb hosts, a Niagara Falls host vented about the city's enforcement efforts:

"Just got a notice from the city that they're investigating my rental for not having a license. I've been operating for over a year without any issues. Feels like they're just trying to make an example out of me. The application process is so onerous and expensive. I'm considering just shutting down and selling. It's not worth the hassle anymore."

However, another host pushed back in the comments:

"I get that the rules can be frustrating, but they exist for a reason. Unlicensed rentals are a big problem in Niagara Falls and a lot of residents are fed up with the noise, parties, and strangers coming and going in their neighborhoods. If you want to operate a legitimate business, you need to follow the laws like everyone else. The city is just doing its job."

Overall, the sentiment among Niagara Falls hosts seems to be that while the city's short-term rental regulations are strict and compliance can be costly and time-consuming, they are a necessary reality of doing business in this market. Hosts who are able to navigate the licensing process and operate professionally are still finding success, but those who try to fly under the radar are increasingly at risk of enforcement action. The key takeaway is that anyone considering short-term renting in Niagara Falls needs to do thorough due diligence on the rules and be prepared to comply fully. Cutting corners is not worth the potential consequences.

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.