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

What are Short-Term Rental (Airbnb, VRBO) Regulations in Victoria, British Columbia?

Short-term rentals, such as those listed on Airbnb and VRBO, have become increasingly popular in Victoria, British Columbia. However, there are specific regulations that hosts must follow to legally operate a short-term rental business in the city. These rules are designed to balance the needs of residents, visitors, and the local housing market.

Starting a Short-Term Rental Business in Victoria

To start a short-term rental business in Victoria, you must first obtain a valid Short-Term Rental Business Licence from the City of Victoria. The license fee is $150 per year if the short-term rental is offered in the operator's principal residence, or $1,500 per year for all other short-term rentals.

When applying for a license, you must provide evidence that you own the property or have the owner's consent to use it as a short-term rental. If the property is located within a strata lot, you must also provide a letter from the strata council confirming that short-term rentals are allowed under the strata's bylaws.

As of May 1, 2024, short-term rentals in Victoria will be limited to the operator's principal residence, which can include:

• Renting the entire home occasionally (e.g., when on vacation)
• Renting up to two bedrooms within the home, with shared kitchen and living spaces

Self-contained dwelling units, such as secondary suites or garden suites, will no longer be eligible for short-term rental use, even if previously allowed under a Non-Principal Resident Operator Business Licence.

Hosts must also display their valid business license number on any advertising, listing, or promotional material for their short-term rental. The City of Victoria can request that platforms like Airbnb and VRBO remove listings that do not display a valid license number.

In addition to municipal regulations, hosts must comply with provincial rules under the Short-Term Rental Accommodations Act, which came into effect on May 1, 2024. This includes the principal residence requirement and the elimination of legal non-conforming use status for short-term rentals.

Failure to comply with these regulations can result in fines ranging from $250 to $500 per day for each infraction. The City of Victoria actively enforces short-term rental bylaws, and non-compliant hosts may face license suspension or revocation.

Before starting a short-term rental business in Victoria, it is crucial to thoroughly review both municipal and provincial regulations to ensure compliance. Staying up-to-date with any changes to these rules is also essential for the ongoing operation of your business.

Short-Term Rental Licensing Requirements in Victoria

To legally operate a short-term rental in Victoria, you must obtain a valid Short-Term Rental Business Licence from the City of Victoria. The application process requires submitting a completed application form along with supporting documentation.

Requirements for a Short-Term Rental Business Licence in Victoria include:

1. Completed application form
2. Proof of ownership or owner's consent to use the property as an STR
3. If the property is a strata lot, a letter from the strata council confirming STRs are allowed
4. Designated responsible person who can attend the STR within two hours if needed
5. Valid government-issued ID
6. Incorporation documents and Notice of Articles (if applying as a corporation)
7. Floor plan of the short-term rental unit
8. Parking plan showing on-site parking spaces

The annual license fee is $150 for an STR in the operator's principal residence or $1,500 for all other STRs. Licenses are valid from January 16 to January 15 of the following year and must be renewed annually.

Applications can be submitted via email to str@victoria.ca or mailed to:

City of Victoria
Bylaw and Licensing Services Division
1 Centennial Square
Victoria, BC V8W 1P6

Processing time for STR license applications is typically 4-6 weeks. Incomplete applications will be returned, requiring resubmission and potentially delaying approval.

Operating an STR without a valid license is an offense subject to fines:

1. $500 per day for operating without a license
2. $250 per day for failure to include the license number in advertisements and listings
3. $350 per day for failure to have a designated responsible person

Failure to comply with Victoria's STR regulations can result in license suspension or revocation. The City actively enforces these bylaws, so it is crucial to obtain and maintain a valid license to avoid penalties.

Required Documents for Victoria Short-Term Rentals

To apply for a Short-Term Rental Business Licence in Victoria, you must submit the following documents:

1. Completed Application Form: The 2023 Short-Term Rental Business Licence Application form must be filled out completely and signed by the operator.
2. Proof of Ownership or Owner's Consent: If you own the property, provide a copy of the land title or property tax assessment. If you are a tenant, provide a copy of your lease agreement and a letter from the property owner consenting to the use of the property as a short-term rental.
3. Strata Council Approval (if applicable): If the property is a strata lot, provide a letter from the strata council confirming that short-term rentals are permitted under the strata's bylaws.
4. Government-Issued ID: Provide a copy of a valid government-issued ID, such as a driver's license or BC ID card, showing your current address.
5. Secondary Proof of Address: In addition to government-issued ID, provide a second document proving your address, such as a recent utility bill or bank statement.
6. Incorporation Documents (if applicable): If applying as a corporation, include a copy of your Incorporation Documents and Notice of Articles.
7. Floor Plan: Submit a floor plan of the short-term rental unit, clearly labelling the rooms and spaces to be used for the rental.
8. Parking Plan: Provide a parking plan showing the location and number of on-site parking spaces available for short-term rental guests.

These documents help the City of Victoria verify your eligibility to operate a short-term rental and ensure compliance with local regulations. Incomplete applications will be returned, potentially delaying the licensing process.

Victoria Short-Term Rental Taxes

When operating a short-term rental business in Victoria, British Columbia, there are several taxes you must collect and remit to the appropriate authorities. Understanding these taxes is crucial for compliance and proper financial planning.

Goods and Services Tax (GST): The GST is a federal tax that applies to most goods and services in Canada, including short-term rentals. The current GST rate is 5% of the listing price, including cleaning fees, for stays of 30 nights or less. As a short-term rental operator, you must register for a GST account with the Canada Revenue Agency (CRA) and collect this tax from your guests.

Provincial Sales Tax (PST): British Columbia charges a PST of 8% on accommodations, which includes short-term rentals. This tax is applied to the listing price and any additional fees, such as cleaning charges, for reservations of 26 nights or less. You must register with the BC Ministry of Finance to collect and remit the PST.

Municipal and Regional District Tax (MRDT): The MRDT is a tax of 2-3% applied to accommodations in participating municipalities and regional districts. In Victoria, the MRDT rate is 3% of the listing price, including cleaning fees and guest fees, for reservations of 26 nights or less. This tax is collected by the province and remitted to the municipality to support tourism marketing and development.

It's important to note that as of January 1, 2024, the federal government will deny income tax deductions for expenses related to short-term rental income, including interest expenses, in areas where such rentals are prohibited or if operators are non-compliant with local regulations. This change aims to discourage the use of residential properties as short-term rentals instead of long-term rentals.

Potential Deductions and Write-Offs

As a short-term rental operator, you may be able to deduct certain expenses from your rental income to reduce your tax liability. Some common deductions include:

1. Mortgage interest
2. Property taxes
3. Utilities (e.g., electricity, water, internet)
4. Cleaning and maintenance costs
5. Insurance premiums
6. Advertising and platform fees (e.g., Airbnb, VRBO)
7. Depreciation of furniture and equipment

It's crucial to keep accurate records of all income and expenses related to your short-term rental business to support any deductions claimed on your tax return. Consult with a tax professional to ensure you are maximizing your deductions while remaining compliant with tax laws.

In summary, short-term rental operators in Victoria must collect and remit the GST (5%), PST (8%), and MRDT (3%) on their bookings. Recent changes to federal tax laws may impact the deductibility of certain expenses for non-compliant operators or those in areas where short-term rentals are prohibited. By understanding these taxes and potential deductions, you can better manage your short-term rental business and meet your tax obligations.

British Columbia Wide Short-Term Rental Rules

As of May 1, 2024, British Columbia has implemented new province-wide rules for short-term rentals that affect hosts in Victoria and other communities. The Short-Term Rental Accommodations Act and its regulations establish a principal residence requirement, limiting short-term rentals to the host's primary residence plus one secondary suite or accessory dwelling unit on the same property.

This requirement applies automatically to municipalities with a population of 10,000 or more, as well as smaller neighboring communities. Victoria falls under this category, meaning the provincial rules are in effect for the city. The province's principal residence requirement serves as a minimum standard, and local governments can implement more restrictive bylaws based on their specific needs.

Under the new provincial rules, short-term rental platforms like Airbnb and VRBO must share data with the government and remove listings that do not comply with local bylaws. Hosts are required to display a valid business license number on their listings. Non-compliant hosts and platforms may face significant fines, with penalties reaching up to $10,000 per day for corporations.

The provincial government has established a Compliance and Enforcement Unit within the Short-Term Rental Branch of the Ministry of Housing to ensure the new rules are followed. This unit will work with local governments to identify and address non-compliant listings.

In addition to the province-wide regulations, short-term rental hosts in Victoria must adhere to the city's Short-Term Rental Regulation Bylaw. This bylaw allows eligible operators with a valid Short-Term Rental Business Licence to offer short-term rentals in their principal dwelling unit, either occasionally for the whole unit or up to two bedrooms with shared kitchen and living spaces. Self-contained dwelling units, such as secondary or garden suites, are not eligible for short-term rentals under the city's bylaw.

The combination of provincial and municipal regulations aims to return more short-term rental units to the long-term housing market while still allowing homeowners to rent out their primary residences or a portion thereof. Hosts in Victoria must navigate both sets of rules to ensure compliance and avoid penalties.

Does Victoria Strictly Enforce STR Rules?

Based on discussions among short-term rental hosts on BiggerPockets and Reddit, it appears that Victoria is not particularly Airbnb-friendly compared to some other cities. The city has implemented strict regulations through its Short-Term Rental Regulation Bylaw, which limits STRs to a host's principal residence and requires operators to obtain a valid Short-Term Rental Business Licence.

While some cities may turn a blind eye to STR violations, Victoria seems to take enforcement seriously. The combination of the city's bylaw and the province-wide Short-Term Rental Accommodations Act leaves little room for hosts to operate outside the rules. Platforms like Airbnb and VRBO are required to share data with the government and remove non-compliant listings, and hosts face significant fines for violations.

Unlike in some jurisdictions where hosts report successfully operating STRs despite local restrictions, the consensus among online communities is that Victoria's rules are actively enforced. Neighbors are often quick to report suspected illegal rentals, and the city follows up on complaints. Attempting to circumvent the regulations by using minimum stay requirements or other loopholes is generally seen as risky and likely to result in penalties.

While there may be some hosts who continue to operate STRs in Victoria despite the rules, it appears to be the exception rather than the norm. The city's strict enforcement, coupled with the provincial regulations, creates an environment that is less Airbnb-friendly than many other destinations. Hosts looking to invest in short-term rentals may find Victoria a challenging market compared to cities with more permissive policies or lax enforcement.

How to Start a Short-Term Rental Business in Victoria

Starting a short-term rental business in Victoria can be a rewarding venture, but it's essential to follow the proper steps to ensure compliance with local regulations and set yourself up for success. Here's a comprehensive guide to getting started:

• Understand the regulations: Familiarize yourself with Victoria's Short-Term Rental Regulation Bylaw and the province-wide Short-Term Rental Accommodations Act. These laws restrict short-term rentals to principal residences and require operators to obtain a valid Short-Term Rental Business Licence from the city.
• Assess your property: Determine if your property is eligible for short-term rental use. In Victoria, you can offer short-term rentals in your principal dwelling unit, either occasionally for the whole unit or up to two bedrooms with shared kitchen and living spaces. Self-contained dwelling units, such as secondary or garden suites, are not eligible. If you're considering purchasing a property for short-term rental use, thoroughly research the zoning bylaws and strata regulations (if applicable) to ensure compliance.
• Create a business plan: Develop a comprehensive business plan that outlines your target market, pricing strategy, marketing approach, and financial projections. This will help you stay organized and focused as you launch your business. Analyze the local market to identify demand, competition, and unique selling points for your property.
• Register your business: Apply for a Short-Term Rental Business Licence with the City of Victoria. The annual license fee is $150 for principal residences and $1,500 for non-principal residences. You'll need to provide proof of principal residence, such as government-issued ID with your address. If you live in a condo or townhome, obtain a letter from your strata corporation confirming that short-term rentals are allowed under the bylaws.
• Prepare your space: Ensure your property is clean, well-maintained, and equipped with all necessary amenities for a comfortable stay. Consider hiring a professional photographer to showcase your space in the best possible light. Provide local recommendations, guidebooks, and personalized touches to enhance the guest experience.
• List your property: Create a listing on popular short-term rental platforms like Airbnb and VRBO. Craft a compelling description, use high-quality photos, and set competitive rates based on your market research. Emphasize your property's unique features and proximity to local attractions to stand out from the competition.
• Manage your bookings: Establish a system for managing bookings, communicating with guests, and coordinating cleaning and maintenance. Consider using automation tools to streamline these processes and save time. Respond promptly to guest inquiries and maintain a high level of communication throughout their stay to ensure a positive experience.
• Comply with tax obligations: Charge and collect GST from guests if your daily rental rate exceeds $20. Report and remit GST to the government as required. Consult an accountant to understand the tax implications of operating a short-term rental business. Keep accurate records of your income and expenses to simplify tax reporting and maximize deductions.
• Encourage reviews: Ask satisfied guests to leave reviews on your listing platform. Positive reviews can attract new bookings and help you build a strong reputation in the market. Address any negative feedback promptly and professionally to demonstrate your commitment to guest satisfaction.

By following these steps and staying informed about local regulations, you can successfully launch and operate a short-term rental business in Victoria. Remember to prioritize guest experience, maintain compliance, and continually adapt to changes in the market to ensure long-term success.

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

If you have questions about short-term rental regulations or zoning in Victoria, here are the key contacts:

Short-Term Rental Business Licences

1. Phone: 250.385.5711
2. Email: businesslicence@victoria.ca
3. Address: City of Victoria, 1 Centennial Square, Victoria, BC V8W 1P6
4. Website: Short-Term Rentals | City of Victoria

Zoning Information

1. Phone: 250.385.5711
2. Website: Zoning | City of Victoria

For general inquiries, you can contact Victoria City Hall:

1. Phone: 250.385.5711
2. Address: 1 Centennial Square, Victoria, BC V8W 1P6
3. Hours: Monday to Friday, 8:00 a.m. - 4:30 p.m.

Hosts may also find the following online communities and resources helpful:

1. Airbnb Community Center - Connect with other hosts, ask questions, and share experiences. Check out threads like "Vancouver vs Victoria BC" to learn from local hosts.
2. /r/AirBnB and /r/vrbo on Reddit - Active subreddits for short-term rental hosts to discuss strategies, challenges, and news.
3. Short-Term Rental Advocacy Centre - A Canadian non-profit organization that provides resources and support for short-term rental hosts and advocacy efforts.

By staying connected with local authorities and engaged with the host community, you can navigate Victoria's short-term rental landscape with greater ease and confidence. Don't hesitate to reach out to the city or fellow hosts if you have questions or need guidance.

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

Victoria's short-term rental hosts have been vocal about their experiences and opinions regarding local regulations on platforms like Reddit, BiggerPockets, and Airbnb's community forums. Here are some notable threads and comments:

Reddit - /r/VictoriaBC: In the thread "Reporting Short term rentals", hosts discuss the new rules and how to report non-compliant listings. Many express frustration with "housing hoarders" and encourage reporting violators to the city and province.

Airbnb Community Center: The thread "Province of BC new Short Term Rental Legislation" highlights hosts' concerns about the new primary residence requirement. Some worry about the economic impact and disruptions to their hosting businesses, while others seek guidance on canceling bookings without penalties.

Reddit - /r/AirBnB: In "Rental for Victoria, BC [Canada] was just canceled with less than a week to go", a guest shares their experience of a last-minute cancellation due to the new law. Commenters advise against accepting the host's offer to rent privately, as it would likely be illegal under the new rules.

Reddit - /r/VictoriaBC: The thread "New Airbnb restrictions spark backlash from Victoria landlords" features strong opinions on both sides. Some criticize hosts for profiteering at the expense of long-term renters, while others argue that the regulations unfairly target small business owners.

Airbnb Community Center: In "Short Term Business Licence Not Approved Victoria BC", a host shares their experience of having their short-term rental business license denied after the suite in their home was previously approved.

These threads reveal a mix of reactions from Victoria's short-term rental hosts. While some express frustration and feel unfairly targeted by the new rules, others acknowledge the need for regulation to address housing affordability issues. Hosts are grappling with the financial impact of the changes and seeking guidance on compliance and adapting their businesses to the evolving regulatory landscape.

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.