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Considering purchasing a vacation rental in Niagara on the Lake?

Added: Jun 18, 2017
Category: For Vacation Home Owners

Considering purchasing a vacation rental in Niagara-on-the-Lake?

Niagara on the Lake requires anyone renting for stays less than 28 nights to have a Short Term Rental License with a classification of a Bed and Breakfast, Country Inn, Cottage or a Villa.

If you buy an existing Cottage or a Villa, the license could be grandfathered under the rules prior to the 2013 revisions of the by-laws governing short term rentals.   Call Niagara Holiday Rentals to see if the property you are considering to purchase is grandfathered!  Also if you are buying an existing vacation rental, you want to make sure you discuss how HST will apply on the purchase agreement.  This should be discussed before putting in an offer!

Real Estate in Niagara on the Lake is an attractive investment but the reality is that a business like vacation rental isn't a huge money maker every year.   When considering opening up a vacation rental your financial goal should be to offset your annual carrying costs not including mortgage payments.  This is a more realistic financial strategy.   Gone are the days where you could pick up a house for a couple hundred grand and then rent it out and cover all costs and put a little extra in your pocket.  While real estate prices have doubled over the past 5 years, the nightly rate for rental has not increased at the same pace.

Contact Niagara Holiday Rentals before falling in love with a home and we can help you navigate the setting up of a vacation rental, including licensing and insurance.   Here are a few highlights of getting a license:

1. must be single detached and the building permit closed at least 4 years ago.  Vacation Apartments are only permitted over commercial buildings.

2. 3 bedrooms or smaller is a cottage license. 4 bedrooms requires a Villa license and rezoning (expensive  and time consuming process). A bedroom is any room bigger than 7 sq metres with a window that is at least % of the floor space unless its a living room (1 per house), kitchen, laundry, hall or bathroom.

3.  Parking for 2 cars about 3 metres by 6 metres for each space (not including any town property) - Villas need more.

4.  There are some areas of town which are not eligible.  The house must front on a public road and if you don't have municipal water and sewers, we need to check with the Town.

5. The yard has to be a minimum of 138 sq metres (1453 sq ft) for a Cottage and for each additional bedroom under a Villa license add 9 sq metres.

6.  Insurance must include $2 Million in liability and name the Town of Niagara-on-the-Lake as additional insured.

There are other rules and restrictions governing the property and how to operate your vacation rental, so make sure you read through the by-law and discuss with Niagara Holiday Rentals!   Here is the link to the short term rental application (make sure you look at the correct sections for Cottage and Villas!)  https://notl.civicweb.net/document/7302/2017%20Short%20Term%20Rental%20Application%20Package.pdf?handle=4476FFDA263C4C87ACDDE48D4D65521C

The process for a Cottage Rental License is about 6 weeks on new licenses and renewals are done annually.  By-law and Fire inspections are required .  

Each municipality in Ontario can create their own regulations governing short term rentals, although most don't.  The province of Ontario has been investigating proving wide regulations, but so far the focus has been on Airbnb issues in Toronto and the province has been slow to move.

One myth is that if you list on AirBnB you don't need a license in Niagara on the Lake.  This is not true, all vacation rentals need licensing in the town of Niagara on the Lake.  In addition, if you are operating without there are financial penalties.  

Confused? Overwhelmed?  Just give us a call at 905-468-8985!







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